For millions of self-employed real estate professionals, including agents and brokers, one of the missing pieces of the puzzle is a brand-new deduction that few
Should I become a real estate agent?
“Should you” you is a second question after “Can you afford a real estate career?”
Is not for the faint of heart, and the sad fact is 87% of agents fail in their first 3 years. Is harder than most people think and easier when you do the right things and have connections in the right circles and places.
Here is a reality check and some things to consider before burning thru hundreds, if not thousands of dollars:
What’s you Budget?
If you are thinking why do you need a budget you are going to be glad we covered this portion of real estate sales. There are several expenses when you decide to venture into real estate sales. Most can be allocated to three phases of the business:
Just the expense of getting licensed can range in the hundreds of dollars. Every state has its own regulations when it comes to obtaining a real estate license. Most have an hourly requirements that come in the form of a course in addition to filing an application along with the fee for processing.
Once you have completed the course, and the state application is approved, you can continue to take a state exam. Should you pass with the minimum score or above, you will become licensed to sell real estate.
Activation & On-Going:
Unlike a new career where you get all resources soon after being hired, real estate agents actually pay for all the starting up costs out of their own pockets. From business cards to office fees, copies and CRM’s, the dollars can begin to add up. Here is when it’s helpful to stay true to the basics, until you know your way around. Some brokerages can require you to pay monthly fees, or also, what is known as desk fees. Remember to factor all these expenses in your monthly budget.
Remember that as a real estate agent, on commission you will get a paycheck when the sale is funded. Given the typical cycle of a real estate closing, often 30 to 45 days, it helps to account for this time as it pertains to all your daily expenses. Food, House, Car, Cell phone, Utilities, etc. Most agents go into business blinded about this little fact, and 30 or 60 days into it the pressure starts building. On a more positive note, the paycheck on any given sale can be greater than most will make in a month or two.
For anyone transitioning from a salary based position to a commission based model, this can be quite a challenge to get used to. Most brokers recommended you prepare for this by having a couple of months in reserve while you make a sale. Something to think about before jumping head first.
In average, considering you are giving your 100% everyday, prospecting and following up, even if you have no experience whatsoever, based on pure hustle along you are bound to see results in 90 days. The thing is, most people wont stick to it long enough for it to work. Not even seasoned agents. This is often proven true on lead generating methods, when agents try something for a week, and later move along to another shiny new way of doing the same thing, just because: “I tried that and it did not work”.
Yet, I’ve seen agents making cold calls, not the crowd’s favorite approach, I know, but they do it for an entire year, and guess what…they’ve made over $130,000 a year in commissions. Everyone wants the results but not everyone is willing to the work. Whether you like the method or not, is not about making cold calls, rather than the discipline it takes to pick one course of action and do nothing else, until it works.
Licensed to Sell. Now What?
The very first thing you have to accomplish in order to be considered an active real estate agent, ready to sell, is activate your license with a real estate broker or office. In future chapters will share how the agent-broker relationship works and provide you with 25 questions to help you interview potential brokers, before you make a final decision.
Choosing a broker is an important factor in your real estate career, and one not to take lightly, as they will help you make it in this business, or quit soon after you hit a rock wall at full speed.
If you thought getting your real estate license was hard work, wait until you discover what is about to come next.
When you become licensed, there is nothing in the content of the state exam that prepares you for the work you will be doing as a real estate agent. Shocker, I know. This is a reality check most agent have when they activate their license with a broker and suddenly realize how the business works.
The moment you have that license in your hands, the real life training begins, and that is when you get an idea of what it takes to make it in the world of real estate sales. Just like any other profession, there are questions that you want answered. From understanding how to work with clients, to generating and closing business, is all part of getting started.
The learning curve ahead of you can be quite steep, so make sure to allow yourself the time to learn while your business grows. The information we have here for you is designed to shorten that learning curve, with the intention of helping you start your new career on the right track.
Position – Chose your title
From real estate agent, to residential specialist, to real estate consultant, there are several titles you can chose from to stand out from the other million licensed real estate agents nationwide.
In addition, there are designations you can chose to complete, to further your understanding and specialty in a specific area of the market. It could a buyer specialist or a seller representative. Even a certified negotiator. These designations are designed to help you further your education, clients may or may not take this into consideration when deciding whether to hire you or not.
As a licensed real estate agent, you are first and foremost, self-employed. This means you set your own schedule and hold yourself accountable to the same. Just that along can prove your career’s biggest challenge, as often phone calls and distractions get in the way of whatever you are supposed to be doing.
As an agent, you will assist clients with their real estate needs, whether is buying, selling or renting a property. The broker and office you choose to partner with will often help you with the basics of getting started, depending on what they have to offer their agents.
Industry-Real Estate Sales
Since you are in the business of real estate sales, this makes you are a salesperson. As simple as that may be, most real estate agents fail to understand this key fact. Is incredible how many agents today don’t understand that their business relies on their ability to sell. Your first task is to learn how to sell as if your career depended on it, because it does.
As repetitive as the word sales maybe to some, the fact is the sooner you understand the secret language of sales, the better. What to say, how to say it and when to do so.
To make it in the world of sales requires training, technique, attitude, and at the highest preforming levels, the mastery that comes with endless repetition. Knowing the business is only a small percentage of what makes a good real estate agent great. I can think of no better example to illustrate this than some veterans in the industry that will gladly tell you they work a lot, they know the business inside and out, yet, they fail to produce enough to thrive and be proud.
In contrast with the example above, here comes the rookie that knows nothing about the business, takes sales trainings, practices presentations daily, seeks help from those that have walk the path before him, works hard being productive and not busy, managing to sell 20 homes or more in his first year.
The veteran’s reaction: The kid just got lucky!
To which I always reply: Luck looks a lot like hard work.
Many associate having a position in sales to being a pushy sales person that will do anything to get a sale. Mostly because they have had experiences and come across pushy sales people that fit that description. We all have at some point in our lives.
Buying a new car or a used one.
A cell phone.
Opening a bank account.
It all comes down to the experience we have as customers. Buying a used sales car down the street can be a completely different experience than buying a BMW at their signature showroom. One of these two will greet you kindly and smile. They will offer you a cappuchino or a hot chocolate. The sales person will be wearing a suit, and while being friendly, will not hover the entire time you are admiring the car. I am sure you just guessed which of the 2 car dealerships this one might be.
There are great sales people, and then, there is the rest. You chose the one you would like to be, and the experience you will create for your clients.
You receive compensation once a transaction closes, and not a minute sooner. Is incredible how many agents today don’t understand that their business relies on their ability to sell. Your first task is to learn about real estate and master the art of the sale as if your career depended on it, because it does. If there is anything you take from this book, let there be this.
As repetitive as the word sales maybe to some, the fact is the sooner you understand the secret language of sales, the better. By this I mean what to say, what tonality to use and when to say it. As you progress in your career I am sure you will find great training and coaching programs that will help you in this area, but for now, so you can understand the basics, one of the basics of sales for real estate agents are scripts.
Here is one of this industry best kept secrets:
Scripts are awesome.
Most agents reject scripts.
Give scripts a chance.
They will change the way people react to you, and in case you are wondering, all the top producing agents do it. They just know it so well that it comes across as a typical conversation to you and others.
If you are thinking: “I don’t want to sound scripted” then master those words until they become second nature.
Memorize them until you are bored out of your mind, and you don’t sound scripted. Like anything in this business, is the practice that makes the master, not the talent.
Just as an award wining actor will learn his lines and act them in from of a camera, and wow large audiences, scripts have the same role. They are designed to help you ask the important questions, lead the client to a decision and mostly, take the guessing out of presentations. Leave the improvisation to the professional comedians.
Scripts will help you speak better to potential clients and prequalify every person. Those conversations will turn into appointments and hopefully sales shortly after.
Schedule – You are the Boss, Boss!
No more wait to get vacation time approved. Before we go any deeper on the subject, I can spot a big elephant with the corner of my eye. That elephant is wearing a shirt that reads: Real Estate means I work seven days a week!
Fair disclaimer: I have to admit, I love what I do, so I don’t mind the hours. I do have some days off, as well as the occasional afternoon when a showing gets cancelled last minute. There are times where the rest of the world reminds me what time it is, because I am working away in my home office or doing research, the music is going in the background and time just disappears. This is just my experience and how I chose to set up my business, your experience may vary depending on your market and the clients you work with.
The thing is, at the initial stages of your business, like anything else, you might put in the extra time to learn fast and get more business. As time goes by and you master your craft, you don’t have to work crazy hours. Remember you run a real estate business, not an emergency room.
There is no need to be on the phone 24/7 and don’t mistake activity with progress. Like many other businesses, you should have working office hours. However tells you any different, maybe they haven’t learned to manage clients expectations just yet.
I like to think that regardless of the client’s urgency, as professionals, we should get the job done, efficiently and on a timeline that does not require you to become a real estate vampire and works nights and hibernates in the office during the day.
In the initial stages of a transaction is normal to work back to back to secure a property for your clients, once the transaction goes thru the next steps, most of the heavy lifting can be done Monday thru Friday, 9 am to 5pm.
After all, you, like the clients you represent, have a life after work. Is only fair to both of you that any work related to the transaction is handled during office hours. Often, when I say this to other agents, they give a look that could only resemble the one a human will have after an alien encounter. I always remind them to keep in mind the lender, the title company, real estate attorneys and major banks have working hours as well. So why shouldn’t they?
On the other hand, making your schedule and sticking to it is crucial. Considering you get paid on commission and at closing, the phrase: “time is money” could not be more true. Be respectful of your time and others.
At what time do you plan to be at the office making calls and actively pursuing leads?
Do you have some training scheduled as well?
Job Description – What does an agent do anyways?
As a real estate agent, you will assist clients with their real estate needs. The clients you will come across can all be split in the following categories: Buyers, Sellers, Tenants, Landlords and Real Estate Investors. The needs of each group are entirely different, and as you learn and master your craft, you will learn in depth more about each group.
In short, here are some of the work involved for each category:
Buyers: Prequalify, find properties matching the client’s desire and budget, show homes and negotiate the best price. Draw the contract. There are also inspections, loan approvals and title follow up during the time line of the contract.
Sellers: Prospecting, evaluate the home, listing presentations, marketing, showings, open houses, secure a buyer and close the sale.
Tenants: Find and show properties in their criteria. Draw and negotiate a lease.
Landlords: List the property for rent, review the leases, deliver the tenants deposit and often, assist the property manager when needed.
Investors: Evaluate and locate potential properties, evaluate repair costs, procuring and negotiating sales.
Knowing everything there is to know about every single group mentioned above is a lot to take on, all at once, this is why many agents pick one group of clients and specialize on it.
When you are starting out, is a lot easier to become a specialist than to tackle all the above all at once. Give yourself the time to learn and grow. Being a specialist in a particular area also provides a great deal of value to clients that much rather prefer a professional in that field over a jack of all trades and a master of none.
Compensation – Let’s talk money.
So far, we have covered a lot of advanced material. You may not know it, but you already know more than many agents with 3 to 5 years of experience in the industry. In case you were wondering when we were going to get to the money part, the wait is over.
As much as the income potential of a real estate career can be promising, there are those who struggle to make a living while other’s are making a killing.
There are basically three income buckets active agents can fall into.
Bucket 1: Not enough sales
Bucket 2: Getting by or comfortable
Bucket 3: Producing at a high level
Real estate agents, as self-employed commission based individuals, get paid once a transaction closes. Every commission you make is made payable to your office, where the broker then pays you according to your negotiated split.
As an example, here is the math breakdown on a sales price of $250,000:
If the commission offered is 3%, which equals to $7,500.00. From that amount you have to deduce any office desk fees and broker percentages. Brokers splits vary per offices, and we will cover more on the subject in upcoming chapters, so you can better understand how the border-agent dynamic works.
Keep in mind when you receive a commission, often there are no taxes deducted, meaning you might be given a 1099 form to pay taxes at a later time. Remind yourself to save for when tax season comes knocking at your door.
Depending on your market, you may come across salaried opportunities for real estate agents. They are rare, but do come around every now and then. It is common to see this when working on a team environment. They often can offer a base salary plus a commission based on the yearly sales. This opportunity can a great way to test the real estate waters and decide if this business is a good fit.
Another salaried agents in the business are those working for a developer. They work on the building site, selling custom homes or condos. They are often offered a salary plus a bonus based on sales. This is one of those one in a million type of opportunities that don’t come around often, but if it does come around, give it your fairest consideration.
This is the type of position agents dream about, and if you have ever visited a custom home showroom, you will get to see why. The product you are selling, in this case, a brand new home, is appealing to the majority of the homeowners. The builders pump thousands of dollars into marketing, generating plenty of leads to chose from.
Potential buyers come in constantly, looking to preview the wonderful homes. This means the buyers come to you, there is no need to actively prospect for clients, a recurring paint point for most realtors. And as a final note, some developers are a one stop shop, meaning they also offer an in-house title and mortgage division, making it even easier to follow up and close sales on time.
Looking Professional – Something to Keep in mind
As common sense as this subject may be, you will be surprised to see how many agents completely ignore this, and it can hurt their business big time. As you begin interacting with other agents, you will notice how some chose to dress the part while others don’t even bother with the subject.
Dress Code: You may want to check with your office once you have decided on a broker. As a rule of thumb, think professional rather than casual. Dress to impress clients and colleagues, we rarely have a second chance to make a good first impression.
The thing is, in any other line of work (unless you are a lifeguard or a personal trainer at a gym) you are expected to dress accordingly. Imagine for a second you visit a law office or a doctor’s office…and you are greeted by an individual wearing fancy sweat pants or fitted clothes that are two sizes smaller than they should be, accessorized by flip flops.
What would you make of it?
At the law office you are probably expecting the men to wear a nice suit, or at least, dress pants and shirts, with a tie. The women would probably wear a dress and closed toe shoes. Even a dress skirt and a blouse or shirt.
At the doctor’s office, you would probably picture the staff wearing scrubs, and comfortable sneakers, since they walk around a lot and work long hours.
The point is you, as a customer, have expectations of the professionals you hire. You have an idea as to how they should behave, and how they should dress. The real estate industry and the professionals in it should be held to the same standards. Almost forgot…hot and sticky weather is never an excuse.
Never Forget: Another staple in the wardrobe of any respectable real estate agent is a briefcase or portfolio, where you can have everything you need on the go, such as your iPad or tablet, brochures, business cards, pens or a notepad. The one thing not forger is always carry a pen with you. There is nothing more embarrassing that when you are closing a sale and there is no pen to be found to get a signature on paper.
Depending the area you decide to work in, there may be a commute involved. Often, clients will choose to meet you at a property rather than have you drive them there. Regardless of what the case may be, you will need a reliable form of transportation that won’t leave you stranded in the middle of the road.
Some years ago, it was common for real estate agents to drive their client’s around from showing to showing. It can come in handy to build rapport and get valuable feedback about the properties in question.
Today, many client’s will chose to either meet you at the property, or drive themselves while you sit on the passenger seat. However, if you are comfortable inviting clients to ride with you, be conscious of how you drive. When it comes to driving, what is your style? Are you more like Fast and the Furious, Tokyo Drift, or more like Driving Miss Daisy? If you were a client, how you like your agent to drive? Something to think about while you asses your driving skills.
Another sensible subject about being responsible for the safety of others is ensuring your car insurance has the liability coverage needed. Should the unfortunate happen, such as an accident or theft of personal property, what type of coverage can you client’s except?. If there is one thing we know in real estate, is to prepare for the unexpected.
Having sufficient liability coverage will help you work with peace of mind and focus on what matters.
Hope this helps,