Real estate agent: The job can be a killer
To those not in the industry, real estate agents may appear to have easy jobs. They ride around showing fabulous houses, work a flexible schedule and sometimes land big commission checks.
But the reality is that real estate agents have a much harder job than we can imagine. Uncertainty about their income, a lack of benefits, a decline in housing values and the risks associated with meeting strangers in vacant homes can make real estate a stressful and dangerous occupation.
High stress environment
For starters, working strictly on commissions is stressful enough. Paul Wyman, owner of the Wyman Group real estate firm in Howard County, Ind., and a regional vice president of the National Association of Realtors, says agents don't have a "guaranteed paycheck" every Friday. And most don't earn a dime until a sale closes. There can be a lot of money riding on each transaction, he says.
"You end up counting on a deal and if it falls apart for any reason, it can cause a lot of stress for the family," says Wyman.
Brad Knapp, senior vice president of Henkle Scheuler Realtors in Lebanon, Ohio, says whether they're working independently or for a large firm, agents often act as their own small business. While that can have some perks, it often has downsides like a lack of health insurance, sick time or paid vacation. For most agents, a lot is riding on every sale, he says.
The job is so stressful, in fact, that Business Insider reported that "real estate sellers are 1.38 times more likely to commit suicide than average."
Home prices vs. commissions
Furthermore, the average median income for Realtors has trended downward in recent years, falling from $52,200 in 2002 to $34,100 in 2010, according to the National Association of Realtors. However, the NAR did report that the median income for Realtors increased $800 from 2010 to 2011.
Agent commissions vary by region and firm, but typically average 5 percent to 6 percent nationwide, according to the NAR. A typical agent may only sell a half dozen properties per year.
"I don't think the general public appreciates the fact that real estate agents will show so many homes and do so much work but don't get paid until they're at the closing table," says Knapp.
Stresses exacerbated in down housing market
Agents have been hit especially hard by the recent housing downturn. Since commissions are based on a percentage of the sales price, commissions decline when home prices decline. According to the latest numbers from the S&P/Case-Shiller Home Price Indices, home prices have fallen approximately 34 percent from their 2006 peak.
The rapidly changing real estate market can also create a disconnect between some sellers, homebuyers and agents, says Wyman. Many sellers have unrealistically high expectations when it comes to the price they can realistically get for their homes. Wyman says agents today have to spend more time "educating" sellers on the real value of their home.
"There are sellers out there that think their house is the exception and buyers have been conditioned to give lowball offers. It's a challenging market and can cause real stress," says Wyman.
Furthermore, Wyman says because many agents have their own real estate investments, either in flips or rental properties, the downturn has been especially hard.
In past years, real estate agents have entered and exited the profession as the housing market fluctuates. But in the past few years, Wyman says the housing market has fallen faster than agents are leaving the industry.
"There has been increased competition because there are just more Realtors and fewer sales," says Wyman.
Job can have dangers
In addition to purely being a stressful occupation, working in real estate can also be quite dangerous. Agents must often meet strangers alone in vacant houses and show properties in all types of neighborhoods.
Criminals have posed as would-be buyers to lure unsuspecting agents into vacant homes and have committed theft, robbery, assault and rape. Some have even been murdered. According to the Bureau of Labor Statistics, 63 people employed in real-estate-related fields (this includes property management and maintenance personnel) died on the job in 2010. Of those deaths, 23 were murders.
Safety has become such an important issue in recent years that the NAR has outlined tips and guides to help Realtors stay safe. The 2011 Realtor Safety Report examined a year's worth of attacks on Realtors, and the REALTOR Safety program features a five-step plan for Realtors to stay safe while conducting open houses.
While the chances of being victimized are still relatively small, it can add an element of stress every time an agent meets with a new potential buyer.
"You have to constantly be aware of the potential for danger. There's an added element of stress and potential danger when they get a call to meet someone at a vacant house in a questionable neighborhood," says Knapp.
Craig Guillot is a business and personal finance writer from New Orleans. He covers insurance, investing, real estate and debt. His work has appeared in such publications and web sites as Entrepreneur, CNNMoney.com, CNBC.com, Bankrate.com and Investor's Business Daily. He is the author of "Stuff About Money: No BS Financial Advice for Regular People."