Should my Fiance Get a Real Estate License?

Question

My fiancee and I have been long distance for the last few years, but we're finally making the plans for her to move to California in August. The major issue we're facing is that we don't know what she will do for work when she gets here. She is currently a Pension Analyst for a pretty big firm in Dallas and that just isn't an option out here in the small town of Lompoc, CA. We've considered having her drive all the way to Santa Barbara or San Luis Obispo, both about an hour away, for the better job opportunities, but I don't feel comfortable with her being on the road that much every day. I don't want her to get in a wreck on the winding back roads...

That said, I recently brought up the idea of her studying for a California Real Estate license over the next few months and taking the test when she gets here so that she can be an agent. To my surprise, she actually seemed pretty enthusiastic about it. I guess I shouldn't have been surprised, she and her sister are pretty active with real estate investing in Dallas. She's also definitely the people person in the relationship, so a more sales-oriented job such as this one would fit her personality in my opinion. My research has left me with a few questions, though...

• First of all, how likely would she be to find a job within a couple of months of arriving assuming she passes the test on her first try in August? 
• Second, I've seen a couple of things here and there about "desk fees" that can be as high as $1500. Is this normal? Do we need a few thousand dollars set aside just to get her foot in the door?
• Last, for now, how likely would a new agent be able to make a livable wage off of the business?

I thank you all for your time. I truly appreciate any advice or help you can give me.

Chris Mason · Answer

1) 100% chance someone will let her hang her license and begin paying fees for the privilege.

2) You need to be prepared for her to pay her dues, and not see a single dollar in income, for her first six months.

3) Plan to be in the red for six months, like I said. Two year burn-out rate for new agents is like 75%, if she can make it that far she's probably good.

Some agent needs to pop into this thread and tell you how horrible it is getting started as a new agent. I have literally had new-ish agents calling me to say that if I don't close this loan for their client by the end of the month, they will not be able to pay their rent. Others skip paying taxes for years (...and then complain to me that they can't qualify for a mortgage lol). One guy I've been with since he started, we have a running joke of it:

Him: "I need to eat, is Sally preapproved yet?"

Me: "I need paperwork from her. I pestered her about it today and yesterday."

Him: "But did you tell her that I need to eat?"

It's only funny to us, but you get the idea.

Account Closed · Answer

@Russell Brazil, thank you for the response! I understand what you mean, and I hope I didn't come off as trying to avoid investing in the business of being a real estate agent. I was more trying to figure out if $1500 is a normal number or if lower amounts are more common in order to be able to plan. $1500/month is not a lot to spend if she makes $3000/month in the long run, but we would need to budget for the immediate impact of that level of investment! Thanks again for the response and the advice.

Dawn Brenengen · Answer

Caribbean W. Great question, and I have no idea what the answer to that is.  I've always been in the same market, so it's never occurred to me to see what absorption rates are anywhere else, and I can tell what they are in my market just by being in it.  A balanced market is about six months of inventory - it would take six months to sell all the current listings if no new listings came on line. Different price points will have different rates, and typically, the lower the price point, the father they sell.

In my area, we are at about two months worth of inventory = sellers market!  That's great for the sellers, but that means I lose some frustrated buyers who don't get homes, and decide to take their money elsewhere (lost sales).  Having too much inventory means there are no buyers, which would also make for a slow market.

Dawn Brenengen · Answer

Caribbean W. Being an agent can be a viable career in any market.  What is your market like?  Are there a lot of transactions occurring?

Finding a broker to work with should be easy.  As a new agent, she should look for one that offers training and mentorship.  Don't worry so much about the commission splits with the broker while she is learning, she can always more to a lower cost brokerage later when she has some experience.

Desk fees are usually higher at lower commission split offices.  She will want to do a cost analysis for each place she interviews with.

It's not very likely a new agent will make a livable wage at first, but if she is good at it, she should be making a great wage soon.  Often, new agents will go six months without a sale, so just make sure you and she have plenty in reserves and that you can support her new endeavor.

Russell Brazil · Answer

Oh I didn't think you came off like that at all. I just know so many new agents drop out of the business because they never learn that any business, agents included require capital to be successful. I just like to always emphasize that point to people entering the business.

Russell Brazil · Answer

To truly be successful as an agent means treating it like a business. Businesses take money to fund, even if there is not money coming in.  Now being an agent is one of the cheaper businesses to start, but it will cost money...without spending that money it will take a lot longer to make some money, and it may not come consistently.

Account Closed · Answer

Wow, this thread is great! I'm definitely going to send her a link to this conversation so that she can read what all of you are saying. You guys are awesome!

Account Closed · Answer

While I have your attention, I did think of one more question if you don't mind, @Russell Brazil. Are agents paid as employees or independent contractors for tax purposes?

Account Closed · Answer

Thank you so much for the informative and insightful response, @Dawn Brenengen! From my perspective, it does seem like the market is beginning to heat up in this area. Is there a correct way to evaluate whether the market is good or bad? Something like a good number for transactions per month for a given population? Is there a website that tracks these things?

I am not overly worried about how much money she makes early on. My job pays enough for us to live comfortably without her working, but I want her to have something that she'll enjoy doing while I'm at work. If it happens to bring in some extra cash, well, I'd be thrilled lol!

Chris Mason · Answer

Almost all are 1099 independent contractors. Often with jacked up / messy credit, and taxes, unless it's been 7 years and things have dropped off.

If you're income can provide stability and operating capital for your wife, she may be able to get past those first few years without screwing up her credit.

Should my Fiance Get a Real Estate License?

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