So, You Want To Do Real Estate! Do Ya?
Once Upon A Time
You got a fire in your belly! A dream in your heart! You are going to make it big one day, baby! Real estate is just the start!
Ok, really...it starts out as a fantasy. Look at Donald Trump, he's successful. If he can do it, why can't I? After 10 years in the business, all I can say is...I am not Donald Trump. Maybe I should have tried commercial real estate...maybe someday I will.
The truth is this...real estate is hard work. You spend vast regions of your time talking to people. Not all of those people want to buy or sell a house. The hope is always that they will remember your name when the time comes that they do want to make a real estate transaction.
Real Estate Will Make Me Rich
If you ever thought about doing real estate, show me your hand:
Get your check! Get your reality check here!
Real estate is still one of the fields a person can do very well in with very little education. You do need to be licensed in the USA in order to practice real estate. If you are an investor and only buy and sell for yourself then you don't need a real estate license to handle your own transactions. Anyone else wanting to make a living in the field, needs to go through a training course.
Every state has varying guidelines for what will be required to become a licensed salesperson. I used the word salesperson because in the world of RE licensing you have to be a salesperson and work in the field for a year before you can take more classes and qualify to become a broker. When you are a broker, you are legally able to open your own shop.
If you are considering becoming an agent, here are some questions you need to ask yourself.
1. Can I live on a commission based structure?
In the world of real estate, your salary is based on a commissioned portion of the sale. If you have no sale, you have no commission. Nobody gets a client and gives it to you. Some companies will give you a client IF you split the commission with them, sometimes starting at a 60/40 split. They keep 60, you get 40 (some splits are not so generous). If a $100,000 home paid a 3% commission and you got to keep 40%, then you earned $1200. It might have taken 60-90 days to close on that home.
2. Are you in a position to take classes in order to meet your states minimum education requirements to become licensed...and then pass their state examination?
You can actually find classes relatively cheap for real estate training. In fact, it is very economical to get into with an average range starting from $400-500. You will need to pay separately for a state exam, which in my state is $75. The total up front cost of becoming licensed, about $500. That isn't bad for the opportunities that now become open to you.
3. Do you like networking with people, talking to strangers, going to events and handing out your business card?
Networking is everything in real estate. If you don't like people, this isn't the right field for you. Networking in person is hugely different from networking on the web. You have to get out there and kiss a few babies. You have to advertise yourself. YOU are the product you are selling, your knowledge, area of expertise, and overall comfort with your client. The advantage of this though is that nearly everything you do becomes a new business opportunity so many of your expenses now become tax write offs. Yeah! Bonus.
4. Can you be disciplined and self-manage?
Nobody watches over your shoulder and tells you when to work. You have to be responsible for getting yourself out of bed, finding your clients, doing the work that needs to be done. Even filing. Yes, even filing...someone has to do it and unless you are hiring someone else to do this for you, you will be required by law to keep copies of your transactions. You have to set a schedule and work it.
5. Do you have reliable transportation? Do you have a fear of meeting strangers in strange places? Do you have detail orientation skills?
There are other things that go into the equation that people don't give any thought to until it happens. If you are a single woman, how comfortable will you be when a male calls on the telephone and requests to see a vacant home listed in your inventory? If you don't drive, getting to a showing appointment on the bus route is tedious at best. If you hate details, then you better find a good assistant that will help complete your written offers to purchase.
I love real estate. I love working with the people. I love the freedom of my time. I even love the research online for properties and the routine of completing purchase agreements. I truly don't wish to discouraging anyone who is interested in pursuing this field. We need good quality, dedicated and ethical people in the business. This is not a business for the weak of spirit or the unmotivated.
What I wasn't taught before entering into the field of real estate I had to learn along the way. Sometimes, I learned it the hard way. It was very confusing trying to weed through all the complications of how to make money, finding a niche, determining what affiliating agencies I had to become a part of in order to succeed. I would have loved to have had some guidelines to help ease the way.
For instance, signing up with the local multiple listing service. I didn't really understand the concept before I entered the playing field. If I am not part of the MLS, in my area it is the MIBOR, then my listings are not gathered with all the other homes available in the area for sell. I can't search the MIBOR database to find homes for my clients to buy. You have to be a member in order to get the most up to date list of homes available.
When I first started, I kind of resented this arrangement because it was another $1000 annually that nobody bothered to tell me I would have to pay. There are very good reasons for why it cost so much. The most important reason for me is that I primarily work with buyers and MIBOR has an arrangement between agents that specify the commission of the split in the database. How does that serve me? I don't have to negotiate a commission for myself, it's already done.
There are many more pitfalls and hurdles in starting out that could merit some explaining. There are many joys and oddities that I have experienced that certainly deserve equal time. Remind me to tell you about the dead body in the crawl space some time. Or, the guy who fell down a hill and ripped his pants so he went into the bathroom to clean off at a showing and came back out in only his underwear. Yeah, those are good times.
Oh, yeah, and remember that scenario where I said if you had a $100,000 and you were splitting it 60/40, you would earn $1200. Well, if you were to continue your education...another $600 or so, and become your own broker...You wouldn't have to split that. You now made $3,000. And, if that sounds more pleasing....I have another. My first year, the 4th house I sold was $380,000. The total commission earned was $11,020. My cut was a little over $8,000.
I didn't say it wasn't possible to make money...only that I am not Donald Trump.