Think TWICE Before Becomig a Real Estate Agent

I live in a little town called Franklin, North Carolina in Macon County. Can you guess how many real estate agents hang out their shingle in that county of 35,000? 50? Way off! 75? Still way off. 100? Not even close! 150? You're getting warmer. 200? Actually you are off by about 20. Close to 180 agents in a county of 35,000!

I have a friend who at 60 decided she was going to become a real estate agent and become wealthy beyond her dreams! She took the test and passed and then she recently became a broker which I think is now required in North Carolina to sell real estate.

She joined with the lady that had sold her a house when she moved to Franklin. And she has sold a few homes in the 150,000-250,000 range. She has an Inn in Franklin listed for 2,000,000 but I know the guy that owns it and he is dreaming to think he will get that amount for that place and many agree with me.

One day it hit me! Have you heard of the coveted Million Dollar Round Table in real estate? These are the people that sell $1,000,000 or more of real estate in one year. Sounds impressive. Then I remembered that the average broker makes about 3.5% commission on their sales unless they own the business. So let's do the math. $1,000,000 X 3.5% = $35,000. Is that correct? Yep. $35,000. So if my friend did sell that dump of a bed and breakfast for even $1,500,000 she would make a whopping $52,500 on that sale. Now tell me how many people are in the market for an overpriced bed and breakfast that the current owners can barely keep their heads above water trying to pay the bills?

So let's be realistic. It is going to take my friend probably a year to sell 6 homes at the average price that relocating Floridians are looking for - $150,000 – 185,000. So let's do the REAL math this time. Let's average the home price at $170,000 X 6 = $1,200,000. Yep you have made the coveted Million Dollar Round Table and walked away with a grand total of $1,020,000 x 3.5 = $37,500!

Let me ask you. What do you think the average assistant manager at your local Wal-Mart makes annually? Would you guess at least $37,500. So would I and aren't there benefits with this job? Usually even though Wal-Mart I understand is doing their best to put even their long term people on part time basis so they don't have to pay benefits!

So the glorified real estate agent is making usually about the same salary as a Wal-Mart assistant manager! REAL impressive!

And don't forget the real estate agent has to take care of their own health and insurance benefits. They also have to drive their prospects all over creation to show them homes and property that they MIGHT buy. Some idiot here in Franklin thinks that she impresses all her clients because she drives a gas guzzling Hummer! My friend at least had the sense not to get one of those and drives a nice Jeep Cherokee.

May be not here but in large cities you also have to wear nice outfits that require to be dry cleaned over and over. Also if you are a woman even in Franklin you don't won't be seen wearing the same outfit twice by other agents. God forbid!

So now we have the health and life insurance, gas, nice clothes, dry cleaning and don't forget the expense of entertaining the potential clients that MIGHT buy one of your houses.

So let's just add up the costs for an average week of expenses excluding health and life insurance. We will use $2.50 per gallon for gas. So the average fill up is around $25-30 except for that idiot showoff in the Hummer. Would you imagine that you would fill up at least 2 times per week. So let's say $60 for gas per week x 45 weeks = $2700. Now how many homes do you have to sell to pay for your gas? Around a 77,000 home will take care of the gas. Pretty easy to sell that price home even here in Franklin.

Now we have the dry cleaning bill. For women it is definitely going to be higher and most of the agents here in Macon County are women. Let's say that is going to run at least $15 per week X 45 = $675. Now surely you can sell one of those single wide mobile homes that proliferate Macon County for about $19,000.

Finally we will add the expense of entertaining the client by taking them to breakfast or lunch. Again you want to show them a good time so you will probably take them to a nice restaurant which we have several that qualify for that rating. The average lunch around Franklin will run you $10.00 per person and usually there at least two people plus your own meal. So there goes $30 per trip with the client. You probably have to foot their bill on the average of at least three times per week during the good months of potential sales. So let's say that here it is from April through early November. Let's say 34 weeks of the year X $90 = $3060. Now that is going to take more than selling a double wide! It is going to take selling a 87,000 home or several double wides!

So by now we have spent the commissions on about $183,000 of sales just for gas, dry cleaning and food. We still have not taken into consideration the expense of maintaining your vehicle like that stupid Hummer; health and life insurance; and other miscellaneous expenses to do real estate.

Remember during the gold rush days it was not the prospects that cleaned house but the suppliers of the shovels and pans! Today the pans and shovels are the dry cleaning establishments (even though in Franklin there is one up for sale that has been business for less than 2 years), the restaurants (there are three of those up for sale as I write this) and the gas stations (none of these are up for sale). Of course there is also State Farm, All State, Prudential, etc. that are doing quite nicely handling the insurance needs of the agents.

So next time you think that you want to be a hot shot real estate agent, remember that your friendly assistant manager at Wal-Mart who probably lives in a nice little house that one of the agents sold him/her is mostly likely making a heck of lot more money than that agent. Hey that person doesn't have to entertain the prospective buyers and gets to eat their own brown bagged lunches and wear Wal-Mart clothes!

Hey I would love to hear from real estate agents that disagree with me at hugh009@hotmail.com.

Hugh Simpson is a former consumer investigative reporter for Post Newsweek TV and currently has NO intentions of entering the overcrowded real estate agent market of Macon County. He will stay with his emergency preparedness consulting at http://www.usprepared.com.