Rebounding market is no guarantee of riches for potential agent
Home sales in most neighborhoods continue to rise, but it’s not an automatic ticket to millions for folks who want to get a real estate license.
Q. The real estate market in our area has really picked up, and I have been thinking about getting a real estate license so I can sell homes to supplement the income I get from my nine-to-five job. I recall you once wrote that you sold real estate for a living. Why did you stop? What do you think of my idea?
A. I worked as a salesman for several years, and made a pretty good living at it. I had to give up my license, though, when I started writing about real estate, in order to adhere to the newspaper’s conflict-of-interest rules — my editor (understandably) worried that readers might be skeptical of the advice in this column if I had a vested financial interest in the answers I provided.
Your idea to earn a license of your own is sound, but you have to approach it with your eyes wide open.
First, you likely will need to spend dozens of hours attending a real estate licensing school or visiting one online to pass your state’s exam. That probably will cost you several hundred dollars, and it can be especially difficult because you already have a full-time job and, perhaps, a family to raise.
Even if you pass the exam on your initial try, you will have a lot of startup costs. Many brokerage firms require new hires to pay for business cards and other marketing materials and may even charge “rent” for the desk that you will occupy to help pay for the company’s telephone bills and administrative and other overhead costs. And remember, all that money will be coming out of your own pocket before you get your first sales-commission check.
Most agents also pay hundreds or even thousands of dollars each year for an “errors and omissions” insurance policy, which covers almost everything if the salesperson is sued for messing up a deal. You can then expect calls from nervous buyers or sellers at all hours of the day or night: I’ll never forget a phone call I got while at the hospital, barely minutes after my first child was born, from a buyer who had contracted a serious case of “cold feet” at 2 a.m.
I had to take the phone call because we needed to close the deal to pay for the medical bills. The brokerage firm that employed me, like many others today, didn’t offer medical insurance.
So, if you’re willing to tackle these and other issues, how much will you make? The National Association of Realtors says its 1.05 million full-time and part-time members earned a median income of $43,500 in 2012 (the latest results available). That means half made more than that amount and half made less.
Q. About a month ago you wrote that one of my childhood heroes, Michael Jordan, pulled his mansion near Chicago off the auction block because no bidders would meet his $21-million asking price. Do you have an update?
A. Yes. The Basketball Hall-of-Famer put his 56,000-square-foot manse in the swank Highland Park suburb near Chicago back on the market in early January for $16 million, a $5 million reduction from his proposed auction price just last month and barely half of what he offered it for when he first began marketing the home two years ago. Its most notable features include a regulation-size indoor basketball court, a putting and chipping green, nine massive bedrooms and 15 bathrooms.
Though the home is again up for sale, don’t expect to pop in at a weekend open house anytime soon. As with many multimillion-dollar listings, prospective buyers must first prove they have enough liquid assets to pay for the property in cash before they can view it or make an offer.
Q. Some guy from our local water company showed up at our front door last week and said he needed to inspect our backyard for a possible water leak in the municipal pipes. I said “No,” but then he threatened to call the police because the water company has an “easement in gross” on our property. I called the desk sergeant, and he said the water company dude had the right to enter our backyard, even though he didn’t have a warrant. Can I fight this?
A, You can fight the inspection request, but you probably won’t win.
An easement is a legal right to use someone else’s land for a specified purpose. The most common easements involve public utilities, such as water or electric companies, which allow them to install or repair pipes under your yard or string power lines over your house.
Most easements cannot be removed or modified, even when you eventually sell your house. Your future buyer also will have to provide access to the property for the utilities, in part because they serve the larger “public good.”
The easements are permanently attached to the deed, and must be honored by all future owners.
Real estate trivia: A worldwide study conducted by Dartmouth University and other organizations found that the U.S. and other modern nations with the highest homeownership rates also tend to have the highest unemployment levels, in part because owners are less willing than renters to move in order to get a new job after losing their old one.
Ÿ For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2013, Cowles Syndicate Inc.