Realtors: 25 Realities They Don't Teach in Real Estate School
I ran across this interesting article today - 20 Realities You Must Accept Before You Can Truly Live Your Best Life and thought maybe I could write something similar about what it is like to be a Realtor. The running joke locally is that when people move to Florida they get two licenses - their drivers license first and then their real estate license. If you are thinking of entering the world of real estate it would behoove you to have realistic expectations. I am not trying to write another 'debbie downer' post. I am truly just trying to help anyone thinking of a career in real estate. Here are 25 realities I wish I learned earlier in my career.
1. Real estate is not a get rich quick scheme
You can forget making a lot of money fast. In fact, you can probably forget making any money fast. Sure, there are exceptions to this and every rule but you should really be prepared to chop some serious wood and go without income for awhile. Many real estate Broker/Managers are telling new licensees to have at least 12 months of expenses in savings or another source of income when they first start out. Odds are pretty good that you won't make 6 figures in your first year in real estate. In Florida, with the average Realtor making less than $50,000 a year (depending on the study), the odds are pretty good that you won't even make that much your first year. Be prepared for that.
2. Getting your real estate license didn't prepare you to run a successful business
Real estate school just prepared you to pass the real estate test. You did learn a lot of information. Unfortunately, much of that information will never be used again. Your real estate class DID NOT teach you how to run a successful real estate business. Don't take your student hat off. You will need it for a long time.
3. You need to work really hard to be successful
Many people get into the real estate business because they want to be their own boss, set their own schedule and make a lot of money. They may want to hit the beach on a Tuesday afternoon, work when they choose to, not really answer to anyone and have plenty of disposable cash. Ahhh, wrong. To get your business going you will need to work really, really hard for lots of hours. I think entrepreneurs in every industry go through this period. Real estate is no different. Ask any veteran Realtor and they will most likely have war stories of long nights and weekends of hard work.
4. Part time agents make part time incomes
The old saying, 'You get out what you put in' is true in real estate. If you want a full time income then you have to put in a full time effort. Sure, there are veteran Realtors who make a good living and work part time but they are enjoying the dividends of lots of hard work performed early in their careers.
5. You need thick skin
Be prepared to be disappointed by your friends and maybe even relatives. Just because you got your real estate license doesn’t make you a knowledgeable Realtor. Your friends and relatives may pass up your services for another agent with more experience. It stings when they do but it will most likely happen to you at some point. Don’t let it derail you. Just think “Next!”
6. This is a business, treat it like one
You can literally make a 7 figure income in real estate sales depending on the market you service. But, that will only happen if you are running a business. Compare the local mom and pop retail store and Walmart. They are both in the same industry yet one might make a comfortable living for a family while the other makes millions or even billions. You have Realtors that sell 5 homes a year and those that sell 500. Pay attention to the differences in how they run their business. Mimic the successful business operators.
7. You will lose business to agents not as good as you
I am amazed at how people so much and so little thought into choosing a Realtor. Once you get some experience under your belt eventually you will lose out on some business to an agent with less experience. The decision to choose a real estate agent isn't completely rational. It could be based on the socks they wear, the dog they own, the church they attend, the car they drive or anything else that has little to do with the agents abilities.
8. Don't spend the commission until the deal closes
Transactions fall apart all of the time. Do not spend your commissions until it finally closes and you have a check. There are just too many things that can go wrong in a deal to count on the money.
9. Be prepared to not make money for awhile
The harsh truth: it'll probably be months before you're sitting at your first closing table. Sometimes, it is not the best agents that survive and thrive in the real estate business. Those agents that are most prepared or with the most resolve usually are the ones who stick around. I have seen plenty of skilled agents leave the business because they were not prepared financially or just couldn't handle the swings in income. There are many reasons why people leave the business but inconsistent income and inability to budget properly are two of the top.
10. In terms of respect, Realtors might be one notch above a used car salesmen
Let's face it, getting your real estate license is not that difficult in the state of Florida. You need to attend a 63 hour class and pass the state test. It isn't on the same level of a college degree. Don't expect the general public to think of you on the same level as many other professions. At least, not until you make a lot of money. ;-)
11. Find a mentor
Believe it or not there is a lot to know about running a successful real estate business. Sure, anyone can find a client and sell a home here and there . But, can you do it month after month, year after year? It is harder than it looks. New agents would be smart to latch on to a mentor to help them learn the ropes. Even if you have to give up some of your commission (as you should) to learn from an expert, you should do it. You will be much farther along in a few years.
12. Always be learning
It is smart to stay humble in this business. Once you think you have it all figured out the real estate universe has a way of putting you in your place. The business is constantly changing and it is clever to pay attention to those changes.
13. A business plan will help
Too many Realtors just wing it. Often times these are the agents that eventually go out of business. Get some help from your mentor and create a business plan. This will help you survive and thrive. Did I create one when I started in real estate? Nope, but I wish I had.
14. It takes time to become a rockstar Realtor
I love to see the excitement and energy that new agents have. It is energizing. But, just remember that this business is a marathon, not a sprint. Leave some gas in the tank for when the business gets tiring and demoralizing. Keeping your energy level high is easy after some consistent successes. The tough agents are those who keep going after a string of failures. Like everything in life, success takes time.
15. It's not as easy as it looks on HGTV.
There are thousands of licensed real estate agents in my market and probably the same with yours. New agents are getting licensed daily because (a) the test is not that hard and (b) they've seen HGTV and think, wow, I only have to show 3 homes, and my buyers will purchase one and I'll get a fat commission check! Reality check, it doesn't work like that. I and many of my agents have worked with buyers for literally YEARS to find the right home. I WISH I could limit them to 3. And negotiations are over in 30 minutes? Um, hardly. There are so many fires a real estate agents has to put out in a real estate transaction before we can get to the closing table, sometimes I think we make less than minimum wage when you calculate the number of hours spent in a real estate deal. But ah, it's all worth it when you see the smile on that buyer's happy face when they close!
16. You may think that you made a huge mistake
I am guessing that this thought goes through every agent's head at some point in their career. You just have those days/weeks where nothing seems to go right. This is a normal thought and nothing to be afraid of. Just hang in there for better times.
17. It isn't always glamorous work
Sometimes you have to get dirty...literally. There may be times when you need to clean your listing right before closing because the seller failed to do it. You might have climb into the attic to see termite damage or repairs. You might need to show a flea ridden foreclosure to an investor. Successful Realtors wear a lot of hats. Many of those hats are not glamorous.
18. Being a real estate agent can be expensive
You can start a real estate business on a shoe string but it does help to have a little money behind. If you start to make some money and want to grow be prepared to spend some money. Advertising, payroll, software, nice cars, nice clothes etc. It can be expensive to run a successful real estate business.
19. When you get your license there is an 87% chance that you won't be doing this in 5 years
This one can be a bit depressing. The National Association of Realtors (NAR) performs studies every year. They purport that 87% of licensees will be out of the business within 5 years. If real estate sales was an easy and lucrative profession do you think 87% of the people who entered the business would quit within the first 5 years?
20. The average Realtor income isn't as much as you think
As of January 2019, the average annual earnings for real estate sales agents was $41,289, according to salary.com. In Florida, the average mean annual wage in 2017 was $57,520 according to this study of Realtor incomes. I have seen other studies that say the average Florida Realtors makes slightly less than $50,000. Regardless, it isn't a tremendous amount of money when you consider the risks.
21. Your schedule won't be that flexible
I entered a career in real estate because I wanted to work on my own time, but I was pretty much working according to everyone else's.You may not work under someone, but you will work for many; they're called clients, and they'll be the ones paying your mortgage and other expenses. Be prepared to work seven days a week at not-so-favorable hours. Clients often want to schedule showings late at night after getting home from work, or on weekends on their (not your) days off. From viewings and tours, to photoshoots, inspection and listing appointments, prepare to work week days, evenings and weekends, sometimes with little notice, and often times for no profit.
22. If you don't prospect you will go broke
Many agents hate prospecting. The fact is that you might be the best technical Realtor ever but if you don't have any clients then you will fail. I know, this one is harsh. But it's so true. If you don't figure out ways to do lead generation on your own, you will fail. I promise. If you are not working for sale by owners, expireds, doing open houses, knocking on doors in your neighborhood and doing other things to find free and cheap leads, you will fail. No one is going to do that for you. Sure, you could buy internet leads, but typically they have about a 1-3% conversion rate, so you'd better have other ways of prospecting to find new customers.
23. If you aren't good at follow up then you may not make it
80% of sales made on the fifth to twelfth contact. Real estate success is largely dependent on nurturing prospects. 48% of sales people NEVER follow up with a prospect. Remember, in Florida, the license you need to sell is called 'real estate sales associate'. This is a sales position. We aren't order takers. It isn't up to your real estate broker to provide clients. You are the sales person. Improve your sales and nurturing skills and you will increase your income.
24. Where there is money there are competitors
While the average Realtor income isn't that high there are Realtors making seven figure incomes. With the potential to make that kind of money without a college, law or medical degree there is going to be a lot of competition. It is what it is and probably not going to change. If you want to make an above average income then you need to run an above average real estate business.
25. You can truly make really good money as a Realtor.
Despite all of the warnings above the real estate business can be very lucrative. Being in business for yourself does allow you to have a very high ceiling on your income. The sky is the limit. Sure, you'll hit a spot in your business as an individual agent where you can't climb much higher, but with the help of an assistant, and possibly a team in the future of buyer's and seller's agents, managers, etc - you have the potential to be a millionaire real estate agent.