By Suzanne Godin, Associate Broker
After teaching a pre-licensing course for several years, I have seen the same look come across some of the student’s faces when they start to realize what is involved with becoming a real estate agent. Some are in the class because they have a friend or family member in the business so they are somewhat familiar. However, others have told me things like they really like looking at houses so they think they would love being a Realtor. Others want to flip homes and re-sell them with dreams of getting rich quick. Some think that they can work as a Realtor part-time and double their income. Real estate is a wonderful, ever-changing field, but there are a few things that you may want to consider before getting your real estate license.
1. Have a Nest Egg
You’ll want to have enough money saved up to cover your initial startup costs. You will need money to cover your education costs, the cost of the state and national exams, your license activation fee, and the fees to join the local, state and national Realtor associations. There is also a charge to join the local electronic lockbox system so you can access homes to show them. Typically, just those fees alone can total over $2000 in our area. They can cost more in other areas of the country. You may find a brokerage that covers the cost of you new business cards, signs and lockboxes but some brokerages expect the realtor to cover those costs as a part of doing business.
Real estate agents don’t receive their paycheck until after a property closes. It is not uncommon for it to take 3-6 months to get established and have your first closing. You’ll need to have sufficient funds to support yourself until you are up and running. There are exceptions, but many agents don’t feel like they hit their stride until they have been in the business for three years. As a brand-new agent, you have a lot to learn and have to convince clients to trust you. Buying or selling a home is the single largest investment that many people make. Clients want to know that you are experienced and competent.
2. Pick the Right Brokerage and Make Time for Continuing Education
Just passing the state and national exams doesn’t mean you will know how to be a real estate agent. Those exams are to make sure that you understand the basics of real estate law, real estate definitions, business ethics and what your responsibilities are as a real estate agent. The exams don’t teach you how to do a market analysis, a listing presentation, market yourself, farm for prospective new buyers, how to write a contract or what to do with a contract once you have written one.
When interviewing brokerages, you will want to find one that has an excellent post license education program. Some brokerages offer a formal classroom situation, a Realtor 101 if you will or boot camp to get new agents up to speed. Others offer a mentoring program where they will pair you up to shadow or get assistance from a more seasoned agent. You’ll want to take the time to interview each brokerage and have prepared questions written up in advance to make sure that you will get the best training possible. A good education is going to be the foundation for building a successful career as a realtor.
You’ll want to ask not only about education but what tools the brokerage provides and which ones you’ll need to pay additional fees for. Many brokerages offer programs and apps to help make your job easier as well as make you competitive with other agencies out there. There are lead generation programs, electronic signature formats, paperless filing systems, marketing tools, web pages, `relocation programs, lead management systems, etc. A good brokerage will stay on the cutting edge of our ever-changing technology.
It’s important to not only meet with the managing broker but to get a tour of the brokerage when agents are there. Even though you are considered an independent contractor you’ll want to make sure the culture within the office is a good fit for you. Some offices are really big while others only have a few agents total. You’ll want to see if there are mandatory weekly or monthly meetings or required desk duty times. It is important to make connections with buyers and sellers but good agents also realize the importance of networking with their peers. In the beginning, you can learn so much from the seasoned agents. Once you are up and running, it is nice to have the respect and good working relationship with other agents when navigating through a difficult contract. Other agents will appreciate a professional agent on the other side of the transaction and it helps to ensure that the property will actually go to closing.
It also takes time to fill out all the new realtor paperwork and join all the required associations. Many of the local associations will offer monthly continuing education classes as well. You should make sure you carve out time to attend as many classes as you can so you can learn your new trade. In Virginia, new agents are required to take 30 post-licensing credits within the first year after you receive your license.
3. It’s Difficult to Sell Real Estate Part-Time
For a lot of the reasons mentioned above, it will be difficult to hold down a full-time job and totally commit to real estate. It can be done with a lot of hard work and intense time management if you have some flexibility with your current job. It used to be easier to dabble in real estate or only close a few transactions a year but it is becoming increasingly difficult to just put a toe in the water without diving in. Most agents want to do enough business in their first year to cover their fees and start-up costs. Over the years real estate laws, contracts and file management has become much more detailed and complex. Things are always changing and you can become a liability to yourself and your brokerage if you do not stay on top of our ever-changing industry.
Today’s buyers and sellers work odd hours, work from home or have access to 24-hour technology. When they have a question or a concern, typically they expect a fast response time. If property inventory is low, buyers or investors often have to go tour a property on the same day it goes on the market in order to get their offer in before the property is snatched up. They just are not willing to wait until you are off from your other job to answer their phone call or meet at a property.
It is not a 9 to 5 job. Sometimes the only time a client can meet you is in the evening or on a weekend. You may have to meet a home inspector or appraiser at 9 in the morning or write an offer at 11:00 at night. Time management will be the key to keeping your own sanity.
4. You Need To Be Self-Motivated
You will be your own immediate boss. You’ll need to make a business plan and hopefully be connected with a brokerage that will help you figure what you need to do to hit your financial goals. If you don’t have anything under contract one month than you will not have closings the next. Unlike most hourly paying jobs or salaried positions, if you don’t work in real estate you don’t get paid.
You’ll also master your own budget. You’ll need to make sure that when you do have a closing, that money will last you until the next. Many people don’t think about this before getting their license but as an independent contractor taxes are not taken out of your commission. You will need to set money aside to pay quarterly taxes. Most brokerages don’t have medical insurance plans or 401K plan either so you will be responsible for your own medical insurance and retirement. Meeting with a good accountant or financial planner is not a bad idea and will help you set goals for yourself when you make your business plan.
5. You Get Out What You Put In
Are you still with me? Hopefully, I have not scared you off. There is a lot to consider before becoming a real estate agent but it is a business with great opportunity. If you work hard as a realtor and put your all into it, you can reap great rewards. All the fees and initial costs may seem a little overwhelming at first but how many businesses do you know that have a startup cost of under $2500 to $3000? Buyers and sellers will recognize a hard worker. If you treat each client with respect and conduct your business ethically, they will refer their friends and family to you. In a short amount of time, you can build a solid referral business.
You also will form a wonderful team networking as a realtor. We work closely with loan officers, title companies, attorneys, and contractors. You will quickly realize how important all the team members are in a transaction and build a team of other professionals that you know you can count on.
In a business where you would think it would be very cutthroat because of competition, I have found just the opposite to be true. I have found other hard-working agents with the same ethical standards that I set for myself. We have developed long-standing friendships based on mutual respect, common experiences and the desire to help others. Many of the agents in our brokerage believe in giving back to our community and we have teamed up to assist with several charities and local food banks.
Real estate can open so many doors. Your path may be to have a thriving real estate business or to build an award-winning team. Down the line, you may choose to mentor, teach or manage. Real estate is what you make it and the possibilities can make for a very happy and long career.