The housing market is hot, and new real estate agents are swarming the industry for a slice of the pie. In January, the National Association of Realtors (NAR) had 1.45 million members, up 4.8 percent from the previous year.
But starting a career in real estate is no easy task, with majority of agents expected to fail within their first five years.
To find out the best ways to approach the market as a newbie, Inman reached out to experienced real estate professionals via email for their tips on how beginner agents can set themselves up for success.
Don’t expect to make a lot of money right off the bat
“If you plan to get into the real estate game, expect to work hard for almost no money for the first couple years,” Tomas Satas, founder and CEO of Windy City HomeBuyer, told Inman. “You grow a real estate business by investing in marketing, hitting the phones, and selling yourself, not houses.”
According to the NAR, the median gross income of a Realtor in 2020 was $43,330, down from $49,700 in 2019.
“New agents think that magically, people show up, look at three homes, pick one, and a couple of weeks later you get a check for thousands of dollars. If only it were so easy!” Satas said. “The reality is that selling houses is not walking clients through beautiful homes every day just waiting for them to pick one. In my area, there are over 6,000 licensed agents and it’s a battle for every single client. It takes time, effort, and money to get clients. Without clients, you end up answering phones in your broker’s office instead of showing homes.”
But securing a client doesn’t always mean money is coming soon. New agents need to be aware that it can take months — sometimes years — to close a deal.
“The most common misunderstanding people have before becoming a real estate agent is the length of the sales cycle,” Bill Samuel, a broker and founder of the home buying company Blue Ladder Development, told Inman. “Most transactions involve a very long sales cycle that can stretch several years from the initial point of contact to the actual closing of a property. This is especially true for agents working heavily with buyers.”
If agents intend on selling real estate full time, they need to make sure they have a financial cushion to fall back on while building their real estate business.
“If you intend to become a full-time agent, then you should be willing to work hard for the first year with very little pay as you start to build momentum. Many people wind up quitting before they get to this point because they have a difficult time covering their living expenses until they get to the point where they are consistently doing deals,” Samuel said.
“Form a habit of budgeting,” he said. “Unless you have a consistent financial cushion, you won’t be able to survive in the industry. The nature of the real estate market is such that there’s a constant exchange of funds from different parties. Ideally, you should keep track of how and where your money flows. This keeps you informed about your money and prevents useless expenditure. More importantly, budgeting is a great way to record your finances and form an effective strategy for financial stability. Agents who jump into the deal without analyzing their budget, often end up in losses. Think of budgeting as a guiding light to your real estate deals.”
“If you are on a tight budget and need to make sales to further your investment, there are lead generation tools that collect payment in a form of a percentage after you close a deal,” she said. “These include OpCity [which was acquired by Realtor.com], Ojo Labs and most likely your broker’s in-house referral program.”
Give properties nicknames
This trick, she explained, makes it easier for a buyer to remember which house is which and can help keep them organized during decision discussions.
“Nicknames help establish connections between homebuyers and properties. Since properties can’t speak for themselves, giving them a handle makes it easier for clients to remember each property,” she said.
When picking a nickname, consider things that represent the qualities of a home the client liked.
Study the competition
If a competitor is doing something right, it can save time and money to learn from them.
“For instance, how is the competition bringing in leads? Is there a new portal or lead generation site they are using? Or how about their website? They may have gone through multiple iterations to improve their site so it’s optimised to capture seller & landlord information,” Dosanjh wrote. “Rather than going through your own trial and error rounds, seeing what already works can help you get off the ground as a new agent.”
Once on solid footing, an agent can focus on adding unique touches to their strategies, which will help them stand out and capture more business, he added.
Find a mentor
“I remember starting out as an Agent. I had absolutely no idea what I should do or how to get around this new profession that I had entered. I watched the older Agents in the firm. I listened to phone calls, watched when they met clients, basically everything that they did, I watched. So, the BEST advice I received and can give is to FIND A MENTOR,” Eric Nerhood, an agent and the owner of Premier Property Buyers, wrote to Inman.
New agents are faced with a list of questions when they first enter the field. What brokerage should they join? How do they source out quality leads? How do they turn those leads into clients? Shadowing someone with experience can help them build the expertise needed to answer those questions.
“There’s essentially no formal training in real estate, so aligning yourself with seasoned, highly professional agents is important, especially in a fast moving market like we are currently experiencing,” Annette Akers, a broker with SERHANT, told Inman. “A new agent may want to invest in a coaching program for education as well as professional and emotional support. If you’re in a firm with many agents, introduce yourself to everyone, show up everyday and ask if you can help them in any way.”