By Scott Newman
So you’ve made it through the worst of the real estate bubble, you’ve developed a nice client base, and you’re taking over the entire industry – great! If that’s the case, then this blog isn’t for you.
Instead, this blog focuses on what we as veterans of the industry can share with the newbies to shorten the learning curve and help create another reputable professional who gives our industry a good name.
The following are my top three “I wish I knew that when I first started” tips to make your transition into a real estate career as painless as possible.
1. Simple Math
So many real estate agents come into this business thinking of the riches they’ll make selling homes for a living. Many even come up with lofty goals for themselves, “I’m going to make $200,000 my first year in the business.” Does that sound familiar?
Well, the problem is that most agents don’t stop and break down the math behind creating that kind of volume. They end up focusing on the big picture when it’s the attention to the little details that will create the success they desire.
For example, let’s say you’re new to the business and don’t know a lot of people, and that the average home price in your area is $200,000. Simple math tells us that you will make $3,500 per transaction at that price, assuming you have a 70/30 split. At $3,500 per deal, you’d need to complete 58 transactions a year to make your $200,000 – that’s more than one house a week, which is a large volume even for a veteran real estate pro.
Let’s break that down further: Let’s say you have to talk to 20 people to get one client and earn that $3,500. That means if you want to sell a house a week, you need to get in front of 140 new people a week in a meaningful way to meet that goal – or 6,720 people a year.
What does this example prove? It simply demonstrates that for a new agent who has no other way to get new business–without spending money–to expect to meet their goal of $200,000 would be unrealistic.
Instead of setting themselves up for failure, if the person in this example had taken the time to break down the math on what it would have taken to meet their goal, they most likely would have set a more realistic goal that would put them on the path to success.
2. The Power of the Word “No”
When I first got my license, I would have taken on any client who was willing to get in my car or take my phone call. I said yes to everyone and everything that came across my desk. Why? Because I valued my time at $0 and figured anything was better than nothing. Unfortunately, that couldn’t be further from the truth.
Every time you make the decision to do anything in this business–take on a client, attend a seminar or training, or take the day off to spend with your family–there is an opportunity cost associated with that decision.
That opportunity cost is the lost income, connection, etc., that you could have made by being somewhere else instead of where you choose to be. This is where the word “no” becomes so powerful.
Think long and hard before you take on a client. Make sure that person is pre-qualified, cooperative, and serious about buying a home and sticking to a plan to get there by a pre-set date. Every time you take on a client who ends up being a waste of your time, you literally threw money out the window because you passed up the opportunity to work with real buyers.
When I mentor the agents on my team, I constantly remind them of two things in respect to this tip: 1) It’s better to take the day off and relax or do something enjoyable than waste it; and 2) When you meet with a client for the first time, it should be just as much about you interviewing them as them interviewing you. Don’t take on bad clients and you’ll make more money in the same amount of hours worked with no additional effort or expense.
Please say this out loud to yourself in the mirror every morning before you head to the office: “Just because I don’t get paid by the hour doesn’t mean my time isn’t extremely valuable,” and don’t ever forget it!!
3. Cooperation is the Key
I have to admit, I have a long, long way to go in restoring the damage I did to my reputation from when I first got into the business. I, as many agents do, felt that the only way to overcome my own lack of experience and knowledge was to be combative, argumentative, and in many cases, less than pleasant to deal with. I honestly thought this is what my clients wanted and expected and that I was being the tough negotiator they wanted.
Unfortunately, I had to learn the hard way that this couldn’t be further from the truth. Of course your client expects you to bend over backwards to advocate for their best interests, but you can absolutely excel at doing so without creating enemies.
The best weapon you have in your tool belt when it comes to being a successful agent is your reputation. If other agents like you, they’ll look for your name on listings, push your offers to the top of the pile on their listings when you have the buyer, and, in general, go out of their way to do business with you and your clients. The more allies you have out there in this industry, the more successful you’ll be–that’s a non-debatable fact.
Go out of your way to make friends, do favors for people, and do everything you can to develop a reputation as a fair, honest, and kind person, and you’ll do wonders for your bottom line.
This is a very tough business and it’s only getting harder. We all need to stick together to succeed. If you’re new, follow these tips–as well as other tips you get from successful veteran agents–and skip the learning curve. This will help you hit the ground running and minimize the time you need to put in to get your business up and running.
Scott Newman is the broker-owner of Newman Realty in Chicago. Connect with Scott at www.newmanknowschicago.com or @newmanrealty.
that you have to have everything in writing. Don’t rely on anything less will save you lots of money and heartache
my motto has been “where my word is my bond and accountability to the client is everything”!
Not everyone lives by that!
Good read. And yes, these are the important things that should be shared with our newbies.
Thank you- it is very nice to see a Vetran Agent give some useful starter pointers. Greatly appreciated
I am new and wanting to do the right thing to get started.
Saying “no” was probably one of the hardest and most important lessons I’ve learned. I’d go out of my way to do ridiculous things for clients in the name of good service. I was often taken advantage of in those first two years.
An older agent saw me spending time with the wrong people and shared the following two pieces of advice that shifted my perspective… “people will treat you as good or bad as you allow them” and “don’t mistake “activity” with “productivity”.
1) Contacts = contracts. Prospect daily.
2) Education never ends. Leaders are readers.
3) Set goals & have someone hold you accountable.
4) Prospect, list, negotiate, & sell. Everything else can be delegated.
5) Find a mentor & use them.
Happy to get advice from a seasoned Realtor. Saying “yes” is good when you have good people with good intentions, but saying “no” wasn’t even in my realm of thoughts. Luckily, the negative people are not knocking at my door.
Hope to hear more of your “I wish I knew articles.
Excellent advice, very thought provoking……………
Thank you for the suggestions. I am new to the real estate industry( 6 months since earning my license). Still waiting to complete my first transaction. Very anxious .
Simple but effective article; thank you for sharing!
I love your article.
When I was a new agent, I went on a “Realtors tour” with one of the top agents in our office. In the 1-2 hours I spent with her in her car, I learned more about selling real estate than I learned in any “training” we got.
It is unfortunate that so many Realtors are not willing to cooperate.
I have since gone over to the “dark side” of IDX and real estate websites, but I have often thought how nice it would have been to do some sort of “apprenticeship” with a great agent.
If I spent my time helping Diane with her website and other tech issues of her business, and just generally be her gofer, then even share all my listings and deals with her. I would have made a smaller percentage, but my business would have been so much bigger.
I would recommend to any newbies coming in to watch the top producers in your office and see what you can do to help. Then approach one you feel you could work with and see if there is some way you could setup a mutually beneficial relationship.
Thanks for the article,
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Thank you so much for sharing your knowledge. I’ve come to realize that the wrong client will waste your time, but a dishonest client can also cause terrible damage to your reputation as an agent. You really have to choose your clients very carefully.
As a broker with 30 years experience, there’s a lot I’d add to this. While estimating what the (unrealistic) $200,000 a year income (in a market where average prices are around $200,000), I’d strongly suggest that the new(er) agent consult with a tax professional to discuss a “tax strategy” so that a large portion of that income doesn’t go to the IRS. I believe this is a MUST, especially if you’re relatively young and don’t have any experience as a self employed person. Have a budget, both business and personal and STICK TO IT!
I can’t emphasize enough how important it is to have your client meet with a lender for a thorough pre-approval PRIOR to making application. I see young / eager new agents (with a company uses a lot of RED in their signs) that meet someone interested in buying a home, put them in their car, show them 30+ homes and finally find one they like enough to write up. Negotiations are fierce, sellers want things their way as do the buyers. If it all comes together, THEN the buyer goes before a lender. WRONG! “What? I can’t have a judgement for unpaid child support? What? I can’t be in debt to the max with car, truck, boat, jet ski loans and get a loan for a house? What do you mean I don’t qualify for a $800 month house payment? I pay $850 month in rent! What do you mean I only qualify for a $50,000 home loan instead of the $200,000 loan?” …. And the list goes on and on. DO THE HOME WORK FIRST! GET THE BUYER BEFORE A COMPETENT LENDER PRIOR TO SHOWING THEM HOMES!
One other thing I learned early on in my career, if your buyer is a new / first time buyer, ask them if there’s anybody else that will be making the final decision when they find the “right home”. I learned quickly how a parent the “kids” want to view their favorite before making an offer can kill a deal quickly because they have no idea what $XXX,XXX will buy in any given market. It was so common to hear a parent say, “My own home didn’t cost this much” ……. and they’d purchased their home 15 years earlier! Take the parent, grand parent ……. benefactor, along with you on showings so they too will realize that the one the “kids” love is the best one out there for their money!
Last thing that comes to mind has to do with working with other real estate professionals. ANSWER YOUR PHONE AND COMMUNICATE WITH THE OTHER BROKER WHEN YOU ARE CALLED AFTER YOU SHOW ONE OF THEIR LISTINGS! It is natural for a seller to know what YOUR buyer thought of their home, even if it is derogatory! You will learn how to use negative comments about your seller’s home in a way that will help them make their home more attractive to the next buyer. Simple things like de-personalizing the home by taking down the scads of family pictures, cleaning off the refrigerator of pictures, magnets, drawings by kids and grandkids can do wonders in the “eye of the buyer”. I get about 4 listing agents calling for “showing feedback” out of 10 to 15 homes shown. This is very sad. At the same time, it is generally about 60% of the agents that will respond to showing requests. In my area, it is the “Red company” that has apparently been taught that providing showing feedback can work against your buyer should they write a lower offer. In 30 years, I can’t think of a time that a seller didn’t want to hear that the buyer liked their home! It is ridiculous to have to text a broker for feedback or worse, to back door them by calling through the office to get them to answer their phone. Remember, “WHAT GOES AROUND COMES AROUND”.
Last thing, want to go into real estate? Get a mental examination first! Your slavery is about to begin! Good luck! I wouldn’t do it again!
Thank you for your advice. I just obtained my license and I’m in the process of selecting an agency. I def. Left real estate classes thinking im going to be the best and kill it in my first year out but the more agents I speak with and the more I read I realize this probably will not be the case. Its better to know that upfront than to assume I will be selling house after house my first year and then feel bad about my career if I dont!!
Thank you so very much for this article. Thank you so much for sharing, I find in this business the vets tend to be really vague or tight lipped about their early experiences. I wish that I had read this a year ago. It would have saved me so much time and money. Truly enjoyed it.