Should you get your real estate license in 2023? Pros & Cons

The short answer is. Yes. I've been in real estate for about a decade as a real estate agent or broker and investor and I don't think there's a bad time to get your real estate license. But in this blog, I want to go over a couple of pros and cons about getting your real estate license in this upcoming year 2023.

This, let's start with the pros.

Pro #1: Extremely low barrier of Entry - You can get your license from beginning to end for about $1,500. This will pay for your background check, your test fees, your real estate school, and even your association fees. you can also get the process done in as little as 30 days. If you're interested in getting your Oklahoma real estate license soon, I put a link at the bottom of this blog and it breaks down the entire licensing process from beginning to end. it breaks down where you go, links to click, how much each step costs, etc. It's your one stop resource for getting an Oklahoma real estate license.

Pro #2: Huge Earning Potential - As a self-employed salesperson, and real estate agent, literally, no one can stop you from making money. If you're in corporate sales or in a company selling products, they can change sales goals, they can change commission structures, etc. However, as an independent contractor and real estate agent, no one can change how much money you make. You can literally make as much money as you can apply your skill set and leverage yourself.

Let's break down the money piece a little bit. The average sales price and Oklahoma is about $250,000, depending on what city you live in. Average commission is about 3% to a real estate agent. That's a $7,500 gross commission on an average sales price home. If you can just have one transaction a month that turns into $90,000 a year in gross commission. If you can grow your business to 3 to 5 transaction per month, that turns into $250,000 to $450,000 in Gross commission per year. Then, of course, you will have to split it with your brokerage through their fees and their commission splits. Lastly, the really awesome thing is, all of this can be done with virtually $0.00 in marketing and advertising. If you're doing the right stuff, you can grow your business entirely organic.

Pro #3: Tax Benefits - There are certain tax benefits are associated with being an independent contractor and being a real estate professional that a regular W2 employee can't access. There's the standard tax benefits, such as writing off your phone, your auto expenses, your internet, and other approved business expenses. On top of that, it makes it easier to become a 'real estate professional' in the eyes of the IRS. This is a special classification that the IRS gives people who can prove they spend 750 hours a year on real estate activities. That equates to about 14 hours a week on real estate activities. This classification allows you to deduct business expenses, losses, and depreciation from real estate across your entire taxable income. Especially if you're an investor, you definitely need to get your real estate license to help you qualify for this classification. I've seen investors go from having a large tax liability to actually getting a refund the next year after they receive this classification.

Pro #4: You Get To Set Your Own Schedule - KINDA. When you're a brand new agent and trying to build your business, you're going to chase deals and money whenever and wherever they are. As you begin to build your skill set and the income in your pipeline, you can start to set more strict expectations, and more strict barriers with your clients. Then you actually start to have a lot more control over your schedule. Once you get good at that part, then you can begin to build a team and leverage your time and your knowledge and start to even make more money with less work.

There's obviously a million great reasons to get into the real estate industry, but these are just four that I thought were worth mentioning. Now let's jump into the cons, and see what kind of negatives you can expect when getting into the real estate industry.

Con #1: It's Going To Be Hard - I can not overstate this enough. This is work. This is a job, it requires self-starters. it requires self-motivation. Most people think they're going to get their real estate license and post on Facebook: "I'm a realtor." Then they're going to get flooded with business. Unfortunately, the reality is 87% of real estate agents quit in their first 2 years. So I know that sitting back and posting on Facebook isn't going to work for most people. I tell all my new agents, there's good news and bad news about being in the real estate industry; the good news is that your income is entirely up to you. The bad news is that your income is entirely up to you. If you want to wake up early and work all day long, you'll do well. If you want to sleep in to noon, you're going to fail. If you treat this like a hobby, it's going to cost you money. If you treat this like a job, it's going to make you money. Hobbies cost money, jobs make money.

You're basically starting your own business and don't expect everyone to come rushing to help you. No one's going to care about your business until you do. And here's a little warning. I want to set this expectation for you: at some point in your real estate career a friend or a family member is going to use a different real estate agent to buy or sell a house. Just be prepared, don't get upset, don't freak out, don't cut them off, don't yell at them, don't blast them on Facebook, just work harder to get their business next time or to get more of your friends and family business. Here is an expectation I want you to set with yourself everyday. Everyday you need to ask yourself: "What have I done to earn someone's business today." If you're just sitting back and posting on Facebook, and you're not learning, you're not growing, you're not sharpening your skills, then why should someone use you? If you're working on growing & learning, you're going to earn that business. And you'll be surprised how many people use you just because they see how much time and energy you're putting into your business.

Con #2: There Is A Ton Of Real Estate Agents - There are over 1.5 million real estate agents across the U.S.. Over 16,000, just in Oklahoma. We know that most of them are not going to sell very much but they're still going to take one or two deals a year out of the potential transaction pool, leaving less for you to have. But remember, those real estate agents who treat this like a job are always going to have enough work. Just because you have one or two real estate agents in your friend group or in your family doesn't mean you can't be successful. If you can prospect properly and build your business properly, there is still more than enough business to go around.

Con #3: We Are In A Recession - I want to spend a little extra time last con. Real estate transactions are down 35% year over year nationally, the down 30%.year over a year in Oklahoma. However, when you peel back the layers a little bit, you see that we're really only down about 10% from our pre-covid19 numbers. When you look at 2016, 2017, 2018, and 2019 averages, we're really down about 10%. We're actually in line with 2016 numbers, which at the time, was a great strong economy and a strong real estate market. the Slowdown that we're seeing right now is an over reaction to the craziness that we saw in 2021 and the rate hikes that we've seen in 2022. When you look at the basics of supply and demand, we still only have about 2 months of inventory on the market in Oklahoma [at the time of this blog post]. A healthy real estate market should have 4 to 6 months of inventory. So as the market cools back down to what we would consider a healthy real estate market, we're going to see prices start to plateau and we're going to see days on market start to rise, but don't let that scare you. What we're really doing is deviating back to the mean. My prediction, and take it for what it's worth, is that in 2023 we're going to see inflation start to curb, then we're going to see mortgage rates start to fall and settle back in the mid 5%'s as we enter a stabilizing rate market. I think buyer demand, especially in Oklahoma, is going to come barreling back. Most consumers are just afraid to enter the market right now because of the rate volatility. The reality is that you might get an approval letter from a bank one month for a 6% interest rate, but by the time you find a home, it might be at 7%. That can significantly affect a buyer's buying power. So once we started to see some stabilization, I think buyers are going to jump back into the market quickly.

The last thing I'll say about the market something that I found funny. The National Association of Realtors did a study years ago that found that 87% of real estate agents quit and their first 2 years. So that means only about 10% to 15% of agents across the U.S. have even been in real estate pre-covid, which means only 10% to 15% of agents even know what a normal real estate market looks like. So between now, and when the market starts to stabilize, we're going to see all these agents that got their real estate license during covid start to freak out and leave the industry. We're really already seeing it and that's what the National Association of Realtors is predicting. They're predicting a 25% Exodus of real estate agents over the next two years.

These are just some pros & cons that we're experiencing in the current market of first quarter, 2023. The good thing about getting your real estate license is that if you're going to work hard, you will always have success, regardless of the market or economic conditions. There will always be homes being sold.

If you're ready to get your real estate license, but you're not sure what to do next, check out our previous blog about the steps to get an Oklahoma real estate license. The first step is to get enrolled in the 90 hour pre-license course. You can enroll in the online real estate course here.