Becoming a real estate agent can be rewarding financially, socially, and skills-wise. However, it involves a number of risks all aspiring agents must be aware of. Your experiences can be different from other people’s when it comes to success and failure in the real estate business; in any case, you have to seriously take into consideration the pros and cons of starting a career in a field that experiences lots of ups and downs.
To learn more about the rewards of becoming a real estate agent, visit Mashvisor to find all the information you need to know about the subject. In this article, we are going to address the risks of becoming a real estate agent.
Risks of Becoming a Real Estate Agent
The risks of becoming a real estate agent are mainly divided into three groups: the housing market status and the stress that results in it, clients’ legal suits, and safety threats for the agents and clients. Below are a number of risks that you should pay attention to as a real estate agent:
Housing Market Unpredictability
Before becoming a real estate agent, you have to accept and know how to deal with the fact that the housing market – be it a buyer’s market or a seller’s market – is ever changing. High interest rates, inconsistency in money lending for real estate investors, and people not being ready to make the decision of buying a house affect the real estate investing process, which also means that real estate agents might at time have no deals to close. This point leads us to the next risk.
Related: How Much Do Real Estate Agents Make?
Real estate agents stress stems from different sources:
1. Lack of Sales Due to Housing Market Unpredictability
Knowing that people aren’t always interested in or capable of buying houses or owning investment properties can be stressful for the real estate agent whose career relies solely on showing costumers properties for sale. In addition, even if real estate agents are already working on a deal, most agents don’t get paid until a deal closes.
Agents do not have guaranteed paychecks at the end of the month, and with that comes a lot of stress. A deal can go wrong and be cancelled at any minute, which leaves the real estate agent hanging on a thread most of the time.
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2. Unrealistic Expectations of Sellers
Some sellers have unrealistically high expectations when it comes to their real estate properties’ value. Therefore, becoming a real estate agent includes the task of educating your client, the seller, in order not to be stuck with a dead end deal.
3. Commissions Reliance on Home Prices
Because commissions depend on the sale’s price, commissions are low when home prices are low.
4. The Number of Real Estate Agents
Upon becoming a real estate agent, you will be bound to compete with a huge number of real estate agents. This large number of agents can result in you getting fewer deals than you expected.
5. When the Agent Is Also a Real Estate Investor
When the real estate agents have their own real estate investments, their stress is doubled. Any recession in the real estate market can hit the real estate agent twice: as a landlord/investor and as an agent.
In an article posted a few years ago, Business Insider, reported that real estate agents rank 10 on the list of the 19 jobs where you’re most likely to kill yourself. This is a testament of how stressful the job can be.
Clients’ Legal Issues
Due to the big decision involved in buying a house, clients usually want to get involved in the smallest details, so not to get tricked into buying a bad property. Therefore, real estate agents should make sure that they keep their clients well informed at all times.
Problems and even lawsuits arise with clients when agents fail to inform their clients of property-related problems. Clients can sue real estate agents because of inaccurate statements or omitting information regarding the sale and the property. Moreover, real estate agents need to make sure that procedures like estimating a house’s value or conducting a house appraisal are done fairly and properly, or they will end up facing a lawsuit if the client thought that he/she spent money on a bad deal as a result of the agent not doing a good job.
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It is important for agents to acquaint themselves with the National Association of Realtors’ Code of Ethics and Arbitration Manual, in order not to face such results.
It is also worth mentioning that the realtors’ Errors and Omissions Insurance covers lawsuits costs when agents are sued over information inaccuracy regarding the property in question.
The third group of risks related to becoming a real estate agent entails safety. Agents, who are not professionally trained to defend themselves, are exposed to danger on a regular basis when they’re doing their job. Below are major risks that real estate agents are involved in:
1. Physical Injuries to the Agent or the Client
When a real estate agent is showing clients a house, there is a possibility that the client or the agent himself/herself might get injured because of any stairs damages or slippery floors, for example. In this case, the General Liability Insurance can cover the client’s treatment expenses, and any possible lawsuit costs.
To be safe in the house you’re trying to show to clients, you need to check the house beforehand and make sure it is safe for a tour. Also, it is important that you let someone else (a colleague, or a family member) know where you are as it helps in cases of disappearance, attacks, or injuries.
2. Being in the Same Car with Complete Strangers
Becoming a real estate agent includes getting in the same car with potential buyers who are complete strangers to you. The risk involved is getting robbed or your car getting stolen, in addition to being physically attacked by your clients.
To avoid such results, agents should ask their clients to drive separately. In case that it not possible, real estate agents should always be the drivers to ensure their safety by being in control of the car. Also, agents should not park in places away from the main road or away from occupied houses. Being close to other people in the area is always a better choice in case you were attacked and needed to run away as fast as possible or attracting people’s attention.
3. Being in an Empty House with Complete Strangers
Becoming a real estate agent entails visiting empty houses with strangers all the time. For criminals and stalkers who pose like clients, this is the perfect opportunity to attack, harm, or harass an agent.
Agents better visit houses during the day to better ensure their safety. It is also preferable to have another colleague with you while showing a client a house.
Other safety measures include:
- Asking clients for identification.
- Establishing a special form for clients that includes: contact information and a copy of the ID or driver’s license.
- Meeting clients in the office first. This will prevent clients from trying to harm you later, because they know someone else can identify them.
- When showing a client a house, avoid walking ahead of them or getting into confined places, like basements, with them.
Becoming a real estate agent includes many risks. It is important for people who want to indulge themselves in this career to understand all of those risks beforehand. To avoid all the possible risks, real estate agents need to take the right procedures and safety measures. For more information on this subject and other real estate related topics, please visit Mashvior.