You're a New Realtor? Are You Prepared for the Shock?

The important thing, Bill, for new agents to internalize before they even take their license exam, is that launching a real estate practice is launching a business. Being prepared for this emotionally and financially is as important as getting licensed. If possible, start out with a business plan that allows for the time it will take to ramp up your operation and begin closing business.

Great tips, I agree with Elva, you need to look at it as opening a business and sit down and weigh the cost, because just like any other business, you will have all the start up cost to start a business. When I use to train the new agents, we would go over their goals and how to set them and achieve them, and the first thing they had to know is what will it cost me to be in business for a year? I would have them total their expenses for one year, which included their fees, state, license, their home expenses and even food and gas for the year. Once they had that total, depending on the area they were working to list or sell homes we would then figure out how many homes they had to list and how many buyers they needed. Some agents had no clue on the real cost of what it really took to be a Realtor.

One has to realize that 1 few months of great sales may not be sustained throughout the year.  In fact in a State like NH where we get a lot of snow, things come to a halt when the snow /ice is on the ground.

Bill, Real Estate is a business - and most who start in Real Estate have a background in a job. They forget that we in real estate are paid at closings and not on 1st and 15th of the month! Habits die hard and that's when things don't go right for them.

So true are those words! From being in a commission based arena almost my entire life I cannot begin to tell you how many I have seen either enter and exit fast or enter have a good month or two (multiply that by 12 lol) and go get major into debt they cant afford.

I am not sure of current stats but from past and my own current experience... you hire 8-10 and 2 are good and make it

Especially in these volatile times, yes, a wealth management advisor is critical for many professionals--especially those in the real estate business. Thanks for the post.

This is a great post. This is my 1st full year as doing Real Estate on my own after being my brokers assistant. It is very important to manage money well. Trying to pay off any debt I have so it makes it easier in those winter months lol

Bill - It can be difficult to manage up and down income, and yet it is a very important skill.

Self-discipline and a strong financial plan has to be the foundation for not only new real estate agents but all agents. Bill, I agree that many new agents must be in shock during that first year and especially if that 'first year' happened to be in the last few years.

Yes, when I got in the business I was told I needed to either have a spouse support me or have 6 months of savings.

If residential Realtors can't stomach the ups and downs financially, just imagine the careful planning needed for a commercial real estate broker.  You'd almost need to have the patience of a cicada as you may go for years between a major deal.  Then again, one good commercial deal can cover you for 3-5 years.

Bill - consistency is a key component of any successful plan.

Savings, living below your means and tucking away, stashing the cash so the ride starting out is less bumpy is first order of business. Then finding no and low cost recreation, making sure your everyday spending is lean and mean as you hone your skills wearing the blue and gold R lapel pin. Interest rates were 16% adjustable, my first house loan was an attractive at the time 12.25% fixed rate and with an oil embargo to boot, 1980 was a supper sobering, real world time to start the list, market, sell (repeat) process. Never forget valuable lessons learned.

As someone who has worked as an admin for over 8 years, I understand by watching agents come and go that they certainly do NOT understand the process. And yes, even the seasoned ones get tricked into thinking they can live large, then they have to lay off people at Christmastime. 

Nevertheless, agents make more $$ than admins and I'm jumping in! I'll be taking the test in two weeks and I have a great team to work with. I understand that taxes are outrageous and am thinking of establishing a separate account just to put tax dollars into.

Great blog! I hope you are able to help some of these agents that do not have a plan.

Good post,  It is true, this business can be a roller coaster ride to be sure. Rainy day money is essential.

I think the surprise comes in two ways...unpredictable income and that some agents don't understand that the expenses...just of being an agent...dues, insurance, etc. continue with or without income.

hi Bill,  I agree this is the hardest thing to teach new agents.

It is one of the most overlooked meeting agendas for agents everywhere.  . 

How to keep your money and a budget

Bill this is great advice in the real estate industry as well as others.  I always cringe when I see new hires who just got out of college starting here and overspend their future earnings, it generally ends badly.