You’ve decided to take the leap and become a real estate agent. Congratulations! You’ve taken the step of making a decision, but now it’s time to take action. Where do you start?
As with any new business, new entrepreneurial effort or new job, preparation is key. This article outlines the four essentials for the pre-license phase of your new real estate career.
1. Get in the right mindset
This business is amazing, and it is tough. Every real estate agent I have ever trained has said it was harder than he or she thought. And most said they are so glad they started.
So your mindset is key to make sure you are at least semi-prepared to push through the hard work and bumps in the road. I say semi-prepared because I don’t think fully-prepared every really happens.
You know how you hear various business success stories out there and often, in hindsight, the success story protagonist says something along the lines of, “if I had known everything I know now, I may not have ever started.”
If you are truly excited about this new opportunity, then start anyway.
You do know you are about to start your own 100 percent commission business, with a high fallout rate, where you are the boss, and you have to convince others to use your services? If that excites you, this is a really good start.
A little nervousness is quite normal. But if that statement is a great big buzzkill, it is worth unpacking those pieces to make sure you are poised to work super hard to turn this new opportunity into something amazing.
In this preliminary phase, your mindset is key. Spend some time — you could journal, talk with friends, read articles online — and answer these questions for yourself:
- What do I most want out of this business?
- What most interests me about real estate?
- What will my success in real estate ultimately do for me and my family?
- What is my motivation?
- Do I attract people, and do conversations come easy?
- How is my energy, health, happiness, motivation, grit, drive, overall well-being?
2. Do your research
You have talked to a few real estate agents, right? How about a mortgage pro or two? A real estate attorney, a title rep, an inspector, a stager.
How about talking with five close friends who have all bought or sold real estate in the past couple years to discuss their experience? Do your research.
This type of engagement typically has one of two results: It will either strengthen your resolve to take on this new endeavor, or it will take the wind out of your sails, and you may take a step back.
I took numerous steps back in the years before I started in real estate. There were a couple of people who talked me out of it, my resolve was not yet solid. But I stuck with the research, I kept coming back to real estate as a possible career option because it truly interested me. When the time was right and my resolve was solid, I was all in.
In your research, I would strongly recommend reading The Millionaire Real Estate Agent: It’s Not About the Money…It’s About Being the Best You Can Be! by Gary Keller, Dave Jenks and Jay Papasan — it’s a bit of the bible for real estate success.
The first few chapters provide the foundation; the entire read is a road map to making it big.
3. Stash some cash
You need a financial cushion. It is easy to find varying opinions on the size of the cushion. I am typically in the six-months-reserves club. So what are your monthly expenses — food, shelter, gas, insurance, kids, basics?
Sock six months of that away for your cushion to getting started in real estate.
The reason for this is twofold: you are building a pipeline, and most every paycheck in real estate is 60-90 days out from signing the paperwork.
So the absolute best-case scenario is if you had a new client sign up with you the very first day you landed with your shiny real estate license, and you got them fully qualified, negotiated and under contract within a few days, you may have that paycheck in five weeks.
Unless the deal falls apart because of buyer financing — then, your pay for the time invested is zero.
And remember the shock you endured, when you got your very first paycheck at your first teenager job, at the amount taken out of your minimum wage check?
Your commission gets chopped up too. You may have earned 3 percent on that $200,000 sales, but that $6,000 gets shared with your broker and Uncle Sam (meaning you need to put some away for taxes).
One other factor in the money department (and the research department) is know your fees. I can almost guarantee you they will be higher than you think.
Keep this in mind: starting any business is expensive. If you compare the start-up of your real estate business to almost any other business start out there, it’s actually quite cheap. Your fees will fall into one of these categories:
- Pre-license: Required classes, exam prep class, application fees
- License: License fees, your local board membership and MLS dues, possibly a couple fees from your broker
- Business expenses: Lockboxes, signs, business cards, website, various technologies, office supplies, professional photographer for your listings and continuing education classes. Your broker may supply some of these, and you’ll most likely encounter most of them. Oh, and your car — it’s in working condition, right? You’re going to put a lot of miles on your car (if you’re not, then you’re not doing real estate or you live in Manhattan).
4. Have a plan
So you have your mindset, you’ve done your research, and you have cash reserves. Now, how about a general plan?
I have seen MBA agents have a complete plan with spreadsheets, sales projections, a marketing budget and an income statement — that’s amazing, good business and the exception.
When I say your general plan, spend some time outlining the following:
- How much money do I need to make?
- How much money do I want to make?
- What is the average commission in my area?
- How many closings will I need to hit my goals?
- Where will my business leads come from?
- Will my broker provide leads?
- What broker will I choose? What training will my broker provide? Does my broker provide any mentor opportunities?
- Do I want to be a solo agent or join a team?
- How will I spread the word about my services?
- Do I want to specialize?
- Who are my biggest fans?
- Who are the top 100 people I know most likely to buy or sell real estate this year?
- Am I going full-time or part-time? If part-time, what financial goal do I need to hit to go full-time?
Your new real estate career — it could be the most brilliant move of your life. Plan accordingly.