Ever wonder what being a successful real estate agent actually entails? Virtually anyone can become a Realtor® and can become rich from it too. For example, I (Alex Popovic) took a 2 week crash course and passed the licensing exam shortly there after, while going to school for my MBA.
The tough part comes afterwards though....right, you know......being successful!
I live in Scottsdale, AZ and my real estate office is in the heart of Scottsdale right by Scottsdale airport. My office window looks over the tarmac at the plethora of Lear Jets that line the runway, did you know that Scottsdale airport has the busiest single runway in the nation? To say we have the stereo typical Realtor would be an understatement. You know the ones driving around in the Mercedes, Range Rovers and luxury cars that scream look at me and I'm trying really hard to impress my clients. Most of us don't have a show called Million Dollar listing.
Actually, the proportion of "successful" or better yet "extremely successful" Realtor's is very, very small. Let's look at the numbers and what differentiates a successful Realtor from the rest of the pack?
The numbers behind the real estate profession
The median income of a Realtor in 2013 was $43,500, which represented sales of $1.45M at a 3% commission. This was up slightly from $1.15M the year prior which represented a gross income of $34,900.
Only 2% of Realtor's earn more than $250,000 per year. In Arizona we have approximately 43,000 Realtor's state wide so that means only 860 Realtor's make over $250,000, to get over the proverbial high six figure range or even into the seven figure range is almost impossible for a veteran Realtor much less a new one.
Source: http://www.realtor.org/reports/member-profile
According to a survey conducted by our very own ActiveRain, 22% of real estate agents earned less than $35,000 per year, and just 21% earned $100,000 or more. Talk about feast or famine, in fact these numbers mirror those professions thought of as lower income such as law enforcement and school teachers. What can you do to swing the pendulum in your favor?
Setting baseline
Let's set the baseline - or starting point - as those Realtor's that earn $100,000 or more, which is the upper 20th percentile. Agents who make six figures (or more) spend six times more on technology and ten times more on marketing efforts than the lower income Realtor's.
We've all heard the old addage right! "You've got to spend money to make money," it's no different here. You've got to be smart with your spending on technology and marketing efforts though. Work smarter, not harder. The higher income earners are much more likely to blog about real estate, there by setting themselves up as what I call SME's or Subject Matter Experts in order to attract potential buyers and sellers. They are much more likely to use online video such as Vine or Youtube to broadcast their listings or themselves and seem like they're everywhere and that there are 27 hours in the day.
Consider the average age of a Realtor is 57 years of age, most at this age, in my experience, are past trying to keep up with the latest SEO and technological advances, ask them if they have a Youtube account and they'd probably say "no!," much less what SEO stands for or do they get the best deals on Fiverr or know how to use Hootsuite? Right after I was licensed my good friend Mark Taylor was presenting a class to about 12 of us at a mortgage company about website's and successful online marketing, at 40 years of age I was the youngest person in there. Most couldn't understand a thing Mark was talking about, or had heard about it but were too scared to try it out. I heard so many saying "I know how to log on the internet and into MLS and check my emails," while laughing. I guess they're content with living in the box.
In conclusion
Becoming a Realtor won't make you rich overnight, that's just the reality, that's not to say you can't though. While some methods seem to be more effective than others, the best way to be successful is like most other businesses. Be a sponge, surround yourself with good people and perhaps the most important takeaway is use the latest technologies and spend money to make money. Look at the technological advances since say 2005 (the last 9 years), Apple wasn't nearly as big, Facebook was a year old, ActiveRain didn't exist and Linkedin was what?
Young professionals were only 18 years old then too. They've grown up in this technological tsunami and are now in their late 20's, graduated from college and looking to buy a home with their new bride and start a family, they talk via technology and not a cell phone, they search for and get their answers instantly. Do you speak "their" language? No? OK we'll go use the hip, technologically savvy, omni-present, young Realtor that just started, to buy our $500,000 home.
Those aspiring to be considered "successful" making over $100,000 a year should probably forego driving their clients around in that new Mercedes and use that money more wisely on technology and tap into the language of technology. I met an new agent (less than 6 months as a realtor) dressed down, driving a Prius who was crushing it monthly, he sold 24 properties in November alone, I checked his numbers and he made over $150K that month in commissions. When I saw him closing a deal at the title company and asked him what he's doing, he said "I speak real estate on the internet" and "invest my image in technology." Perception is reality.
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