The Association of Real Estate License Law Officials estimates that there are about 2 million active real estate licensees in the United States. The median gross income of Realtors was $39,800 in 2017. That’s the median gross income, which means that more than half of licensed Realtors made less than $39,800. According to the Bureau of Labor Statistics, only the top 10% of Realtors earned more than $109,500.* A significantly smaller percentage reports the type of income that many people think of when they imagine the glamorous life of hobnobbing with the super wealthy, buying and selling million dollar homes.
Kirk Pugh, co-owner of KBT Realty Group and a Broker/Realtor®, observes that the large number of Realtors making below the median income is an outgrowth of the “hobbyist” mentality: failing to work at the profession of real estate.
What is your take on the hobby versus profession discussion in the real estate industry?
KBT Realty: The hobbyist mentality comes from not saying, “I really want to do this as a career.”
Some people in this profession don’t see the value in making an investment in building a full-time business for themselves. I take offense to that attitude because, as someone who has made it a career, the hobbyist is not representing the industry at a high level. They’re just kind of doing it for “fun and beer money”… and I’m doing it to take care of my family.
Plus your reputation as being “not so good” in the profession reflects on me and the industry as a whole. That concerns me.
What is the hobbyist mentality?
KBT Realty: It’s approaching real estate as a part-time job. When they come out of real estate school, they are like, I’ve got my license, bring it on. But they don’t see that’s when the hard work starts.
I have to admit, when I got my license, about the second day, I was like, no one is coming in here wanting to do business with me. At that point, you have to make the decision that you are willing to go out and be uncomfortable and – because this is probably something most people haven’t done before – tackle the lead generation side, the contact side, the marketing side.
If you are not willing to do that, you’re the hobbyist. You will be the person who goes to hang out at the club and has a conversation with someone dreaming about buying a boat slip. That’s not what this industry is about.
There must be a difference between real estate as a second job, and real estate as a second career.
KBT Realty: That’s what often gets in the way. Real estate seems like such an appealing career for people who may already be committed to something else. It seems like it would be a great “second job,” so to speak.
The problem comes in when there is still that main career or that big passion that takes someone away from committing to what real estate is as a profession.
I found out that – especially in the beginning of your real estate career – you cannot do this part-time and do it well.
What about as a second career?
KBT Realty: Real estate is an appealing and viable option for a second career, for people who really want to have something to do after they have finished their first profession.
Maybe they worked in the school system and they retired in their mid-fifties and they go hey, real estate would be a great opportunity for me to stay productive and continue to do things. The people who get into real estate as a second career often don’t have financial pressure on them because they may have a retirement. They also have skills and discipline that come from having already learned about business in their first career. They understand the mentality of “If I do this right, I can have fun, and I can make money.”
Second career people are often okay with investing the effort and resources into approaching real estate as a full time profession.
How do you discern between the hobbyist and the professional?
KBT Realty: That’s the upfront conversation that we have to have: what do you expect out of this and are you willing to give back to achieve those expectations?
If you’re not ready to commit to approaching real estate as a full-time profession, you are really going to be on the liability side more than the asset side. When building a team or a firm, it comes down to whether someone wants to put forth the effort to come at it as a professional or whether they are playing at it like a fun hobby.
What defines the real estate professional?
KBT Realty: This industry is about creating the opportunity for home ownership. The real estate professional is the person that home buyers and home sellers can rely on to get them through that process.
Because the general public doesn’t know all the nuances of real estate that a real professional – who is committed to learning every day – knows. A real estate professional brings the network, the skills, and the market knowledge. Think about it. If you are buying a house, you probably don’t know a real estate attorney, or a home inspector, or recent transactions in your target area. Your professional real estate agent does.
*U.S. Department of Labor, Bureau of Labor Statistics, National Employment Statistics, Occupational Employment and Wages, May 2017, 41-9022 Real Estate Sales Agents