Recently, a real estate agent became an overnight millionaire after completing the sale of a penthouse at a freehold condominium at a record price, earning a commission of S$1.5 million. Of course, this has definitely led many people to think that being a real estate agent is highly lucrative job. Actually, the truth is not as rosy as what most have imagined. This article aims to dispel this myth and many other misunderstood facts about being in this line of work.
1. Myth: I think real estate agents earn a lot, so much so, that they become instant millionaires
Fact: Real Estate Agents Earn on a Commission Basis, not on a Regular Income Basis
There is no actual benchmark of a real estate agent’s salary. How much an agent earns depends a lot on factors that affect the property market, e.g. the market’s property price index, industry transaction volumes, government laws and measures on the property market.
A real estate agent earns via commission, which is calculated as a percentage of a property sale, typically 1-2%, or 1 month for every 24 months of rental amount, in the case where he or she helps to rent out a property. Therefore, the wages of a real estate agent are highly volatile, as it is commission-based. There could be months where an agent earns only a 3-figure sum, and there are also months where an agent might earns a hefty 5-figure amount.
2. Myth: A real estate agent’s job is JUST only viewings and necessary paperwork for property sale/rental
Fact: Real agents do not have it easy; sometimes they might need to run errands for their clients
Working in this service-oriented line, and with competition from so many other agents, it is difficult for a real estate agent to stand out in the industry. Indeed, there are agents who are able to find potential clients only by word-of mouth marketing, but often, property agents have to go the extra mile in order to secure property deals.
Unlike 10 or 20 years ago, present-day agents have to do more to show their sincerity to clients. The agent who made the news for clinching a commission of S$1.5 million, said in a newspaper report that she even has to run errands for her clients, and also pick them up and drop them off wherever they want to go. This goes to show that an agent has to prove that he or she is worth their salt, before they can successfully close a deal.
3. Myth: The real estate agent does not have to do a lot of marketing to secure a deal
Fact: It’s the exact opposite. Agents must now employ many creative marketing strategies
Effective and clever marketing helps get the word out that there is a property for sale or for rent. Conventional marketing methods via newspaper advertisement, brochures, and flyers, while useful to a certain extent, are often costly. Usually, it is the agent who has to fork out the money to engage such advertising media; hence some monetary sacrifices are needed before a deal is secured.
With the proliferation of social media and the Internet, agents can now post their listings online. While being very affordable, listings by an agent often get ‘lost’ among other listings by numerous other agents.
On top of it all, property owners typically engage several real estate agents to assist in the sale/rent of their property. Hence, competition is very tense among these agents to clinch the deal. To stand out among others, an agent has to be creative or spend more with his or her marketing of the property.
4. Myth: I don’t have to be accredited to be a real estate agent
Fact: It is now a MUST to be accredited before you are allowed to join this field
It is a legal regulation that agents must be certified and regulated by the Council for Estate Agencies, where they are required to pass the Real Estate Salesperson (RES) examination.
Real estate agents must also renew their license to remain accredited. The threshold to enter the industry has been raised, and aspiring agent-to-be have to work way much harder than in the past, to be able to work in this line as a true real estate agent.
There truly lies the opportunity to earn a higher-than-average living as a real estate agent. However, one must understand that insanely high-income earners are the exception more than the norm, and a lot of work goes on behind-the-scenes of a property deal. There is increased competition in the property industry nowadays, and to really survive, real estate agents must be prepared to go out of the way for their clients, get accredited, and be creative. Good luck!
By CY Low, belowVal