A friend of mine recently told me that he is thinking about becoming a real estate agent on the side to help generate extra income. I come from a family of unemployed mortgage brokers so I couldn’t help but blurt out an inappropriate, “Are you crazy?!”
Since the housing bubble popped in 2006, home prices are down nearly 30% in our area and many of the houses on our block have been sitting unsold for nearly a year, so you can see why I thought he might be a little nuts.
My friend, never the one to back down from a chance to prove me wrong, laid out his reasons…
1. Less Competition
One of the hardest hit sectors of the job market have been those connected to the housing market and real estate agents are no exception. In California, the number of registered agents is down 18% alone since 2007. My friend reasons that will less realtors in the game, there will be less competition for listings and representation for buyers.
Of course, I argue that there are less listings and buyers so the point is mute, but more on that later…
2. Ability to Set Your Own Hours
There’s no doubt that being able to set your own hours is a huge plus, but selling real estate is also demanding of time. I argue that you will need a first job with a fairly flexible schedule since buyers/sellers generally want their agent to work on around their schedule, not the other way around.
With the market being the way it is, it’s also likely that you are going to have to show picky buyers a lot more homes and spend a lot more time marketing your seller’s homes.
3. Record Low Interest Rates
If you look at a home loan comparison chart, it’s clear that there has never been a better time to sign a long term loan. A 30-year mortgage can be locked in for around 4.5% so it is certainly possible that new buyers could come into the market.
Even if you accept all of that, I still wondered…
“Where will all these phantom clients come from?”
My friend replied that he knew finding clients would be the toughest part, but that because it was a second gig he was only going to market to clients via word of mouth. He wasn’t going to spend any money on those fancy magnets or ridiculous park benches. He was just going to market himself to friends, family, and their acquaintances.
His goal is to not make a fortune selling real estate, but just sell a couple of houses a year and bank the commission on each one.