My first day in the business I attended a Mike Ferry seminar that my brokerage had organized. I took a lot of notes (which I still have). Mike was up on stage telling stories about the 90/10 rule and about agents failing and how he believed successful agents became the top in their field (mostly it involved cold-calling). The next day (my first day actually working) his theory was confirmed when I went into the office and my broker showed me a desk with a phone and a Coles Directory (basically a telephone book listing names and numbers by street instead of by last name). He told me I’d be sharing the desk with about two or three other new agents and he showed me how to use the directory and where the copy room and break rooms were and that was basically my initial training. Later I would attend a two week training course the office had, but at the beginning it was all about that phone. So I got on the phone and began making calls.
The calls went something like this…
Hi, my name is Greg Tracy and I’m with Coldwell Banker Real Estate. May I speak to the owner of the home? I’m calling to ask if you have thought about selling your house now or in the near future? If you were to move where would that be?And when would you be making that move?Do you know anyone who may be thinking of selling at this time?Thanks, have a nice day.
Here’s a checklist to making money in real estate;
Take one month going through schooling – About $450 Pay Licensing and Association fees – About $1000
Buy business cards/yard signs/open house signs – About $400
Find home to sell
Market home – discuss marketing with seller and choose from following;
(Of course these costs are one reason so many agents simply put homes in the MLS and hope they sell)
Go through escrow period (inspections, appraisal, title, loan)
Closing gift – Up to $100’s
Finding a home to sell is the hard part because who wants to list with a brand-new agent who has no experience? And if you do find a home to list, what if you spend the money marketing it and then it doesn’t sell?
What if you are really good (or lucky) and find five homes to list and spend $500 to market each of them all and two of them sell?
Average price home in Salt Lake is around $260,000. If an agent lists a home at 6% and gives 3% to the other agent their commission would be $7800. Now pay the broker $2300 (30%- not bad for new agent) and subtract the $500 marketing and the agent gets $5000. Not bad, except how long did it take to sell that home and get that check? Average time on market is about two months right now, plus the average 30 day escrow and you’ve spent three months waiting for that $5000 check.
The average agent in Utah sells 3-4 homes per year- that’s $15,000-$20,000 per year. This is all agents- new agents sell less.
Factor in the stress of a feast-or-famine income schedule, the emotional stress involved (way above average) and the process of prospecting for business (not very fun) and you begin to see the pressure a new agent feels. Many spend $2000 getting into the business and make less than $10,000 or even $5000 their first year.
And thousands of people get their real estate license every year and sell one or two homes and then leave the business. So those sellers may have listed with an agent who had little money to market their home and little experience to do the job and may have a bad experience. And that experience is how they now see Realtors.
There are over 8000 Realtors in the Salt Lake Board of Realtors, but only a couple hundred do most of the business. Most of the 10% of agents who do stay in the business are part-time, either because they have a full-time job or they have spouse who brings home the money and just do a deal or two each year. Or they think they are full time but don’t do much business anyway.
Starting out in real estate is a tough gig and I try to talk friends out of it. I’ve seen a lot of people get into the business feeling pretty confident only to leave a year later with their savings account drained and their confidence shattered.
Those who succeed can do pretty well, making a great living and enjoying a wonderful career, but the odds are 90-10 that it doesn’t happen.