You're currently frustrated in your current position and excitedly searching out a new life direction. You watch tons of HGTV and love houses. You get along with lots of different personalities, and talking to new people excites you! While real estate is portrayed on T.V. as a flexible career with fabulous commissions, you'll want to wait before spending money and time getting a real estate license. Let’s cover what you'll need to be prepared for a career in real estate.
Be Prepared in your Piggy Bank
Every business has start-up costs and on-going costs, plus a lag time before you see the fruit of your labor. Your one time start-up expenses for real estate (in Colorado) will be roughly $2,000 to $2,500. This includes real estate school, licensing, insurance, business cards, photos, signage, lock boxes, LLC formation, etc. Professional quality marketing is important!
Additionally, you'll have ongoing monthly costs of $400-$800+, depending on how you run your business. Real estate has a low barrier to entry, yet to build a sustainable business it takes investment over time. Some expenses include transaction software, continuing education, marketing, gasoline (have to get to the houses!), brokerage desk fees, and the list goes on & on. The costs vary as you get listings, yet you'll have paychecks coming in down the road later to offset these upfront costs. Every business worth owning takes investment, and real estate is no different.
Before starting your real estate career, hopefully you will have saved at least six month's worth of living expenses, plus an additional $5,000 to $10,000 nest egg to launch your business. You'll need to master budgeting in the real estate business since there are times when revenue fluctuates! You could have several closings in a two month period, then the next month there's no income. You'll need to save during the good times and live within your means during the lean months.
Also, the huge commissions seen glamorized on TV are the result of several years of hard work building a business. These businesses normally have the matching expenses over time to go along with the success. Also, some agents will overspend on personal items such as cars and clothes, to portray an image they've seen on TV. Sometimes, these agents cannot truly afford to keep up this lifestyle and end up getting out of the business. According to the National Association of Realtors the median annual real estate agent salary was $39,757 as of December 28, 2016, with a range of $38,839-$50,571.
One of the great things about being a real estate agent is that you are your own boss. One of the hardest things for many new agents is that you are your own boss. You make money only if the transaction closes. If you spend 6 months driving a client around, only to not find them a home at all…you don’t get paid a dime. There are many factors outside of your control, as an an entrepreneur you must accept (and be okay with) the things you cannot control.
Be Prepared to Work
A Realtor's schedule can be flexible, but not in the way most people think. Realtors have the flexibility to pick up their kids up after school and and make it to a soccer game on Saturday (maybe); however, most Buyers work 9-5 Monday through Friday which means they usually view homes on evenings and weekends. This can cut into family dinner time!
In a Seller’s Market it's even more important to be available the moment a home hits the market. So, remaining flexible in taking care of your family is often necessary in order to help your client, and this is where a spouse can really help. Realtors often find themselves juggling multiple clients on weekends, with multiple buyer's schedules! Many Realtors enjoy this action!
When you first start out, be prepared to work 50-60 hours a week. Building a business is a process. What the public sees (showings and open houses) is just a small percentage of what's actually done behind the scenes. You'll be creating a personal brand, gaining industry knowledge, market, and practicing sales skills not taught in the pre-licensing course. If you enjoy taking time every day to reach out to people to see if they're interested in buying or selling a home, this could be the right job for you!
The agents who are successful and build a sustainable business in our industry "Show Up". They show up to the office during the day to learn and lead generate, and they show up for their clients when called upon. There's a reason 88% of real estate agents get out of the business after 2 years...they simply don't do the work that's necessary to succeed.
Be Prepared to Compete
In the Denver area, there are approximately 20,000 real estate agents. Most individuals know at least 8 real estate agents and they all think we do the same thing. If the public views you as a commodity, how are you going to differentiate yourself? Why should they hire you and not their brother’s wife who just got licensed and hasn't yet closed a deal?
Your chief competitors take this career seriously. They're continually training on skills and customer service, gaining certifications, and increasing their market knowledge. They "Show Up" to the office during the day to make phone calls, create marketing, troubleshoot issues on deals, and find creative ways to solve client's problems. They know their value and are constantly striving to improve every day. The real estate industry is competitive!
Be Prepared to be Wooed
You'll hang your real estate license at a Colorado real estate brokerage registered with the Colorado Real Estate Commission. Be prepared to set up interviews with several brokers and don’t feel like you need to make a decision immediately on where to hang your license. You'll want to know who's going to train you, and whether or not someone will help you build your personal brand. Find out if the brokerage has trainings, meetings, and/or mentorships with other agents. You'll want to learn as much as possible before making your decision on where to land.
Remember, YOU are the brand and the ONLY one responsible for your business. Many of the best brokerages are agent-centric, helping to build your business first and serving in a training & support role. Your sales will make them money, as will your desk fees, and many brokerages are all too happy to make promises to add you to their real estate agent roster. Look for true coaching and training masterminds with agents doing business. One on one time is best to get your questions answered, which can be done by experienced agents, mentors, managing brokers, or coaches Some form of accountability will help you grow personally and professionally!
Once you're licensed, you'll continue to be wooed by competing brokerages. Your phone will ring off the hook with 3rd party vendors trying to sell you services, leads, marketing packages, and the like. Follow the advice of agents who are already successful.
Lenders, title companies, and others will contact you for lunches to try and earn your business. Protect your time. Stick to your daily schedule, yet if you can fit in a free lunch…go for it!
Real estate can be a professionally and financially outstanding career for the right person. The first two years can be especially challenging as you build your business, but your success is entirely up to you. You'll get out of the career what you put into it. If you're interested in learning more about a career in real estate, feel free to contact me!
Keelan McCamey, Managing Broker