My journey to becoming a real estate agent started approximately five months ago. I was sitting in a mall parking lot broiling in the summer heat (it was like 103° F outside) waiting to pick up some Uber rides. I had been using Uber to supplement the income I receive from writing projects. Normally I supplement that income with substitute teaching, but the job dries up during summer vacation. Anyway, the summer heat sucked. I was scrolling through my Facebook feed and I came across a post from Adam, one of my teammates from my mma gym. My friend (and another fellow teammate) Damian was looking for a new agent to join his growing agency. I figured 'What the Hell, why not?'
Fast forward five months. I took the required classes. Passed the salesperson test. Now I'm just awaiting the approval of my application to the state bureau of real estate. Prior to deciding to take this journey, I did a little research on the profession. Apparently about half of all new licensees do not make it to their first anniversary before leaving the profession. That's a shockingly high number.
It also explains the sheer volume of 'recruitment' letters I've received since the state announced I was taking the test (which must somehow be a public record... thanks California.) Interestingly, these letters aren't of the 'apply to work with us' so much as 'this is what we can offer you; PLEASE JOIN US!!!!!' The tone of the letters makes the point obvious - 'recruiting' isn't a culling process to identify the best candidates. 'Recruiting' consists of throwing as much pasta against the wall as possible and hoping something sticks... which is a tell-tale sign there are a whole lotta people that wash out.
So what's the big problem? Why do so many people fail?
As it turns out, the issue is simple. Most people fail because they run out of money.
Even though the education, testing, and licensing for real estate is relatively inexpensive compared to other professions (it should cost less than $2,000 or so), it's extremely difficult to make money in the beginning. It takes time to break into an established market, make a name for yourself, and begin building a client base. As a real life example, I met a teacher who's spouse is a real estate agent. This agent has been an agent for three years. They've sold exactly zero houses during this time. None. Nada. The agent lives entirely off their spouse's teaching salary. If it weren't for that salary, this agent would have (and probably should have) washed out of the profession within the first year because they would not be able to afford to live. This problem is, without a doubt, the biggest obstacle new agents face.
Me? I'm incredibly lucky in this regard. I already have two sources of passive income from the aforementioned books and affiliate advertising on my various blogs, I can still work as a substitute teacher, and my wife has a full time job. On top of all that, my agency is generously (and wisely) set up to help us new agents weather this phase. Until we're licensed, we act as real estate assistants and earn income for non-salesperson duties. After being licensed, we're provided with leads to help us build that client base. All of this, coupled with a rather minimalist lifestyle, adds up to a great formula for surviving that income chasm.
If I were advising people that were interested in a career in real estate AND they wanted advice from someone that's going through the process currently, I would offer the following tips:
- Save Money! This is a biggie (and the one I really failed.) Having a repository of funds to pay the bills would go a long way to bridging that early lull in income. At a minimum, I would recommend saving enough to cover three to six months of expenses, and ideally have enough savings to cover an entire year.
- Develop passive or semi-passive income streams. I did this in lieu of the big savings account, but the idea would be to combine these two strategies. Passive income is defined as income that requires no time or effort on your part; semi-passive refers to income that takes very little time or effort. There are a million possibilities here that goes well beyond the scope of this particular article. Google it.
- Don't quit your current job. This one is a little controversial because any amount of time spent working on anything besides real estate will, in all likelihood, slow your development as an established, successful agent. However, it adds a ton of security you wouldn't have otherwise. If the previous ideas are not feasible, working another job would be an undesirable but effective solution. Ideally, you'd want to be able to work this job during times that does not interfere with your work as a real estate agent.
- Have a plan to develop leads. Leads are the lifeblood of a real estate agent. Again, there are a million ways to generate leads, which goes beyond the scope of this article. Without leads, though, you will fail. Do research and develop a plan.
- Live frugally. It's far easier to spend less money than it is to make more money. Curtail excess spending. Eliminate debt. Make a budget. avoid major purchases.
- Pick your agency wisely. As I alluded to earlier in the post, some agencies are ideal for new agents. Most are not. Any agency that gives you the opportunity to earn income without having to actually sell a house is probably going to be better than an agency that's just going to throw you to the sharks. Some may offer an actual salary. Others, like my agency, act as a team and pay for doing various administrative tasks. Agencies that provide leads can also be a huge boost to new agents as it helps develop that all-important client base.
If you're a new agent and you follow these steps, odds are excellent you'll avoid becoming one of those 50% of new agents that 'flunk out' of the profession.
Current long-time realtors - do you have any advice?