So you just got into real estate, or maybe you’re thinking about getting into it. And why not? Depending on who you ask, it’s a great profession. You can be your own boss, work your own hours, and of course you can make a lot of money. You’ll also meet many great people along the way. We are in the business of building relationships after all, but it’s not all lilac and gooseberries. To most people they look at Realtors and think that we have the easiest job in the world. We sleep in til noon, drive our hover-cars to the office, sell a house, then take a vacation for the last 364 days of the year. OK, so maybe I exaggerated a little bit . . . they don’t make hover-cars yet. But still, there are many misconceptions about being a Realtor. And if you’re new to the profession, or if you or someone you know is thinking about getting into the biz, then it’s good to know what some of these misconceptions are as they can help you keep your expectations in check. So what are some of the most common misconceptions? Let’s conversate.
Financial Investment. It’s true that compared to many other businesses, starting out in real estate requires is a smaller financial investment. You don’t have to buy space to set up a store or spend thousands of dollars on college. But it is an investment nonetheless. You are running a business after all; and aside from the money spent taking classes and getting licensed, there are many other expenses that need to be considered. There are association fees, broker fees, MLS fees, continuing education, vehicle expenses, advertising, business cards, as well as other general expenses like office supplies just to name a few. One expense most often overlooked is health insurance. That in itself is a major expense. We don’t have the luxury of an employer footing most of the bill for us. And sadly many agents choose to opt out of health coverage altogether because of how expensive it can be. All of these expenses add up. So it’s wise to have money saved prior to selling full time, because it may be a few months before you sell your first home. Speaking of which . . .
Ease of Geeting Business. People think that getting business is easy peasy lemon squeezy when really it is tedious devious pomegranate mysterious. It’s assumed that when an agent gets licensed that the phone starts ringing and people start lining up at the door wanting their business. But that’s just not how it works. If it did, then everyone would be a Realtor. And when you’re new to the business, you won’t have the luxury of referrals. Sure, you’ll get the occasional one here and there, but they’re generally not consistent. Referrals take experience, trust and time. So when newly licensed, you need to devote more resources to advertising, making phone calls and more time just meeting people. You have to put yourself out there. And yeah, you’re going to get rejected. It’s just how it is. But you have to be comfortable being uncomfortable. Smooth seas don’t make good sailors.
Commission. There is an assumption among many that Realtors get paid salary or even hourly. People don’t realize that Realtors get paid solely by commission. But for those that do know that, they assume that Realtors get most, if not all, of the commission from selling a house. I’m sure I’m not the only one who has had someone assume you get the entire six percent and comment on how nice that must be. Sure, that would be nice. But that six percent, or whatever the percent from the sale of a home may be, usually gets split several different ways. Typically half gets split between the buying and selling side. And that half can get split even more as brokers get a cut. They need to keep the lights on so that you have a place to hang your hat. Many, if not most, real estate companies have their own advertising department that is separate from an individual agent’s advertising efforts. And they’ll often get a cut, too, because advertising isn’t free. While how much of that cut the agent gets is different depending on how much experience they have, how much business they do or who their broker is, newer agents tend to get a smaller cut when they are new, but they’re also getting less money from selling those homes. And if you are used to getting a paycheck every week, it can be a difficult adjustment starting out. As mentioned before, it may take a while before you sell your first home. You may go through stretches when you sell a few homes in a single month, only to go through a stretch of a few months when you don’t sell a home at all. When you do get your commission checks, they’re not going to have any taxes taken out, so you need to budget yourself and put money aside from each check you receive because Uncle Sam wants his cut, too.
Time Investment. This goes a couple different ways. While it’s true you have more flexibility with your schedule being a Realtor, you’re also always “on call”. If you have a buyer who wants to write up an offer at 8:00 p.m. on a Saturday night, then you need to be there, or at least have another agent represent your client in your stead. You can never be the reason a client doesn’t get a home . . . that just can’t happen. Even when you’re on vacation, you are still working to some extent. There is also the investment put into transactions that ultimately fall through. Sometimes in this business you can do everything right and still have an unsuccessful transaction. It’s a mighty tough pill to swallow to spend weeks or even months on a transaction only to have nothing to show for it. Maybe you spent time preparing a listing presentation only to have the listing go to another agent. Maybe you show a buyer 20 homes only for them to decide that they want to rent. It can be frustrating sometimes; and if you aren’t patient, then you aren’t going to succeed.
These are undoubtedly the most common misconceptions. And of course, there are always exceptions to the rule. And this article isn’t meant to deter anyone from getting into real estate; its only intent is to address some of the myths that are out there. And just because you’re starting out, it doesn’t mean that you aren’t going to be successful right away. There are many new agents who bust right out of the gate and are able to make great success for themselves. But you still need to have realistic expectations and not assume that you’re going to set the world afire your first year or two.
Richard Boas, III, Berkshire Hathaway HomeServices HomeSale Realty
Facts, opinions and information expressed in the Closing Comments Blog represent the work of the author and are believed to be accurate, but are not guaranteed. The Lancaster County Association of Realtors® is not liable for any potential errors, omissions or outdated information. If errors are noted within a post, please notify the Association. Posts represent the author’s opinion and are not necessarily the opinion of the Association.