Plan on Getting Rich as a Real Estate Agent? Read This First

Many people think that becoming a real estate professional is a quick path to success, but that's generally not the case.

Jan 12, 2014 at 11:14AM

Being a real estate agent is often seen as a somewhat glamorous job, one that virtually anyone can do and potentially get rich from.

In fact, becoming a real estate agent (or Realtor, as the National Association of Realtors calls them) can be a simple matter of taking a two-week course and passing a licensing exam. In a sense, getting into the business is easy.

But being successful is tough!

Car

The stereotypical Realtor is one who drives around in a luxury car and projects an image of success in order to impress his or her clients enough so that they list or buy a house with them (the movie American Beauty does a great job of creating a stereotypical Realtor). However, this is not always the case. In fact, the proportion of "rich" or extremely successful Realtors is very small. Let's take a look at what most Realtors make, and then take a look at what separates the successful Realtors from the rest of the pack.

The reality of the real estate profession
In reality, the median income of a Realtor in 2012 was $43,500, which is well above the $34,900 figure from 2011. This really illustrates how much a Realtor's income can fluctuate -- and can plummet in a bad housing market. Only 2% of Realtors earn more than $250,000 per year, and even to get in the upper five-digit range is rare, especially in the early stages of a realtor's career.

Re

Image Credit: http://www.pallspera.com

According to U.S. News, realtors in the 75th percentile make $61,960, and those at the 25th percentile make just $27,200. This data is from 2011, so these figures are undoubtedly a little bit higher now, especially with the improvement in the housing market, but it is a good indicator of the range and uncertainty involved in the profession.

According to a survey of 1,758 real estate professionals conducted by ActiveRain, 22% of real estate agents earned less than $35,000 per year, and just 21% earned $100,000 or more. This is far from a "rich" profession. In fact, these income levels look pretty similar to professions that are thought of as lower-income, such as education and law enforcement.

Since it's pretty safe to assume that those considering the real estate profession are aspiring to be in the upper income brackets, let's see what they might be able to do to swing the odds in their favor.

The exceptions

Tech

We'll define the "exceptions" as those real estate agents who earn $100,000 or more, which is roughly the upper 20% of realtors. Agents who make six figures (or more) spend six times more on technology and ten times more on marketing efforts than their lower-income colleagues.

In other words, those who spend more money tend to make more money. The higher earners are also much more likely to actively blog about real estate in order to attract potential buyers and sellers, and they are are much more likely to use online video sites such as YouTube to broadcast videos of their listings and other real estate topics.

Also, the more successful Realtors tended to be the most experienced. Most of the successful real estate agents surveyed had 11 to 20 years of experience.

In a nutshell
Becoming a real estate professional probably won't make you rich overnight. While there are methods that seem to be effective, the best way to be successful in real estate is similar to that in most other businesses: Learn all you can, effectively use the latest technologies, and don't be afraid to spend money in order to make money.

While a career as a real estate professional can certainly pay the bills and earn you a good living, those aspiring Realtors with visions of driving clients to properties in their new Porsche may need a reality check.

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Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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