Commercial PropertyNew Agent Wants To Know Where Grass Is Greenest
A new licensee living in California wonders whether he"d be better off as a real estate agent or a mortgage broker. Realty Times has advice for him.
Hello Blanche,
I am a newly licensed Real Estate agent, not with a broker yet, and I am eager to begin with either a brokerage or mortgage company. I work 8 - 5 as a computer programmer for a financial institution and I am hoping to find something part time while still working at my current position. I figure this is a good time to do this because the market is slow and if I can find a mentor to help me get my feet wet. Do you offer or have any suggestions for me regarding the best way to approach the slowing Real Estate Market?
Thank you in advance for your answer and hope to hear from you soon, Kevin.
Realty Times responds:
Dear Kevin, if you read Realty Times, you know I"m all about facing reality head-on. It saves time, hurts less and gives you an advantage, so keep in mind that I"m not trying in any way to discourage you, but to simply answer your question with the answers you really need to know.
After a few follow-up questions I learned that you are an experienced homeowner, you seem to understand the housing market"s relationship to the stock market, bank rates and so on, and that you live in California, all facts which influence my suggestions to you.
You live in one of the most competitive markets there is, with more real estate agents per population than just about any other state, but that doesn"t mean you won"t do well as either an agent or as a mortgage broker, or both. I understand that when you are licensed as a mortgage broker in California, you are automatically licensed to sell real estate as well.
But you said you are a licensed agent, so that suggests that you already have a preference for real estate over mortgage origination. When I asked you what you thought you could bring to consumers, you said, "Education. I have a way of explaining things to people they can understand easily. I feel this is important to consumers who have little knowledge of Real Estate transactions and how they work. I want to be able to explain all that is necessary to make a buying a home a pleasant experience, not a nightmare."
All that is well and good, but you"ve skipped the most important part of going into business for yourself -- where are you going to get customers? It"s going to be easy to educate customers once you get them, but how will you get them?
Whether you work part-time or full-time, you"ll be met with the same challenges and that"s how to be two places at once. That"s why I personally don"t believe in part-time real estate sales as a rule but sometimes it can work for highly motivated people. Are you highly motivated?
I can ask this question from experience. In 1993, I was raising two little kids on very little money and wanted to become a writer. I worked full time in retail sales and wrote freelance pieces late at night. For nearly four years I hardly got any sleep, but I was determined to give my family a better lifestyle where I could make more money, work flexible hours, exercise my mind, and enjoy life more. By 1996, I quit the retail job and began working full-time as a writer, a dream I"m grateful to be living ever since.
Now let"s talk logistics. I was able to work part-time as a writer because I was able to control my schedule. I farmed for freelance assignments in the morning before I went to work, and wrote at night after the kids went to bed, leaving me to work at my retail job without interruption. That"s not going to work for you because real estate sales is about making yourself available to clients on their schedules.
So, how do you plan to farm for clients? Phone, internet? How are you going to do that without your boss noticing? When are you going to show property? On your lunch hour? If you build any business at all, you will quickly hit a wall with scheduling conflicts -- the client can"t look at property when it"s convenient for you, but when it"s convenient for them.
You mentioned working with a mentor -- when exactly do you plan to be available to meet with and observe this person? In most cases, your mentor will be your broker, but as many agents have found out before you, your broker is hiring you to bring in business, not take him/her away from business. You"ll have a brief honeymoon period with some attention from your broker, and then you"ll find you"re on your own.
Next question. Do you have the money to fund a real estate career? It takes a lot to get started, with licensing only a small part. You have to pay for association fees, MLS access, training and development, technology, marketing, lead generation and other expenses. You should have at least three to six months of expenses set aside to live on your first year, and your broker may recommend even more.
You said the market is slow, and that"s a good time to get into the business. People are bailing because they aren"t making any money. You have to do things differently if you"re going to make it.
The first thing I would do if I were you is start interviewing brokers. Ask them what their companies offer in the way of training and support and what they would recommend you do to be successful as a rookie in their firms. If they offer to put you with a top agent to train you, run the other way. No top agent is going to train you -- they"ll simply use you to lick stamps on their mailers -- they aren"t getting paid to train you. If the broker suggests you start by writing a business plan, you"re talking to the right person because this person knows that is what it takes to get the stars out of your eyes and reality into your checkbook. A good broker will help you write a business plan that makes sense.
When you see from your business plan what it takes to run your own business, you"ll know what you have to do to make a profit -- how many sales you have to make, what equipment you need, and what the costs/rewards will be.
That should tell you right then and there whether real estate sales is for you or not.
Last piece of advice -- don"t get hung up on one broker paying a high-split over another. Generally speaking, the more the broker does for you, the lower the split. The less the broker does, the higher the split. As a rookie, you"re going to need all the help you can get, especially in meeting and developing clients. Using the brand power, reputation, organizational systems, and the lead generation capabilities of an established broker is well worth the difference in splits because all those things are as important as "mentoring." Remember, 100 percent of nothing is nothing.
Good luck to you, and keep us posted of your progress.