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After some vocational soul-searching I'm realizing that life as a contract auditor isn't for me. Yes, my current position pays the bills, and yes, my current position offers stability during uncertain economic times, but as an extraverted person who loves people and who loves to have a lot of face-to-face interaction with individuals I feel very horribly "out of my element", so to speak, sitting alone in an office for 9 hours per day not speaking a word to anyone. Through college I supported myself working nearly full-time as a stand-out sales associate at Lowe's Home Improvement, and seeing the "light bulb" go on above a customer's head when I had successfully guided them towards an epiphany gave me so much of a euphoric rush that even loading bags of fertilizer into the trunk of a Buick in the rain or having to clean up a spill couldn't dampen my mood.
I seek to once again use my optimistic, hard-working, and outgoing personality for vocational purposes, and I believe real estate may just be the career for me. However, there are several apprehensions I currently harbor that I hope some of you seasoned professionals could possibly help me to overcome.
1.) Age. I'm in my early-20s, but I'm phenomenally mature for my age. Drinking is the least of my desires right now, I'm taking a long (potentially permanent) break from dating/romance after being hurt very badly, and I derive pleasure from reading the Wall Street Journal or watching CNN (or dare I say on occasion C-SPAN?) as opposed to partying. However, I have yet to see any other peers of mine here in Northern Virginia who are Realtors. I've seen some in their late-20s, though. My concerns are twofold:
i.) Would buyers be reluctant to list a property with someone or enlist the aid of someone as a buying agent who has such relative youth, assuming that I'm not yet "wet behind the ears" enough about life in general, let alone the industry? Do you think reverse-age discrimination may come into play in such a career?
ii.) I hope to launch my career working for RE/MAX, Keller Williams, or Long & Foster. All three firms seem to have stellar reputations and seem to be firmly committed and devoted to helping new agents to achieve their fullest professional potential. Do you think a newly-licensed 23-year-old would have difficulty in securing employment with such agencies for the reason listed above in that clients may be reluctant to approach me or give me a chance based upon my youth?
2.) Income/Compensation. Unlike some Realtors I have zero interest in becoming fabulously wealthy because I tie very little importance in life to material possessions. However, I would need a guaranteed gross annual income where I currently live of about $35,000-$40,000 in order to pay my bills (with a few thousand dollars more annually being helpful to start saving for my own potential starter condo or home someday). I know this will sound like a very amateur question, but do all agents work on commissions alone, or do some agencies offer a base salary upon which "the sky is the limit?"
Let us assume that my go-getting personality, aggressive marketing and social networking, the rebounding housing market in the DC Metropolitan Area, and drive to serve my clients well results in me managing to sell 6 properties in my first year (not necessarily an unrealistic goal). Let us assume that the sale prices may be as follows (bear in mind suburban DC has very high housing prices, so these are very possible for the local market):
Let us also assume that each sale would net a 6% commission, which I'd split in half with my employer (meaning I'd walk away with 3%). This means my gross income from the above transactions would be:
Even once you factor in taxes, costs of continuing education courses to retain my license (assuming the employer wouldn't pay for them), costs of additional marketing over what my brokerage already invested, cost of gasoline to ferry around clients, cost of buying clients meals, etc., etc. I should still end up with much more than enough income to survive. What am I forgetting? Did I factor in something incorrectly above? Even if I were to sell four of those six properties in my first year I still have enough to pay my bills. It just looks to be too "easy" for me, if you catch my drift, to bank that much money so quickly. What's the catch?
3.) SPECIALTY: Perhaps my toughest decision will be deciding whether I want to become a "buyer's agent", a "selling agent", or something else entirely (i.e. relocation specialist). I know this sounds like a "newbie" question, but do you need to specialize, or can you simultaneously list and try to sell homes while also enlisting yourself as a buyer's agent (with clients who may very well want to buy one of your listings?) Do brokers/clients generally frown upon you if you try to serve both roles, even if you are great with time management skills and won't neglect one for the other? I'm sorry, but in my mind I can see myself happily staging homes for open houses and even baking cookies and burning just the right scented candles to put buyers in a positive frame of mind while ALSO being happy driving around buyers to show them listings that I believe may suit their needs and exposing them to a new area. Any guidance on how you may have chosen your specialty would be greatly appreciated!
4.) CLIENT "PERKS": If I'm primarily a buyer's agent I already envision myself driving my clients around to various properties, treating them to meals, and otherwise helping to "schmooze" them to build their trust and to entice them to want to keep me on-board until their dream home comes along. A few concerns I have?
i.) Do most clients "judge" a Realtor based upon what vehicle they drive, what restaurants they may take them to, what food/beverages they order, how much they tip, etc., etc.? In my mind I'm almost picturing myself "dating" my buyers, and I worry if pull up in my Mazda instead of an Escalade or Mercedes they'll assume I'm relatively unsuccessful at selling homes because I choose not to drive an expensive vehicle. I worry they may think I'm "cheap" if I take them to a noted neighborhood hot-spot for lunch so they can see what everyday life is like in their new community instead of some stuffy place that serves caviar. Are any of these fears justified, or am I working too hard to try to get into the minds of my buyers?
ii.) For buyer's agents, what music do you typically play to keep your clients in a positive mood as you drive them around? I normally listen to relatively soothing yet upbeat music like Coldplay, The Verve, Muse, etc. to keep my mind focused. Do you think that just like an open house listing agent might "stage" a home and bake cookies to help put buyers in a better frame of mind music in the car might help as well?
5.) WORK/LIFE BALANCE: While I currently work 6 AM-3 PM I'm more than prepared to sacrifice my evenings and weekends as well to be "on call" for a client whenever that need may be. If they see a home, tell me they want a night to "sleep on it", and then call me at 11 PM to say they want to make an offer, I'd be ready to fax the conditions of the offer over to the listing agent ASAP. Since I don't have a family or many friends, social engagements will be minimal. HOWEVER, I do like to take an occasional long weekend somewhere for a getaway (the maddening crowds here in DC will do that to you). How do you, Realtors, manage to take vacations? Do you sit with your laptop open on cruises "tweeting" on Twitter about new listings? Do your clients call you saying they want to see homes? Do you establish an "alternate" agent for that week or so while you're gone that your clients can turn to if they need any assistance? I'm just not understanding how a rare vacation or getaway might work.
I apologize for the length of this message, but I'm just very excited about potentially embarking upon a new career in an industry I've loved for years. I will post more questions as I think of them. Any and all advice would be greatly appreciated!
Last edited by SteelCityRising; 05-18-2010 at 07:04 PM..
Reason: Typographical Errors
One more thing I forgot to add is that due to the relatively exorbitant housing prices in the region I currently rent. I think home-ownership is a very enriching goal that many have to achieve their own version of the "American Dream", but at my age currently earning under $50,000, there is no possible way I could even afford a fixer-upper condo. If a client asked me about my own home, should I lie and pretend I own my own place? The reason I ask this is because I fear clients may not think someone who has himself or herself never before been through the process of purchasing a home is qualified to serve in this role. Is this fear justified?
2.) Income/Compensation. Unlike some Realtors I have zero interest in becoming fabulously wealthy because I tie very little importance in life to material possessions. However, I would need a guaranteed gross annual income where I currently live of about $35,000-$40,000 in order to pay my bills (with a few thousand dollars more annually being helpful to start saving for my own potential starter condo or home someday). I know this will sound like a very amateur question, but do all agents work on commissions alone, or do some agencies offer a base salary upon which "the sky is the limit?"
Let us assume that my go-getting personality, aggressive marketing and social networking, the rebounding housing market in the DC Metropolitan Area, and drive to serve my clients well results in me managing to sell 6 properties in my first year (not necessarily an unrealistic goal). Let us assume that the sale prices may be as follows (bear in mind suburban DC has very high housing prices, so these are very possible for the local market):
Let us also assume that each sale would net a 6% commission, which I'd split in half with my employer (meaning I'd walk away with 3%). This means my gross income from the above transactions would be:
Even once you factor in taxes, costs of continuing education courses to retain my license (assuming the employer wouldn't pay for them), costs of additional marketing over what my brokerage already invested, cost of gasoline to ferry around clients, cost of buying clients meals, etc., etc. I should still end up with much more than enough income to survive. What am I forgetting? Did I factor in something incorrectly above? Even if I were to sell four of those six properties in my first year I still have enough to pay my bills. It just looks to be too "easy" for me, if you catch my drift, to bank that much money so quickly. What's the catch?
Let me just tackle this for now ... you're a bit off on your calculations of commissions.
At 6% commission, you split the 6% with the other agent. Of that 3% you then split with YOUR broker.
Do you think reverse-age discrimination may come into play in such a career?
Yes it will.
Do you think a newly-licensed 23-year-old would have difficulty in securing employment with such agencies for the reason listed above in that clients may be reluctant to approach me or give me a chance based upon my youth?
Real estate agents are almost always independent contractors, not employees.
I know this will sound like a very amateur question, but do all agents work on commissions alone, or do some agencies offer a base salary upon which "the sky is the limit?"
I am not aware of any traditional agencies that offer a base.
Let us also assume that each sale would net a 6% commission, which I'd split in half with my employer (meaning I'd walk away with 3%).
6% means the listing and selling broker each get 3% and then split it with each agent. So you may be looking at 1.5% to start.
Even once you factor in taxes, costs of continuing education courses to retain my license (assuming the employer wouldn't pay for them)
Again, you are an independent contractor and these are your business expenses.
costs of additional marketing over what my brokerage already invested,
Assumes the broker makes an investment in marketing which may or may not be the case.
What am I forgetting?
Off the top of my head: Local Board fees NAR fees State Asscoiation Fees MLS Fees Lock Box Fees Signage E&O Insurance Increased auto insurance Liability Insurance Health Care insurance Self Employment Taxes No sick or vacation days No retirement benefits or 401K matching
Any guidance on how you may have chosen your specialty would be greatly appreciated!
Most new agents tend to start out working with buyers. Hooking up with an established team is an option.
4.) CLIENT "PERKS": If I'm primarily a buyer's agent I already envision myself driving my clients around to various properties, treating them to meals, and otherwise helping to "schmooze" them to build their trust and to entice them to want to keep me on-board until their dream home comes along. A few concerns I have?
I worry they may think I'm "cheap" if I take them to a noted neighborhood hot-spot for lunch so they can see what everyday life is like in their new community instead of some stuffy place that serves caviar.
Are you pulling our collective legs, here?
ii.) For buyer's agents, what music do you typically play to keep your clients in a positive mood as you drive them around? I normally listen to relatively soothing yet upbeat music like Coldplay, The Verve, Muse, etc. to keep my mind focused. Do you think that just like an open house listing agent might "stage" a home and bake cookies to help put buyers in a better frame of mind music in the car might help as well? Ditto.
Many buyers prefer to follow agents in their own cars. Many agents prefer not to drive clients because of liability. If you do drive, turn the music off.
Do you establish an "alternate" agent for that week or so while you're gone that your clients can turn to if they need any assistance?
Yes and sometimes it's necessary to compensate the other agent for doing so. Most newbies do not make enough money to afford a vacation. In this market, in many areas, even the old hands may not be making enough to afford a vacation.
I apologize for the length of this message, but I'm just very excited about potentially embarking upon a new career in an industry I've loved for years. I will post more questions as I think of them. Any and all advice would be greatly appreciated!
Where are you going to get clients from, given you say you do not have much of a social network.
Why will someone want to use an inexperienced agent when they can get someone who had decades of experience? What is it that you are going to offer your clients that no one else can? While you are " dating your client" the agent on the other side, is going to use your inexperience to his or her client's advantage.
Until you can answer this, it's going to be challenging to persuade someone else to take a chance on you.
One needs about 6-12 months savings, maybe more in this market, to live on, in the begining.
Please think long and hard about giving up your day job. Perhaps a corporate sales position may suit you better.
Let me just tackle this for now ... you're a bit off on your calculations of commissions.
At 6% commission, you split the 6% with the other agent. Of that 3% you then split with YOUR broker.
Thank you very much for the clarification. I realized after I had posted that there are actually four of us who share in the commission---my broker, myself, the other agent, and their broker (assuming they have one). I hadn't yet thoroughly investigated the commission structure. In the above scenario I would then be cutting my gross income in half to $35,000, the very bottom end of my "survivability" budget. I knew the numbers looked too good to be true! LOL!
Keep in mind that your broker split commission % can vary from broker to broker and over time. It is typical that new agents usually start out low around 50% to cover training and possibly marketing costs, but should improve over time as you gain experience and close more deals. Some companies only require a relatively small transaction fee (100% companies), but you typically get little support and training.
As MaM indicated, you need a sizable cushion to get started to cover your expenses until you can get deals closed.
Where are you going to get clients from, given you say you do not have much of a social network.
Why will someone want to use an inexperienced agent when they can get someone who had decades of experience? What is it that you are going to offer your clients that no one else can? While you are " dating your client" the agent on the other side, is going to use your inexperience to his or her client's advantage.
Until you can answer this, it's going to be challenging to persuade someone else to take a chance on you.
One needs about 6-12 months savings, maybe more in this market, to live on, in the begining.
Please think long and hard about giving up your day job. Perhaps a corporate sales position may suit you better.
Well, while it was very discouraging to read your feedback I was expecting and hoping for a healthy dosage of "reality" in regards to the industry and really do appreciate you leveling with me in this manner.
Unfortunately with the high cost-of-living where I currently reside contrasted with my relatively low current salary it will take me at least five years to save up enough money to cover a year's living expenses (my rent alone on a 1-BR apartment here is higher than my parents' mortgage payment in an upper-middle-class subdivision in Pennsylvania). I suppose this does explain, though, the dearth of younger professionals in the real estate industry. With student loans still being repaid and low starting salaries most my age can't really afford to take a "gamble" as a first-year Realtor, especially if it does take a considerable length of time to start making sales.
"Why will someone want to use an inexperienced agent when they can get someone who had decades of experience?", you ask? Well, with all due respect, you were all at one point or another rookie agents looking to make your first sale, right? Obviously someone out there was willing to take a chance on your youthful idealism, determination, and vested interest in getting the job done---at any cost---to give you the "in-road" into the industry. Why do you presume any other new agent would be unable to do the same?
I didn't mean I would be literally "dating" my client. While working at Lowe's I developed such levels of trust with some of our clientele that I knew them on a first-name basis, they referred friends to me to make large-ticket purchases (in which I netted a commission), they were more apt to let me "up-sell" them because they trusted me, etc. I'm sorry, but I would never view a prospective buyer as a commodity---like cattle that had to be prodded along. Taking care of people should be an essential core value for any sales professional, including a Realtor.
It has just been tough because as I should be living in the "prime years" of my life in my 20's I've grown largely miserable doing something I'm skilled at, doing something that pays the bills, and doing something where my work is valued, but, at the same time, it is all for naught because I sit alone day-in and day-out and don't talk to a soul. That "isolation" isn't me. I've suffered in this role for a year now, and the "veterans" here whom I consult about the career who have been here for 8, 10, or 15 years all say "at least it's a paycheck." Shouldn't you want more out of where you spend 1/3 of your week than just showing up to collect a wage?
I'm sorry I misinterpreted the "independent contractor" vs. "employee" relationship. I was looking at the web sites for two major real estate firms, and they mentioned medical benefits, retirement plans, etc. on their "careers" sections, which implied, to me, that an agent would be an "employee" of those firms in order to be offered those perks.
Business expenses are tax-deductible (up to a threshold), so at the very least I'd be able to recoup some of the losses I had invested into my career.
If you're trying to firmly impress upon me a notion of "this job isn't a cake-walk, so be damn sure you know what you're getting yourself into", then realize that I do know. I was being a bit overly-optimistic here with first-year gross earnings potential (especially considering I had incorrectly calculated the commission split). I'll admit that. I'm being "pollyanna" thinking I may be able to close 4-6 transactions over the course of a year before I have an established social network in my repertoire. I also hadn't considered needing a one-year savings "safety net." That last sentence, unfortunately, kills my dream. I would need $20,000 to pay all of my bills here for one year. It will take me a considerable number of years to accumulate that earning a $50,000 gross salary.
I thank you for pointing out more of the "reality" of the profession. While it doesn't kill my hopes and dreams to do great things to steer families into the homes of their dreams someday you brought up the point that it's not something I can do thanks to the unforgiving cost-of-living in my area where it's impossible to forgo the luxury of a stable income for any considerable length of time.
Keep in mind that your broker split commission % can vary from broker to broker and over time. It is typical that new agents usually start out low around 50% to cover training and possibly marketing costs, but should improve over time as you gain experience and close more deals. Some companies only require a relatively small transaction fee (100% companies), but you typically get little support and training.
As MaM indicated, you need a sizable cushion to get started to cover your expenses until you can get deals closed.
Thanks for the clarification regarding the broker/agent commission split. I knew that you typically started out splitting it on a 50/50 basis to help account for what the broker invested in your personal development and training expenditures, but I didn't realize that this percentage gradually slid upwards in your favor as you gained a proven track record for success.
Unfortunately MaM took the "dancing happy Realtor" in my thoughts and just beat it over the head with the "reality" stick, but it was something I'm glad she reminded me of. Not having a savings "safety net" (and not being able to acquire one easily living nearly paycheck-to-paycheck in one of the nation's most expensive areas) was something I was conveniently hoping to stow away in my back pocket. Unfortunately that is something I can't dismiss, and that is something that will kill my dream.
You could consider being a part time agent while you build up experience if your job allows you flexibility to meet with clients, show homes, deal with contracts, etc. However, from your job description, does not sound like you have that option.
Almost without exception, do not go into the real estate business part-time. I do not know of one successful Realtor in my local market that successfully transitioned from part-time into full time. Of course, there are exceptions, but few.
That being said, go ahead, get your real estate eduction, get your license, put them in escrow if necessary, but once you commit, go for broke. I am a principal broker and I see many part-time agents make excellent part-time incomes, but none transit successfully to full time.
I would not tell you which franchise to join. While I am a RE/MAX broker and I know you will eventually be a RE/MAX associate, I will tell you to find a broker that sponsors Brian Buffini's 100 Days to Greatness. You need to learn how to prospect first, foremost, and always. It's your job and your career will depend on it.
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LOL!
