We want to help you make more money — right now. All month, go Back to Basics with Inman as real estate pros share what’s working now and how they’re setting up to profit in a post-pandemic world. Get full access to the series for 50 percent off here.
So many people think being a real estate agent is an easy job. First of all, it’s not even a job. You are essentially starting your own business —please treat it as such.
Understand that when starting your own business, it’s pretty typical that people will apply for business start-up loans because the cost of doing and creating business is not cheap. Most new companies often operate at a loss for the first two to five years.
Real estate can be a prosperous occupation if you give it the right respect and start with the right perspective. Here, we set the stage and review a few items to keep in mind when embarking on your new career in real estate.
After high school graduation, the traditional next step is a college education. Typically, a four-year bachelor’s degree, occasionally abbreviated by a 2two-year associates degree, and oftentimes extended with a master’s degree and even a Ph.D.
Touring colleges was a proud custom relished by many parents. But at what cost? According to a recent US News article, “in-state tuition prices among public National Universities grew by 72% over the period from 2008 to 2021.”
And how do 54 percent of college attendees pay for their education? They get approved for student loans with the average amount of student loan debt at $37,584 (as reported by Investopia.)
Just like colleges, there are a plethora of schools where you can take pre-licensing classes. The required amount of class hours (averaging between 40-100) will depend on what state you are selling in, and if you are getting your first license or adding an additional state license.
Some states have reciprocity (meaning they will allow you to practice in another state if you are already licensed in another state). Most do not. And just like college, your tuition fees will vary from school to school. Just be sure to take classes from a school that has been approved by your states real estate commission. There are in-person classes and online options for you to study and learn the basics.
2. Licensing fees
Once you successfully pass your classes, you will then have to pay for and pass a state licensing exam, and pay licensing and fingerprinting fees once you do.
You will also have to choose which broker you want to hang your license with. That is a huge career decision that we will discuss in a moment. But first — the expenses.
3. Cost of doing business
Monetary obligations will seem like they are coming at you like a zombie apocalypse. You will have your Realtor association dues, multiple listing service subscriptions, E&O insurance, digital lockbox key, business cards, headshots and oh my, that is not even considering office supplies, sale signs, cell phone fees and all other ancillary business expenses.
The important thing I want you to see here is perspective. While this may seem like a lot of money up front to become a sales agent, you are not paying even a fraction of the costs of a student attending a college or university. Think about it. You are entering an entirely new career and essentially going back to (or just starting) school. Perspective.
Business expenses are so much more than staplers and sale signs. When you run your own business as a real estate agent, you will want to keep good records on your car expenses, your client lunches, parking fees, open house items and closing gifts too because many of these things are tax deductible. Remember — you are running a business. You will have to spend some money to get started.
4. Where to hang your license
Before choosing your new broker of record (aka where you will hang your license), it is highly recommended that you interview at least three different brokers. I suggest you choose one nationwide big name company, one local brick-and-mortar company and one alternative company.
We’re all familiar with the heavy-hitters like RE/MAX and Keller Williams — the big names that have been around and typically have the highest number of agents. When visiting and getting to know the different companies, do not overlook the smaller local real estate brokerages.
Between the culture and availability of assistance, you want to be sure you chose the right fit. In addition, don’t rule out some nontraditional firms that may offer competitive commission splits or even virtual participation, like eXp Realty.
Each one of these companies operates and educates their agents differently, and you want to make sure you team up with the one that will best fit your needs. Ask questions about training, support, admin help and mentorship.
See how you feel while touring the office and if you vibe with the company culture. Remember: You are embarking on starting your own business. You will be a sole proprietor, and your broker will be getting a piece of your commission.
It’s so important to make sure you are comfortable with the level of service they provide, the education they offer and the fees they will charge. There can be monthly fees and transaction fees, technology fees and copy machine fees too. Be thorough and aware so you don’t get shocked with a huge bill in your first month when you haven’t even brought a deal to close.
5. Advertising money pit
New real estate agents can become quickly distracted by exciting marketing pieces and lead generation services, falling into what I call the advertising money pit. Do not be one of them. Keep your eyes on the prize, and realize that you do not have to get into debt trying to pay for a billboard or purchase branded swag right from the start.
Learn the ropes and take advantage of the free and low-cost options you have at your disposal. You can absolutely request some giveaways from your broker. They will be branded to the company for sure, but they also will not cost you extra in the beginning as you get started.
Learn about social media marketing and how you can organically grow your online footprint and increase lead generation with little to no expense. And of course, you always want to start with your sphere of influence — all the people you already know, so that word of mouth can get you started and create momentum for your network to understand that you now are available to help people buy and sell a home.
6. Professional development
Once you are established, you will want to be prepared to take additional education classes about every two years or so, depending on your state’s continuing education requirements.
Be prepared and get these done ahead of time — preferably during slow season — so you don’t get caught trying to cram it in in the middle of an important deal.
You can also consider taking some specialized training to increase your industry knowledge and earn a designation or certification. These can be used in marketing yourself to let clients know your dedication to your work and extended professionalism.
There are also opportunities to attend different real estate conferences where they may offer some of these educational opportunities. Do not underestimate the value of getting to know your peers and increasing your industry knowledge.
Launching a new business and learning how to manage it will take time, have a huge learning curve and become overwhelming. If you enter real estate understanding the value of your time and efforts, you will have a higher likelihood of being successful.
In the beginning, you will be working what seems like 24/7/365. If you set up systems, maintain work schedules and set boundaries for yourself, you will achieve a higher level of happiness and be prepared to greet your clients energized and prepared.
You will be able to better focus on them if you make sure you also have provided the same level of attention to your mental wellness, your loved ones and your health. It is not going to be easy, but if it were easy, everyone would do it!
Now that you understand you are starting a business, not a job or a hobby, you can have the proper perspective in understanding that while it may appear to be expensive to get into the real estate business, it actually isn’t. The startup costs are significantly less when compared to other industries where higher education and even post-graduate degrees are the norm.
As long as you are ready to invest the time, the effort and the grit into moving forward and learning the ropes, this business can end up being one of the biggest returns on investment you will ever make.