Several people reached out to me recently because they were thinking of becoming a real estate agent. They wanted some ideas about how to proceed with licensing courses, and where they should work after they have their license. So I put together some information to share with them. I thought it might be useful to share here as well, in case others are also thinking of entering the field.
Getting the license is the easiest part. It consists of taking courses and passing a few tests. Everything that comes afterward is harder, believe me. So here are some things to keep in mind.
Many brokerages will be happy to hire any newly licensed agent, especially if they are energetic and excited. What many new agents do not realize though is that the interview is a chance for YOU to decide which company YOU would like to be affiliated with. It's a big decision and once you are at a specific company, it is not always easy to leave and move on to another. So take the time to interview with at least three or four brokerages, including large franchises and smaller companies to see which might work best for you. While not a complete list, some of the questions you should ask are:
- What is the commission split? Does it change at any time and if so, when? Many companies have one split when you first start but as you make more money, your portion may increase. Some companies also "reset" the split once a year while others do not. Make sure you understand exactly what is behind, for example, a 50%-50% split.
- What kind of fees will be charged? Brokerages may have desk fees, annual fees, transaction fees, franchise fees, marketing fees, or the like.
- Also, in terms of fees, some companies will require that you purchase E&O insurance, which is Errors & Omissions insurance in the event claims are made against you for inadequate work. This can be a hefty fee, so make sure to ask!
- Does the brokerage provide training? What kind? How often? Do they require attendance? Is there a fee?
- Does the brokerage provide coaching/mentoring? Is there a fee? As a new agent, some sort of coaching or mentoring would be very helpful in learning the ropes. Learning by doing will definitely ensure you remember the lessons, but it's better to be sure you are operating correctly!
- What tools and technology are provided? Does the brokerage provide an agent portal? Is there an online system for "paperwork"? Are you provided with a database to use for leads?
- Does the brokerage provide equipment such as desks, computers, copiers that you can use? Is there a fee for use? Are there any restrictions? In other words, are you allowed to make copies of open house flyers? Marketing letters you want to send out?
- Does the brokerage require (or strongly suggest) that you attend regular meetings? If yes, how often are they held? Where are they?
- Does the brokerage provide any leads to the agents? If yes, do they charge a referral fee if those leads close?
- Will the company help you market your business? And if yes, how?
- Do they provide business cards? Is there a fee?
- Do they provide professional photographer services for your head-shot? Is there a fee?
Plan your marketing:
Contrary to popular opinion, real estate agents do not spend most of their time showing three houses to excited buyers in one day, writing offers, and attending closings to pick up the check. In fact, most of what we do is prospecting and marketing our services to ensure those few people who want to buy or sell know to call us. These prospecting activities, especially when you are a new agent, could include:
- Conducting open houses for other agents. If you are willing to spend several hours on your weekends working at open houses, you could wind up selling the home you are working at, or gaining some buyers who need representation. Conducting open houses could also include: preparing flyers for distribution at the open house, notifying the neighborhood ahead of time that there will be an open house, putting up signs and balloons, writing a post about the open house, doing a live Facebook video of the open house, and more. You don't just show up!
- Start a website to get your name/business out there. Today, many people start their real estate search online. Because of that, you will want your name to pop up when someone searches for "real estate in [your town.]" Getting that to happen takes a lot of time and effort. Developing a website, writing material consistently, marketing the website, are all part of this activity.
- Do “floor time” for your company. Many companies no longer have floor time, or up time, or opp time. If they do, it refers to a real estate agent coming into the office or at least being accessible by phone for a specific time-frame. They're there in case any people call in to the office or stop by with real estate needs. Part of the reason this is not done as often now is that most business comes via Internet or messaging, and people walking into a brokerage are not common anymore. But if your office does have this, you could pick up some leads.
- Door knock. Decide what you might be able to offer to people that would be of use to them, and head out to a specific area and meet people. Knock on doors. Introduce yourself. Provide something useful for them. Some agents swear by this process. Others don't want to have anything to do with door knocking. See if it works for you.
- Cold call. Similar to door knocking, but in this case you just pick up the phone and call people. They could be people in a specific geography, or people who are selling their home themselves, or sellers who had listings that recently expired. Again, some people love this process and some won't go near it.
- “Farm” an area. Pick an area that has a good potential for sellers or buyers and use any combination of marketing methods to get the word out about real estate and you. Send out post cards, newsletters, or other materials. Call. Visit. Conduct free seminars in the community. Whatever you can do to make sure everyone knows your name.
- Volunteer at community events. What better way to meet people than to volunteer your time? Whether it's at a town festival, or ambulance corps event, or veterans celebration, get out there. Make a difference. Become known.
- Build a database. No matter what else you do, having a database is a "must." Stay in touch with anyone you add to your database. Send newsletters, send emails, call them on their birthday. You wouldn't want someone you've known for years to NOT call you when they are selling because they "forgot" you are in real estate. You don't want to be annoying, but make sure people remember you.
- Use social media. Even if you don't like Facebook, Twitter, Instagram, or any of the other Social Media platforms, they are important. That's where people are. So get profiles and use the services. Again, don't be annoying. But just be reachable.
One of the things that was I did not truly understand prior to becoming a real estate professional was the amount of money the business would take. In addition, I didn't understand how long one might wait to get paid, or how much of the commission would never make it to the bank account. The bottom line is that you must have at least six months of living expenses saved up before you start in real estate. In fact, I would suggest having even more. Here's why.
- When you start in real estate, before you ever get a client, you will need to pay for your MLS services, your license, any ongoing fees your company might charge, insurance costs, a good camera, a laptop and/or other device. In addition you will not get a check of any kind until your first sale closes, or your first lease is signed. And typically, you will have to wait a week or so after closing to get paid. So you could be looking for no income for months. And during that time you will still need to pay your mortgage, rent, gas to get to appointments, food and other normal living expenses.
- Also, there is no guaranteed income in real estate. You could have months where you make plenty of money and life is easy, and then you might wind up going several months with no income at all. Having a cushion for those slow months is a 'must."
- And then there is your income. The first check you get might be quite disappointing. Please remember to plan for "real" income. Let's take an example just for argument's sake. Let's say you have a buyer who is purchasing a $250K home, and the commission you are getting is 2.5% of the purchase price. Therefore, you might expect $6,250 in your pocket ($250K * 2.5%). But let's say your company takes 40% as their split, and they also have a $250 transaction fee, you are now down to $3,500. And that is before expenses or taxes. Let's say you put 15% of that away for taxes, your check went from $6,250 to $3,000. Except it could be even less! If another agent referred the deal to you, or if your company charges a % when they give you a lead, you could wind up with $2,200. So plan properly!
Your Own Business
Being a real estate agent is definitely different than working for a company. You own your own business, and as such, you have to decide how to manage it. You have to make sure you don't just sit, waiting for the phone to ring. Here are some additional decisions you will have to make:
- When will you be available? Most people who want to look at houses will want to do so when they aren’t working, which is often in the evenings and/or weekends. If agents don't set boundaries, they could easily work 24 x 7. I read something recently from an agent who was dealing with a client who was angry she did not respond immediately to his 2am text message. In order to keep your sanity, you will have to figure out how to balance your life. Are there certain times you will refuse appointments? If yes, put those time blocks on your calendar so you don't forget. Do you need time on certain days to exercise? Put it on your schedule. Burnout is quite possible if you don't do so!
- Who will you help? One of the best things you could do for your business is to figure out a niche. When first starting, it's definitely attractive to grab every single lead. But you will soon realize which calls won't turn into a actual clients, and which will. Not everyone who calls you will actually wind up selling or buying, and if they do, they may wind up using someone else. You want to focus your time on those people who actually might turn into business. If you can figure out a strategy before you even start, that would be great. If you can't, then keep your eyes open for those types of clients that work well and those that don't. You might want to only work with tenants. Or never work with tenants. You might want to focus on getting listings of Victorian homes only, or houses on the lake, or 55+ communities. Figure out what works for you and focus. You do not need to help everyone.
- How will you market you? It would be great if you had a business website, email address, database. Everything should be a reflection of you, your marketing goals, your mission, your ethos. Give some thought to how you want potential buyers or sellers to find you. Down to the paper and pens and folders you use. This is YOUR business, and should reflect YOU.
The above information is just a starting point. If you decide real estate is the field for you, there will be many other lessons you will learn. I'm sharing this in the hopes it will help! When I started in this business, I wish I had known how important it was to have a plan, to focus my business, and to pay attention to the financial aspects of selecting a brokerage. Had I started with a different mindset it would not have taken me so long to be productive. That being said, I knew as soon as I started real estate training, that this was the path for me. After 30 years in the corporate world, being able to help people with their life dreams, was exactly what I wanted to do. So I have continued to push on past any roadblocks in my way, and I am happy I am doing what I am doing.
If you are interested in becoming a real estate professional, take the information above to heart. And of course, feel free to contact me if you have questions! You can call me at 914-419-0270 and reach out via email at firstname.lastname@example.org.
Originally published at thehousekat.com.