The 4 Biggest Drawbacks of Being a Real Estate Agent

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Being a real estate agent is a great deal for many investors—but not everyone.

Over the past five years, I have done over 400 deals, meeting mortgage brokers, title companies, lenders, insurance providers, and other real estate agents along the way. I’ve realized that there are three main drawbacks to being a real estate agent in this day and age—and a number of smaller annoyances.

Related: Real Estate Investors: Should You Become a Real Estate Agent?

Let’s take a look at each of these problems in a little more detail.

Problem #1: The Stigma

We’ve all heard jokes about real estate agents: The greedy, unethical real estate agent now sits comfortably alongside that dodgy, lying used car salesman. Both sell a subpar product for an over-inflated price in order to line their own pockets.

In popular culture, real estate professionals—unlike the used car salesman—not only rip off the buyer but the seller, too. They deceive the buyer by not disclosing certain details about the property, exaggerating the school system, or lying about the number of offers on the table.

But they don’t do this for the benefit of the seller, either. People now see a real estate agent working hard to close the sale only because they want to claim commission—regardless whether or not the seller earns what their property is worth.

All stereotypes have roots in truth. When selling something, of course it makes sense to point out the good aspects and ignore the negatives.

Related: How to Be a Rockstar Real Estate Agent: 9 Tips for Standout Success

And real estate agents are paid based on the sale price. Both seller’s and buyer’s agent typically receive 3% commission. For a $250,000 property, that’s a tidy $7,500 once the sale closes.

But say the bid comes in at $240,000. That lowers the commission—the home owner would be down $10,000, but the real estate agent would only lose $600, a negligible sum. They have little incentive to hold out for a higher offer.

Thanks to these two perceived tactics—dishonesty and greed—the profession has become the butt of jokes, damaging the reputations of even the hardest-working agents. This is most definitely a problem!

Problem #2: Working With Brokers

A real estate agent takes classes and passes a state licensing exam, which gives them permission to operate within that state. A real estate broker takes a few more classes and then passes another exam—unsurprisingly called the broker exam.

That broker’s exam provides a license allowing them to work independently. Real estate agents must work under a broker. And those brokers can take a significant cut of every agent’s commission. In my experience, there are many brokerages who don’t earn that commission. They essentially steal it from hard-working underlings.

In today’s volatile job market, new agents can’t put up a fight when their broker takes half of their commission—not if they want to keep working. With qualified agents competing for limited brokerage positions, many agencies even request bachelor degrees to secure work.

And this really irks me. It’s reasonable for brokers to take a cut if they actually contributed in any way to the closing of a deal. But in many cases, a broker doesn’t lift a finger to help. The legwork is done by the agents.

That commission is their reward. They should keep it.

All of it.

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Problem #3: The “Lazy” Agent

My next point almost entirely contradicts my previous point. Confused? Yeah, me too. Being a Realtor requires bootstrapping your own career. That means paying startup expenses, training for your real estate license, and creating your own schedule. Despite the brokerage, you really are your own boss. So agents should never be lazy… right?

But when some real estate agents fail they blame their broker.

Sometimes that’s a reasonable belief. Brokers should provide certain training and support. If a new real estate agent doesn’t receive this, complaints are understandable.

But agents must have flexibility. They build their own reputation and generate their own deals. Some people choose to enter this line of work because they think every house will be a million-dollar listing. They want easy money. But this business is so much more than that. The lazy attitude of a select group gives all agents a lazy reputation.

How brokers and agents can help each other

Laziness should not be tolerated in any workplace, and that goes for real estate too. A good broker should do the following for their agents:

• Provide training
• Provide support
• Offer leads where appropriate
• Help agents with branding and advertising themselves
• Oversee transactions

And in return, agents should do the following:

• Go door to door to drum up business—how else are people going to know who you are?
• Hand out flyers
• Give out business cards
• Attend networking events and meet people
• Help out in the local community
• Oh, and sell houses

The agent themselves must pound the pavement. It takes years of hard work and commitment to establish a client base and a book of business. And yes, it’s a competitive market. Yes, there are lots of other young, eager real estate agents looking to make their fortune.

Related: Newbie Agent 101: How to Choose a Real Estate Brokerage

Problem #4: The Small Things

If you’re debating whether to apply for your real estate license and want to know the practical drawbacks, here are a few more things to consider:

• Fees. Startup fees, like licensing courses, marketing and advertising, and National Association of Realtors (NAR) dues, can eat into your profits. And that’s before the brokerage takes their cut.
• Part time vs. full-time. Yes, technically being a real estate agent has unlimited income potential. But few agents start out with high incomes—or any income at all. Are you willing to put in the hustle to work after hours for a few months (or even years) until you get your footing?
• Dealing with challenging moments. Agents work with buyers and sellers during one of the most stressful times of their lives. Are you able to handle different people at their worst?

Don’t sit back on your laurels expecting your (hopefully) experienced broker to drop listings and reams of potential buyers on your desk. Get out there yourself. Find your own clients, establish your own reputation, and maybe, one day, you’ll be heading your own real estate brokerage. Just don’t be lazy when you achieve that goal, OK? It makes the rest of us look bad.

Real estate agents: Do you agree with this assessment? Why or why not?

Let me know your thoughts with a comment!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.