So, you think you want to be a real estate agent?

I know people outside the industry sometimes see the job of a real estate agent as being an easy, "get rich -quick" business. Perhaps the job looks easy to somebody on the outside looking in, especially when a transaction is handled by the ultimate professional who often does not let emotion get in the way of doing business. However, the true professionals in this business roll with the punches and hold back on their frustration.

The fact is - only 20% of new agents renew their licenses after the second year and many drop out of sight long before their licenses are up for renewal. What does that say about the business?

When I was entering the field and these statistics were presented by an instructor, I quickly glanced around the room of 30 students and wondered which of them would survive with me - I was determined to "make it"!   

During the boom years of real estate, wanabee real estate agents popped up out of nowhere. As property values increased, so did the number of people applying for real estate licenses. I was told by my broker today that our local MLS advised him that many agents did not re-apply as members last month when semi-annual fees were due. I wasn't surprised.

I've been wondering just how many people would soon fly the coop. Competition was becoming fierce, as there were fewer and fewer sales. Indeed, only the strong will survive in this business NOW - where income is based on commission sales. I know of many agents who are seeking jobs which involve regular paychecks!

For the newcomers who thought this was the ticket -  goodbye! I might seem unsympathetic, but I resent those who ever thought my job was easy. This business is not as easy as just putting a sign in the ground!

Don't get me wrong. I mean no disrespect to anybody who enters into the real estate profession with a passion to learn the ins and outs, as long as they intend to work hard and understand that they won't get rich, fast. They probably won't get rich at all.

So you think you want to be a real estate agent?

Let's start by rolling up those sleeves....

First and foremost, you must have the personality to get along with others and be prepared to tolerate other personalities who will be ready to challenge you - including your own clients. This is a business built on long term relationships. Don't try to compare it to retail sales, where at the punch of the cash register button the transaction is completed and you are done. A good agent has to be prepared to go along for a very long ride in this market and must be patient, caring and compassionate (and have a thick skin) at all times. Did you know the law requires us to put the needs of our clients before ours? Yes, by law we must also be loyal and obedient to our clients, even if we might not always agree with them. When I was explaining my duties to a new client once, he joked about the part on being loyal and obedient to him. He laughed and said it sounded like we were getting married, or like I was his new little doggy - if only he knew I was about to start working like a dog!  

Real estate agents pay income taxes just like the next person. However, we also have business expenses too. If you are looking for a career in real estate, enter at your own financial risk! Be sure to have a cash reserve and be ready to start out with a willingness to spend money to build your business. It's great you will be your own boss but you will now be a small business owner. I don't know too many business owners who get by without having business expenses. There are office fees, membership and association fees, equipment, office supplies, fees for web-site set up, marketing and advertising costs, vehicle expenses and gas, etc.

This is just for starters. You can't overlook that as an independent contractor, there are no health insurance benefits - you must provide and pay for your own.       

A new agent should know what is expected on a daily basis....

Aside from knowing the laws that have to do with buying or selling a house, real estate agents need to be able to direct buyers on where to get a loan. Sellers will need to be guided on how to price their home correctly in this market, you will need to be prepared and confident to give the right advice. For a buyer or seller, a house is a very important investment - it's one of their largest investments. Clients have every reason to be demanding of your time. Buyers often want to look at many houses before they decide to buy. Creatively marketing a home becomes an acquired skill over time. An agent must be internet savvy to stay competitive. When an agent lists a property for sale, they must do everything possible to generate leads and qualify buyers - it's very time consuming. Potential clients will be looking for agents with the best skills - are you entering the business prepared to compete with seasoned agents?

The most active of agents often work 60 plus hours a week. They must work in the evening or on weekends. This is because most buyers and sellers are free only at those times. I have missed a few family events over time. Be prepared to have to let your family down at times. Before giving it another thought - is your family going to be understanding and supportive of your new endeavor? I often work through lunch and seldom do I stop working before 8 p.m. I hesitate to take vacations, because of fear of losing business. You never know when a potential home buyer or seller could call and want to meet. The motivated ones won't wait for an agent to return when there are others ready, willing, and able to help.  

Good real estate agents must get along well with buyers, sellers and other agents. This is a people business. If your previous career was in the engineering or an analytical field and you think you'll be good at this business for that reason, think twice. I have found that agents least successful in this business are those who had no real people skills and/or were overly analytical. I was told once to never try to convince an engineer that his numbers are off. Well, I've worked with my share of engineers - this is very true. A good agent needs to be open minded when negotiating with others and when on the receiving end of feedback regarding pricing. This is not just a game of numbers. It's not about architecture either. Once, an agent I was mentoring told me she entered into the business because she likes looking at houses, decorating and the architectural designs. Pleeeze! She had no clue about the many other things she would be required to do!

Once a buyer decides on a home, the art of negotiation comes into play. The first step of the sales transaction begins when the real estate agent does finally arrange a "meeting of the minds". The real estate agent still has to work - to finalize the sale. Both the buyer and the seller of the house must sign contracts. This usually happens after a home inspection. If issues come up with the inspection, the real estate agent needs to determine how each party can feel comfortable moving forward and resolving problems. Somtimes there are title and CO issues. We must be there at every step of the transaction. We are the problem solvers and caretakers!

Real estate agents do not get a regular paycheck. Instead, we get paid from the sellers proceeds at closing. This usually means splitting the agent fees four ways when there are two agents involved in the sale and two principal brokers because the agent fee which the seller previously agreed to when listing the home is divided up. The agent's brokers take the first slice of the commission - in exchange for providing office support, leads, on-going training, and brand recognition. Out of what is left, the listing agent might have to pay the cost of marketing the home. And when home sales drop, marketing consumes more time and more money. Oh, don't forget to pay your health care premium...and you MLS fees are now due!

Does it still sound easy?

Now, let emotion take over on both sides of the transaction. Emotions run deep when there is a lot of money at stake. How do you feel about getting in the middle of an argument between your clients.....the husband and wife who don't see eye to eye on things?

I always appreciate the client who praises me and recognizes that my job is NOT easy. I recently had a client say "I don't know how you can do that job". Well, even if the job of a real estate agent still sounds easy...factor in my local statistics:

Purchase Offers 1st of Month

November 2006 - 2007     -15%

November 2005 - 2006     -20%             

November 2004 - 2005     -50%

November 2003 - 2004     -10%     

Yes, the real estate business had seen some glory years, but the party is over. Gone are investors who bought property sight-unseen and lenders who didn't require down payments. Now the job of an agent is an exhausting one of marketing to generate leads, answering to sellers who are waiting for offers, chasing after hesitant buyers, and then chauffeuring them from one end of the county to the next. Sellers are sitting at the edge of their seats waiting for the phone to ring. Buyers are on the fence and need "time". Last year, a buyer I had represented looked at 63 homes before I put together a transaction (isn't it Floyd Wickman who calls this "wheel estate"?). I also sold a home that took 60 showings before a buyer came along and made an offer - no price reduction was needed, the property was indeed priced-right.  

Many agents have burned out. For many of today's agents, this is the first housing downturn they've ever seen. There will be survivors but the belt-tightening has begun and now it's simply a test of staying power. Sellers have the notion that they can negotiate down the Realtor's commission. But how is this a wise thing to do when they need the real estate agents now more than ever? Again, I appreciate the client who understands that my job is not easy.

Okay....it USE TO BE an easy job!  

Not no more. Gone are the slackers who thought all they had to do is sit at an open house and write up offers. Gone are the agents who thought they would "get rich, fast". There is nothing that comes fast about getting paid in real estate. A closing can take 2-3 months from the time of offer acceptance. And what if the property took the average of 122 days on the market before arriving at an offer? Many wanabee agents entered into the business with little cash reserve and couldn't wait that long to get paid. They're gone now.

Each day I have more and more respect for my fellow agents, as I know we are in this together. There aren't too many agents out there now that don't have survival skills. Those who are still dedicated to the profession full time are the crème of the crème in my book!