Real Estate Jobs

Attorney vs. Realtor: Who Makes More $$$?

It’s All About the Benjamins, Baby….

-Puff Daddy

Before I switched to full-time investing, I labored away as an attorney and later as a Realtor. Ultimately, neither job was a good fit but I developed skills in both professions that are invaluable for my investing career. Plus, I made a good amount of money to fund my initial investments. Let’s go over my personal experience in both roles and then compare the jobs head-to-head.

This Is A Story, All About How…

I Am The Law!

When I was young, dumb, and broke, I made a very foolish decision… I went to law school. I undergrad I majored in unemployment (i.e., sociology) so law school felt like my only real option. I based my decision on one reason and one reason only: to be filthy rich! It didn’t go quite as planned…

At the beginning of my legal career, I made a paltry $60k a year. Luckily, I worked my way up and made about $200k with bonuses toward the end of my career. Notably, I went to a T14 law school and worked at an AmLaw100/Biglaw firm so I was one of the lucky ones. Nationally, the median salary for attorneys is $127k with a range of $85k-$190k between the bottom and top 25%. That’s a pretty wide margin so results vary. I know plenty of attorneys who couldn’t find law jobs after graduating and took jobs outside the industry (often making less). So don’t be fooled into thinking that all lawyers are rolling in dough.

Realtor Life: Always Be Closing

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Once I finally left the law, I became a Realtor. I already had my real estate license so it made sense. The allure of being an agent is obvious: you get to be your own boss, you have more control over your time, and you become filthy rich! What’s not to like? Well, memes have taught us that reality doesn’t always live up to expectations. Turns out, to make the big bucks as an agent, you need multiple bosses (i.e., clients) and have to work a lot, a lot. I put in more hours as a Realtor than I did as an attorney.

At the same time, your earning potential is huge. In markets like California, each closing nets you $10k+ and you can close as many deals as you want (talk about “eat what you kill”). It isn’t easy though. Like my legal career, my income started slowly as a Realtor. In the first six months, I made a measly $25k. But, the legwork I put in over those six months catapulted my business the following year. In fact, I made slightly more than I did as an attorney in my first full year. The next year, I made significantly more in the first six months (I took a “sabbatical” for the rest of the year for personal reasons). Skeptical? Honestly, I didn’t think it was possible to make this much this quickly either, but I have receipts.

Again, these results are not typical (we different!). The median gross income for rookie Realtors (2 years or less) is about $9k and $85k for Realtors with 16 years or more experience.

Let’s Get Ready to Rumble!

Being a lawyer and being a Realtor have their own pros and cons. Let’s take a look at some important factors to consider, side-to-side, to help you decide which is right for you.

Getting Started (Barriers to Entry)

Attorneys and Realtors both have licensing requirements so there is prep work you need to do to start. The barrier to entry for an attorney is very high. It takes about seven years of higher learning (4 years in undergrad and 3 years in law school) to get a law degree unless you’re a whizkid and knock it out faster. Law school is also extremely expensive. On average, attorneys are saddled with $165k in student debt when they graduate. I was fortunate to come out of school without any student loans so I had more flexibility in my career choices because I didn’t have that huge debt hanging over me. The irony is that if you are successful, you most likely won’t be eligible for student loan relief. Finally, you have to take the bar exam which is not easy by any means (only 34% of California test takers passed the most recent exam).

The educational and testing requirements for a real estate license are nothing in comparison. You only have to take a few courses (45 hours in total) that you can take at home. The California licensee exam also has a pass rate of around 50% and is administered year-round so you can retake it multiple times if you fail (the bar is only administered twice a year).

Pay Structure

Lawyers are typically paid a base salary and eligible for bonuses if they meet their annual billing requirements. On top of that, they can earn additional bonuses if they bill more than a threshold amount of hours and/or revenue, or bring in their own clients.

On the other hand, Realtors usually don’t have any guaranteed income. Most of them work strictly on commissions through closed sales. Further, Realtors typically split anywhere from 5% to 55% of their gross commissions with their broker unless they are their own broker. Most agents are “business owners” so they also have to cover their own expenses. I have gone months without seeing a penny coming in and money still going out for expenses. That can be terrifying and unsettling. It’s no surprise that 87% of agents leave the business within five years.

Even though there’s no floor, there’s no ceiling either. You can literally make unlimited money as an agent and hire employees to scale your business. If you are risk tolerant and can stomach that uncertainty your earning potential as a Realtor is huge.

“We Play To Win The Game”

We all have an image of what it’s like to be a lawyer or real estate agent based on what we’ve seen in movies, shows, or through people we know. But the actual practice rarely aligns with what we think about it. It’s usually a glorified version that focuses on the upsides and ignores the pain. In reality, both jobs require a lot of work, dedication, and gumption to succeed.

Even though the money was good for being a lawyer, I hated it. I spent most of my days buried in paper, reading legal opinions and codes, and writing court briefs. For the first few years, I rarely went to court for anything other than scheduling conferences. This wasn’t such a bad thing because I hated public speaking (like most people do). But, I still had to give talks at conferences, lead webinars, and teach college classes to bolster my resume. None of this is particularly exciting and becomes soul-sucking fast. I was fine being a sell-out but I just couldn’t stand other attorneys. Lawyers are some of the most arrogant and obnoxious douchebags roaming the earth. And guess what… your boss happens to be a lawyer. Managing attorneys are notorious for being “yellers” and demeaning junior attorneys. Luckily, I never had these types of bosses so I stuck it out for seven miserable years before I finally built up the courage to leave.

Being an agent isn’t all roses either. Most clients work during “regular” work hours so you have to work a lot of evenings and weekends. And you aren’t “off” during regular work hours either. When I wasn’t with clients, I managed transactions, followed up with leads/clients, and marketed my business. I had no experience in these areas so I needed to learn a bunch of new trades. I had to learn how to market myself and put myself out there on social media so I wasn’t a “secret agent.” I had to get comfortable with sales. I had to study the form contracts–I’m a licensed attorney they took me a while to understand. I had to learn how to close the deal after opening escrow. I had to learn to manage my finances to anticipate expenses and taxes (there are no tax withholdings so brace yourself when you see your first tax bill). Not to mention, Realtors are pretty crappy to work with too. Maybe I’m the problem????

And The Winner Is…

The Choice is Yours

It depends… how about that for a typical lawyerly answer (sadly, this is the only way I put my degree to use)?! Which is better depends on your personality and personal preferences. Are you a self-starter or do you direction from a supervisor? Are you comfortable wearing a lot of hats or want to focus on one thing? Do you like public speaking or prefer individualized face-to-face conversations? Do you prefer the security of a paycheck or uncapped earning potential? It’s different strokes for different folks.

One final food for thought… you have other options. For some reason, a lot of people gravitate towards the law or real estate to make a lot of moola (that’s how I got tricked in). Here’s the thing, you can make great money doing anything as long as you have the right mindset. Don’t believe me? A janitor in San Francisco made more money than me! No matter what you do, you’re going to need to put in a lot of time to succeed. Why not make it something that doesn’t make you miserable? The choice is yours so choose wisely friends!

Thank you for reading!

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