The shock of paying taxes as an independent contractor. The lies you hear. The rewards at the end of the day that make it all worth it. Those are just a few of the things that surprised agents in their early years of selling.
The shock of paying taxes as an independent contractor. The lies you hear. The rewards at the end of the day that make it all worth it.
Those are just a few of the things that surprised real estate agents the most in their early years of selling.
A recent conversation on Raise the Bar in Real Estate covered all the perks, jerks and work that agents never saw coming.
The business partner named Uncle Sam
Bedford, New Hampshire-based agent John Moscillo put it succinctly when summarizing what surprised him about the business: “I had a business partner called the IRS,” he said.
As independent contractors, real estate agents have to pay taxes on their earnings; that means they get quite a few options when it comes to tax deductions — but it also means that if you didn’t pay your quarterly estimated taxes in your first year of business, you could be in for a pretty unpleasant surprise come tax day next year.
Bloomfield Hills, Michigan-based agent Kelly Aulph was taken by how much it costs to start a real estate business in general. “I was 18. Clueless,” she added.
“Oh, I own a business now? This isn’t just a job?” asked Atlanta-based agent Carrie Smith Qualters rhetorically.
You have to generate leads
Suz Backstrom, an agent in Oklahoma City, Oklahoma, said that when she entered real estate, “I came with marketing experience but absolutely zero sales experience.”
As a result, she said, “my biggest surprise was the concept of lead generation. I’m not sure what I expected, but that wasn’t part of it!”
Orem, Utah’s Eric James Smith is a new agent himself, and he said one surprise is “how directionless I feel. With not a lot of leads upfront, finding ways to stay busy is difficult.”
Where your money comes from
Columbus, Ohio’s Jodi Beekman said one big surprise for her was that “you are really expected to work only on commission.
“It’s amazing what you don’t know until you know,” she added.
Donna Prisyon Galinsky from Cornelius, North Carolina, was surprised to learn “that a contract did not equal a closing” and “that a million things can go wrong in between.”
Fresno, California-based Mandy Herring listed several payment-related surprises she remembers from her early days. “You don’t get paid till the check is in your hand. Your commission is not your paycheck. Don’t spend money til you make money. Everyone wants a piece of your pay. Auto deduct is not your friend,” she said.
Lies and the lying liars who tell them
“The biggest surprise for me,” said Havertown, Pennsylvania, agent Sally Roberts Marcelli, “was buyers’ lack of truthfulness and loyalty.
“I guess I was naive; I assumed if I gave them information, got them pre-approved and showed them 10 houses that they would actually use me as their Realtor!!” she added.
“Buyers are liars and sellers are worse,” said Kirkland, Washington-based commercial agent Marguerite Marrs. “I wouldn’t want to go back to selling houses for anything. Less emotion.”
“Not everyone who says they want to buy is a buyer,” added Herring.
What top producers are really like
It’s not just buyers, sellers and sub-par agents telling tall tales — sometimes you might figure out that an alleged top producer is anything but once you pull up the MLS numbers.
Panama City, Florida-based broker Jeff Payne cites agents who “tell everyone they sold 100 homes or something like that when the reality is they sold much less.”
He added that he overheard a husband-wife team “telling someone about real estate and that they are the top selling agents in the county and their brokerage was the no.-1 selling broker in the county” while having a drink at a local watering hole.
“I thought it sounded odd, so I looked it up, and neither had a record of a sale in the past 24 months,” he added. “My team had more sales in the MLS than their entire brokerage.”
“Top agents’ don’t make nearly as much as I thought they made,” said Columbus, Ohio-based Sean Carpenter. “Once I was in the biz for a while, I realized that agents didn’t take home 100 percent of their GCI [gross commission income],” he explained.
“Many people in this business — especially those who split much of their GCI with teams — aren’t near as profitable as they claim to be,” he added. “Sure, they might make a lot of gross, but what is the net?”
Real estate agents: The good, bad and ugly
One unwelcome surprise that several real estate professionals encountered was a lack of camaraderie or even basic helpfulness from their colleagues. Beekman said she was surprised that “most agents had no desire to help new agents be successful, and some of them were simply nasty in their pursuit of the almighty dollar.”
Poulsbo, Washington-based broker Rich Jacobson put it this way: He said he was surprised by “how easy it is to positively differentiate yourself from the masses.”
Kathy King, an agent in Owasso, Oklahoma, was surprised by “the arrogance of some agents — the ones that assume that just
because you are new to the profession, that you are a total idiot and that you have no other experience in life or a previous profession to draw on.”
The number of “crazy, unethical” real estate agents in the business was a surprise for Danville, New York’s Kim Kreiley VanDunk — “and people choose to use them.”
Another thing that surprised Payne is “how often agents are moving around from brokerage to brokerage. Maybe they collect business cards,” he theorized.
Payne added that stronger markets mean more bopping around from place to place by real estate professionals. “Grass is always greener,” he said.
North Lauderdale, Florida-based broker Robert Newman doesn’t think that shifting around until you find your place is always a bad thing, however.
“Agents should move from broker to broker and find the best fit,” he posited. “The problem is when they stay at a brand on a 60/40 or similar and that brand does nothing for them. Then they leave the business.”
Another North Lauderdale, Florida-based agent, Brian Brooker, suggested that agents start with an indie broker. “Big brokers have no time for the new agent,” he noted. “Find an independent broker who hustles.”
“What surprised me then and still does is the amazingly low barrier of entry for a profession that assists consumers in spending as much money as they likely ever will,” said Westchase, Florida-based Anthony Malafronte. “My barber had more rigorous path to his profession than we do! And cutting my hair is easy!”
Not all brokerages are created equal
Steve Nicewarner, a broker in Bellevue, Washington, said he was surprised that not all real estate franchises are all that alike.
“The individual broker-owners define the firm, not the franchise they work under,” he said. “I had thought that all Coldwell Bankers (for example) were largely the same. Absolutely not the case.”
Herring told a cautionary tale about working with an agent who suddenly disappeared — after following up, Herring discovered she had a serious illness. “They really needed the money from the sale,” Herring said, so she (willingly) did the work to get the sale to closing and looped the agent’s broker in on what was happening.
“Come closing day we both got paid,” Herring remembered, “but her broker gave her a referral fee and kept the rest. He did nothing but sign off the file.”
That agent recovered and is back at work — with a new broker.
How the market can change the business
Aurora, Illinois-based agent Eric Anderson said the biggest surprise for him “was how much I loved it for the first three years until the bottom fell out” of the market.
“Then everything changed,” he added.
Mike Jaquish, an agent in Cary, North Carolina, has some welcome news for new agents: There’s often free food.
He says that builders, home warranty companies and tech folks often ask for a few minutes with brokers in a sales meeting — and offer to bring catering — and that’s not including the broker opens.
“In 2009-2010, I swear some people really needed that lunch and were crushed when the food ran out,” he added. “I started hanging back until everyone got a shot at the trough.”
Cranford, New Jersey’s Sharon McCarthy Steele found a deeper meaning in her work. “I was surprised that, despite all of the ups and downs that go with the business, this is the most rewarding and enjoyable career I could have imagined,” she said.