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Four tips for future agents to jump start their career

Real estate is not an easy game to get into, yet many people take the leap, unaware of some simple ways to jump start their career BEFORE day one.

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Earlier this month, a discouraged viewer from my Habitat for Hermanity web series emailed me for advice about embarking on his new profession as a realtor.

“I’m really struggling with how to really get clients and make that first sale. I’m young and have no real connections so to speak.  Is there an easier way? Do you have any advice for a new agent looking to jump in and get through the struggles and tribulations that come with entering this industry?”

I told him that launching a career in real estate is indeed an uphill battle, so armor up!  The attrition rate for newbies is dismal, with many agents abandoning the business in 6-12 months or less. How to  avoid this tragic fate?   My two cents to him were as follows:

Online Brokerages:

Some companies like ziprealty.com or  redfin.com feed agents online leads.  Their websites are widely used  by prospects (and even some agents, albeit surreptitiously) and have countless number of people who register to access their sites. This is attractive to brand new realtors whose Rolodexes are empty. You have an instant bundle of leads.

But there are 2 big drawbacks. First, because these companies supply the agents will clients, they retain a ginormous cut from your commission. They arguably are doing the hard part for you, procuring business, and that will cost you dearly.  Secondly,  these companies give clients massive rebates from your commission. This practice is highly frowned upon by the majority of  brokerages…so beware that your offers (or you?)  might be shunned by listing agents.  However, if you are willing to put up with these downsides for the naissance of your career, these online companies could be a  viable option to slam out a lot of deals quickly and build a strong referral base for when you leave.

The Power of Two:

Partnering with another agent is a great strategy to double your exposure. Your sphere of influence is twice as big, which will only increase your chance of closing your first deal.  In order to cast a wider net, it might be best to align yourself with an agent who has a different demographic group than you.  For example, younger &  older  (mom/daughter), guy & gal (husband/wife),  gay & straight (Will & Grace).   The opportunity to snag your first escrow will arise faster by combining your networks. The biggest downer of the power of two is the power of half. You split share half the commission.

Assist a Top Producer:

If you just aren’t ready to take the plunge as a full fledged agent, try to get someone to take you under their wing. Preferably, this someone is a smashing success of a realtor.  Be an executive assistant for a year.  True, you will be working for someone else, but you will learn all the tricks of the trade from an successful agent. Plus, it’s a steady paycheck compared to closing no deals on your own.  

Absorb all you can the first year and when you are confident enough, branch off later and fly solo.  (Who knows? If you two hit it off, your boss may invite you to be co-agents/partners down the line).

Join a TEAM:

This is an off-shoot of #3 and #4. Sometimes, you can join a team of agents where there is a top head agent, and there is a buyers specialist, listing specialist, transaction coordinator, assistant, etc. You can get your feet wet in the business and accumulate real life experience from the get-go. However, beware that you may paint yourself into a corner if your team member responsibilities are too specialized. When you eventually leave the team, you may find yourself not as well-rounded.

What else?

There are endless tips for future agents- what tips would YOU add to the mix? Let us know in the comments!

Watch Real Estate Expert Herman Chan put the REAL back in REALTY. In his show Habitat for Hermanity, Herman skewers the real estate business and pokes fun at his fellow agents, all the while empowering buyers & sellers with behind-the-scene tips & secrets of the industry! Get a glimpse beyond the glitz & glam of real estate. It's a hot mess! Featured on HGTV, House Hunters & other media outlets, Herman is the undisputed Real Estate Maven whose helpful & hilarious commentary you just can't live without! In fact, his real estate TV show has just been optioned in Hollywood!

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9 Comments

9 Comments

  1. Fred Romano

    August 19, 2010 at 11:36 am

    Herman,

    “Secondly, these companies give clients massive rebates from your commission. This practice is highly frowned upon by the majority of brokerages…so beware that your offers (or you?) might be shunned by listing agents.”

    That would be completely unethical! Are you serious? As a buyers agent, why would any listing agent care what kind of “rebate” you give back to buyers??? That makes no sense man. This is the exact type of bull crap that give real estate agents a bad name. For you to even suggest that means you “believe” it. Not cool at all.

    • Herman Chan

      August 19, 2010 at 6:43 pm

      hi fred!
      it’s not so much that i “believe it”, as much as i “lived it”. i used to work for zip.

      when i joined, i felt the same way : “what do the listing agents care, if the buyers got rebate back from company I worked for” right? well, you wouldn’t believe the venomous reaction i would get from some outside agents, especially during offer presentations & brokers tours. it was like i was wearing a scarlet letter on my chest.

      you are right, it shouldn’t matter, but for whatever reason, it did to them. as nonsensical as it may be, the reality of the situation is that some (snooty?) agents will go with another offer from a “traditional” company (all things equal of course). It’s not always the case, but I’ve been burned more than my share. I think that some agents take personal affront to their livelihood, these companies that so blatantly advertise rebates. personally, i don’t care either way, but i just want new agents to weigh the pros and cons of their options as they start their new professional life. just somethin’ to consider!
      xo
      H

      • Fred Romano

        August 20, 2010 at 9:56 am

        If I was not working for myself I’d probably work for Zip Realty. I like their progressive approach to real estate services. But they don’t offer what I offer, the flat fee listing, which I think saves sellers loads of cash. And while I am sure there are some unethical agents that might not show our listings, they are still selling if priced right.

  2. Danny

    August 23, 2010 at 11:54 am

    I think it is important for new agents to have at least six months of living expenses before jumping into a real estate career. When you don’t have money behind you then every deal and every day that goes by mount more pressure on you which can cause you to get frustrated and eventually leaving the business.

    • Herman Chan

      August 24, 2010 at 2:57 am

      good point danny…..and i suppose it’s always a nice safety net if you have a partner who has a regular job too!

  3. Nancy

    August 23, 2010 at 1:41 pm

    The problem with teaming up is that two agents generally do the work of one. They have more fun going everywhere together than working their business as a true team should. Also, teams are tricky. You need to have the same work ethic to insure that no one feels they are providing the bulk of the leads/commissions.

    • Herman Chan

      August 24, 2010 at 3:01 am

      one of the main reasons ppl are attracted to working in real estate is the autonomy. working with partner or team does tend to hinder that freedom. many of us left corporate america to avoid office politix, and working in a bigger team can recapitulate that environment…..which puts us back at square 1.

  4. Rob McCance

    September 8, 2010 at 10:59 am

    A boat load of cash saved, a partner with a real job, or you having a real job are the only ways to get off the ground. I know the latter will tick off people, but the cash has got to come from somewhere…..sorry!

    It takes years of steady work and effort to get to a sustainable income of any predictability and magnitude to even think of not having income from one of those other three sources.

    It’s commission only with no leads. Nice combo!

    Then, it can all disappear in six months if your lead generation method is not solid and repeatable.

    The barrier to entry is super low.The barrier to success is ultra high. Yeah – I just made that up.

    RM

    • www.hermanchan.com

      September 8, 2010 at 2:50 pm

      “The barrier to entry is super low.The barrier to success is ultra high. Yeah – I just made that up.” i love that! thanks rob!

      you are right the cash/reserves have got to come from someplace….another way young ppl are getting started in the real estate business, is living at home with the parents (which is part of a larger gen Y trend). but certainly helps when some overhead expenses are taken care of by mommy and daddy!

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Coaching

Disputing a property’s value in a short sale: turn a no into a go

During a short sale, there may be various obstacles, with misaligned property values ranking near the top, but it doesn’t have to be a dealbreaker!

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magic eight ball

It’s about getting your way

Were you on the debate team in high school? Were you really effective at convincing your parent or guardian to let you do things that you shouldn’t have been doing? How are your objection-handling skills? Can you flip a no into a go?

When working on short sales, there is one aspect of the process that may require those excellent negotiation or debate skills: disputing the property value. In a short sale, the short sale lender sends an appraiser or broker to the property and this individual conducts a Broker Price Opinion or an appraisal, using special forms provided by the short sale lender.

After this individual completes the Broker Price Opinion or the appraisal, he or she will return it to the short sale lender. Shortly thereafter, the short sale lender will be ready to talk about the purchase price. Will the lender accept the offer on the table or is the lender looking for more? If the lender is seeking an offer for a lot more than the one on the table, mentally prepare for the fact that you will need to conduct a value dispute.

Value Dispute Process

While each of the different short sale lenders (including Fannie Mae) has their own policies and procedures for value dispute, all these procedures have some things in common. Follow the steps below in order to conduct an effective value dispute.

  1. Inquire about forms. Ask your short sale lender if there are specific forms that you need to complete in order to conduct a value dispute. Obtain those forms if necessary.
  2. Gather information. Your goal is to convince the lender to accept the buyer’s offer, so you need to demonstrate that your offer is in line with the value of the property. Collect data that proves this point, such as reports from the MLS, Trulia, Zillow, or your local title company.
  3. Take photos. If there are parts of the property that are substandard and possibly were not revealed to the lender by the individual conducting the BPO, take photos of those items. Perhaps the kitchen has no flooring, or there is a 40-year old roof. Take photos to demonstrate these defects.
  4. Obtain bids. For any defects on the property, obtain a minimum of two bids from licensed contractors. For example, obtain two bids from roofers or structural engineers if necessary
  5. Write a report. Think back to high school English class if necessary. Write a short essay that references your information, photos, and bids, and explains how these items support your buyer’s value. This is not something that you whip up in five minutes. Spend time preparing a compelling appeal.

It is entirely possible that some lenders will not be particularly open-minded when it comes to valuation dispute. However, more times than not, an effective value dispute leads to short sale approval.

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Coaching

Short sale standoffs: how to avoid getting hit

The short sale process can feel a lot like a wild west standoff, but there are ways to come out victorious, so let’s talk about those methods:

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short sales standoff

What is a short sale standoff?

If you are a short sale listing agent, a short sale processor, or a short sale negotiator then you probably already know about the short sale standoff. That’s when you are processing a short sale with more than one lien holder and neither will agree to the terms offered by the other. Or… better yet, each one will not move any further in the short sale process until they see the short sale approval letter from the other lien holder.

Scenario #1 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they will proceed with the short sale, and they will offer Bank 2 a certain amount to release their lien. You call Bank 2 and tell them the good news. Unfortunately, the folks at Bank 2 want more money. If Bank 1 and Bank 2 do not agree, then you are in a standoff.

Scenario #2 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they cannot generate your approval letter until you present them with the approval letter from Bank 2. Bank 2 employees tell you the exact same thing. Clearly, in this situation, you are in a standoff.

How to Avoid the Standoff

If you are in the middle of a standoff, then you are likely very frustrated. You’ve gotten pretty far in the short sale process and you are likely receiving lots of pressure from all of the parties to the transaction. And, the lenders are not helping much by creating the standoff.

Here are some ideas for how to get out of the situation:

  • Go back to the first lien holder and ask them if they are willing to give the second lien holder more money.
  • Go to the second lien holder and tell them that the first lien holder has insisted on a maximum amount and see if they will budge.
  • If no one will budge, find out why. Is this a Fannie Mae or Freddie Mac loan? If so, they have a maximum that they allow the second. And, if you alert the second of that information, they may become more compliant.
  • Worst case: someone will have to pay the difference. Depending on the laws in your state, it could be the buyer, the seller, or the agents (yuck). No matter what, make sure that this contribution is disclosed to all parties and appears on the short sale settlement statement at closing.
  • In Scenario #2, someone’s got to give in. Try explaining to both sides where you are and see if one will agree to generate their approval letter. If not, follow the tips provided in this Agent Genius article and take your complaint to the streets.

One thing about short sales is that the problems that arise can be difficult to resolve merely because of the number of parties involved—and all from remote locations. Imagine how much easier this would be if all parties sat at the same table and broke bread? If we all sat at the same table, then we wouldn’t need armor in order to avoid the flying bullets from the short sale standoff.

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Coaching

Short sale approval letters don’t arrive in the blink of an eye

Short sale approval letters may look like they’ve been obtained simply by experts, but it takes time and doesn’t just happen with luck.

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Short sale approval: getting prepared, making it happen

People always ask me how it is that I obtain short sale approval letters with such ease. The truth is, that while I have more short sale processing and negotiating experience than most agents and brokers, I don’t just blink my eyes like Jeannie and make those short sale approval letters appear. I often sweat it, just like everyone else.

Despite the fact that I do not have magical powers, I do have something else on my side—education. One of the most important things than can lead to short sale success for any and all agents is education.

Experience dictates that agents that learn about the short sale process
have increased short sale closings.

Short sale education opportunities abound

There are many ways to become educated about the short sale process and make getting short sale approval letters look easy to obtain. These include:

  • Classes at your local board of Realtors®
  • Free short sale webinars and workshops
  • The short sale or foreclosure specialist designations

As the distressed property arena grows and changes, it is important to always stay abreast of policy changes that may impact how you do your job and how you process any short sale that lands on your plate.

The most important thing to do is to read, read, read. Follow short sale specialists and those who blog about short sales on AGBeat, Google+, facebook, and twitter. Set up a Google Alert for the term ‘short sale’ and you will receive Google’s top short sale picks daily in your email inbox. Visit mortgagor websites to read up on their specific policies and procedures.

Don’t take on too much

And, when you get a call from a prospective short sale seller, make sure that you don’t bit off more than you can chew. Agents in most of America right now are clamoring for listings since we are in the midst of a listing shortage. But, if you are going to take on a short sale, be sure that it is a deal that you can close. And, if you have your doubts, why not partner up with a local agent that can mentor your and assist you in getting the job done? After all, half a commission check is better than none!

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