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!
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.
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!
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.
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!