I have many new prospective agents interview with me while they are in real estate school. I don't think they realize that it really does take a lot of money and time to survive in this business. The post below really gives you an idea of exactly what is needed to get started and stay afloat, then maybe successful. I'm happy to mentor agents that want to work hard and are technology savvy. Come interview with us if you are ready.
A REAL ESTATE AGENT IS A COMPLETELY UNIQUE WAY TO EARN AN INCOME!
In an economy of employers and employees, only the real estate industry functions as a conglomeration of self employed individuals under the supervision of an employing company.
Inspired by a thoughtful article by Karen Rice, Why Some Agents Fail, responding to a RealtyTimes article by a writer who, IMO, has little understanding of the real estate business and attempts to make the success or failure of licensees all about "feelings". Karen attributes the failure of many agents to lack of training. I agree but I believe it goes much farther. I believe that agents often fail simply because, like learning to swim, if agents are simply forced to jump into the deep end of the pool, how many would learn to swim on their own?? Even deeper, I believe that most new agent failures is due to the lack of MONEY. From personal experience, I know that I was shocked, shocked that my new broker didn't hand me a pile of buyer or seller leads when I joined his office with a mega company.
FACT: A new agent is beginning a new business with NO BUSINESS.
FACT: A new agent must advertise their services which costs MONEY.
FACT: A new agent must pay their own expenses which costs MONEY.
WHERE DOES THE MONEY COME FROM?? How many new agents understood that, to be successful in a new business, they needed CAPITAL, significant savings or an ongoing source of income (retirement, spousal, other employment) other than from their new real estate business.
Only in the real estate business are new agents expected to succeed or fail with a minimum of training and supervision. Many agent tout the "training" provided by their individual companies. Yet, most new agents in those companies would have been long dismissed if their retention depended on their production as in most employing companies.
The Independent Contractor Myth. The very term self employed itself is misleading since it is only for taxation purposes. Although denied by many employing brokers who fail to exercise supervision over licensees over whom they have license law responsibility, the company holding that license is the employer. In fact, when there is no written Independent Contractor Agreement between an employing real estate company and a licensee (agent), that employing company should be treating that agent as they do any non-licensed employee of the corporation, meaning:
Paying them an annual income,
Providing access to health insurance,
Regular hourly pay up to 40 hours and
Overtime for work performed over 40 hours.
What does a new employee (not real estate) receive as a new hire by a company providing a service?
1. Money on a regular basis with deductions for F.I.C.O, etc.
2. A description of their duties as an employee of that company (doesn't have to be in writing).
3. Training to produce a desired result in their job.
When a person is hired by a company to fill a job, they are joining an ongoing business and are paid from day one to perform duties for which they were hired.
ENTER THE REAL ESTATE AGENT. An individual joins and completes a course of instruction to prepare them to take the examination to obtain a LICENSE TO SELL REAL ESTATE. Once the individual passes the real estate examination, they are eligible to receive a LICENSE TO SELL REAL ESTATE. However, that LICENSE can only be used after they are HIRED BY AN EMPLOYING REAL ESTATE BROKER OR COMPANY. Once hired and employed, their license is held by the employing broker or company.
WHAT DOES A NEW REAL ESTATE LICENSEE RECEIVE? Does that newly hired real estate agent (license) then receive any of the benefits of an employee?? Do they receive a regular paycheck? Do they have access to the company health insurance if any? Do they have regular hours for which they are paid an hourly wage and over time for more than 40 hours? HA!
WHERE'S MY CHECK? Where is the paycheck at the end of the first pay period? HA! Until that new agent has managed a sale, there is no pay period. Most new agents have not recognized that their "pay period" is usually:
Marketing your services (yourself) for days, weeks, months to real estate consumers until there is a contract of sale for a buyer or seller client.
Managing the contract of sale, which (for resales) may be 1, 2, 3 months until the projected settlement date,
Receiving your commission check from the employing broker/company. May be 1-14 days depending on the company structure.
THAT FIRST COMMISSION CHECK may be 2-6 months from the date your were first hired by your employing broker.
WHERE IS THE HARD COLD CASH TO JOIN THE REAL ESTATE INDUSTRY? Over the years, I've interviewed many newly licensed real estate agents. I would estimate that only about 30% of them were financially prepared to start a new real estate business. They were, like a salaried employee in any business, just looking for a job. Further, I would estimate that fully 30% of these newly licensed agents had the funds to join the MLS, pay the Real Estate Association dues. Even with spousal support, it takes HARD COLD CASH to be a new real estate agent.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988,
serving home buyers in MD and Northern Virginia.
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