Everyone gets into real estate for a different reason. Some decide to get their real estate license because it’s a flexible career, others may have heard you can make a lot of money by selling houses. Or maybe you watched Selling the Sunset Strip and thought “I can do that.” Regardless of your reason, when you’re starting out in real estate, it can be tough. So if you’re on the fence about whether or not you should get your license, here are 10 points to consider.
1. It Takes Time To Become Successful.
When you first start out, no one is going to hand you 100 people ready to buy and sell. You have to build up a database for yourself. For most new agents it can take anywhere from a couple months to almost one year or longer to close your first escrow. That’s a long time especially considering most agents only get paid, when they close escrows.
According to the National Association of REALTORS, 87% of REALTORS leave the industry after five years. Patience is key when starting out. It takes time to build up your database.
I recommend having a financial plan before getting your license. Save up money at your current job before making the switch so you have a substantial cushion. Or better yet, stick with your current job while taking the real estate course and until you’ve closed your first escrow. The bottom line is, you want to prepare. If it takes six months or one year to get your first paycheck from real estate, you don’t want stress about money.
2. It’s Hard.
This might seem a little obvious, but I want to be honest here. Real estate can seem glamorous from the outside. Many agents drive nice cars and who doesn’t love looking at beautiful properties all day. But to be a successful real estate agent, you have to be willing to put in the work and build up your own business.
The most successful agents I know all work long hours. A typical day could include tasks such as showing property, writing offers, following up with clients via phone or email and checking on listings. Real estate isn’t always predictable so clients might call you late at night to discuss a current transaction.
Real estate can also be a feast or famine business. One month you have 10 escrows going, and the next zero. The real estate industry is also susceptible to the highs and lows of the economy. Some years may be booming and others may be bust. It’s important to not get discouraged in tough times and to keep pushing.
3. You’re Building Your Own Business And Brand.
Being a real estate agent is very different from working a 9-5 job. You’re no longer a W-2 employee, you’re an independent contractor. Yes you have a broker watching over you, but no one is going to tell you exactly what to do and when to do it. You are responsible for marketing yourself and for finding your own clients.
Being your own boss is one aspect of being a real estate agent that can be great, but also challenging. On the one hand, you can set your own schedule and decide how you want to organize your business. On the other hand, there are no step by step directions on how to become a successful real estate agent. You need to try different techniques to see what you like and what works for you. Some agents like to cold call to generate new clients, and others prefer holding open houses. There is no one size fits all when it comes to real estate.
Before I got my license, I had no idea how much I would be on my own building up my name. Think of it like being a hairdresser. There’s a chance you could gain clients who happen to walk into your salon. What you really want, however, are people who know your work, tell their friends, and return to you everytime they need a haircut.
4. You’re Going To Spend Money Before You Make Money.
This one can be hard, especially in the beginning. All in all, you could easily spend $2,000 in start up costs alone.
Here are some fees you can expect when starting out:
- Real estate course ($100-$500+)
- Exam fee ($100+)
- License fee ($200+)
- National Association of REALTORs fee ($500+)
- Joining your local MLS (Multiple Listing Service) ($1,000+)
- Monthly desk fees (in some offices) ($250-$1,000+)
- Business cards and headshots ($200+)
Then once you’re all set up, you’ll also want to start marketing. You can expect to spend anywhere from $100 per month to $2,000 per month on marketing depending on what type of marketing you choose to do.
While it’s tough to spend money in the beginning, this is part of running your own business. All businesses have weekly or monthly costs and being a real estate agent is no different.
That being said, this one was hard for me. There were months at a time where it felt like all I was doing was spending more money on marketing and not seeing results. Eventually though, it all compounds on itself and you start converting leads. When you’re just getting started, take advantage of free marketing tools such as Instagram, Facebook, and the free versions of email marketing platforms.
5. Choose Your Broker Wisely.
After you get your license, you’ll need to find a local broker to work under. I recommend making appointments at a few different brokerages and interviewing with the broker. I also recommend talking to at least one agent at each office. Here are some questions to ask when interviewing:
- What kind of commission splits do they offer?
- What type of training do they offer?
- What is the office environment like?
- How many listings does each agent close per month/year on average?
- Is the broker available to help review your first purchase agreement?
There are many different types of real estate brokerages, make sure you pick an office that has a specific training program for new agents. You DO NOT want to end up in a large office with 100 agents, but no one to guide you.
I picked my brokerage because the broker was nice. While that was wonderful, I soon learned that my office had no training programs and that my broker was frequently out of town. This made it hard for me to learn what I needed to do to start my business.
I also recommend choosing a brokerage that is selling a high volume of real estate. Ask the broker what percentage of the local market they represent. My office sells about 25% of the local real estate. The more successful agents in your office, the more chances for you to learn from them. If agents in your office are only doing a couple deals a year, they might not be the best role models.
6. Find A Mentor.
Ideally you’ll find yourself in a brokerage with a wonderful training program where they pair you with an experienced agent to help show you the ropes. If you can’t find an office that offers a training program, at least find one experienced agent you can turn to with questions. Consider offering your assistance to an experienced and busy agent, in exchange for some training.
Though real estate courses are a part of the process to get your real estate license, they don’t fully explain the daily tasks of being an agent. This is where it is important to have at least one experienced agent you can count on. They can help walk you through writing your first purchase agreement and let you know which local vendors to use and refer.
7. The Old Way Isn’t Always The Best Way.
When you’re first starting out as a real estate agent, you’ll meet many agents with 20 + years of experience. Some of them may be happy to offer advice. Unfortunately, the real estate industry and technology have changed so much that their advice may not be the best.
When I first started everyone told me to cold call and hold open houses. While these were great strategies to find new clients 20 years ago… they’re not the best nor most efficient ways of lead generation now. Similarly, I know a lot of old school agents who don’t have websites, don’t market their listings, and simply put up a for sale sign and wait. Take advantage of new technology to grow your business.
8. Your Business Is Lead Generation.
You’re probably thinking, “I thought selling properties was my business.” Selling properties is a huge part of being a real estate agent. But lead generation is what is going to make your business grow.
If you want to have consistent escrows, you need to continuously market. Some agents only market when their business dips. They generate new leads and close new escrows. The problem is, if you only market when you need business, you’ll always end up with troughs in your business.
9. It Can Be Competitive.
We’ve all heard stories about cutthroat real estate agents stealing clients from other agents. I wish I could say this never happens, but it does….Every agent loses clients at some point in their career. Sometimes you just didn’t follow up enough, other times another agent may try to snag your clients.
Just remember, not to take anything personally. The best way to keep your clients is to follow up consistently. When you first meet a new client, don’t be afraid to ask if they’re already working with another agent. Being kind and upfront is a good way to keep yourself out of sticky situations.
10. Be Consistent And Disciplined.
When you don’t have a boss telling you to show up to work at 9am and to finish x,y, and z today, it can be easy to procrastinate. It can also be easy to fill your days with the wrong type of tasks. Brian Bufinni, a real estate expert, finds that most agents spend the majority of their days running errands1 such as making copies of keys or hanging signs . While some of these tasks might be necessary, running errands is not going to make you money. You want to prioritize tasks like following up with your clients.
To truly be successful in this business, you need to set a schedule for yourself, and make sure to complete tasks every day that benefit your business. You also need to stick to a plan. If you decide you’re going to mail out a postcard marketing campaign, commit to doing it six or seven times. People need to see your marketing more than once before they’re ready to pick up the phone and call you. Similarly, have a plan to follow up with your database on a set schedule.
11. (Bonus) You Want To Stand Out.
In most cities, you’ll find an abundance of real estate agents all competing for the same listings and buyers. In order to be successful, you’ll want to do something that sets you apart from the rest.
In my local town, I realized that most of the older agents hadn’t yet joined social media. I decided a good way for me to stand out was to build up a strong social media following and post about new listings and local news. It took a few months, but after a while my followers started to reach out, ask questions, and schedule showings.
While being a real estate agent has many wonderful perks. It’s not the career choice for everyone. If you’re motivated to work hard and build your own business, then real estate might be for you. If you prefer to have a regular, predictable schedule and do best when someone else tells you what to do, then you might prefer a regular W-2 job.
The best advice I can give to anyone starting out in the real estate industry is to stick with it. It might take longer than you thought to land that first escrow, and then the second, but it’s rewarding to watch your business grow.