Like the author of the article I am sharing below, I get asked about real estate as a career all the time. And, like the author, it’s not always easy to get across the true nature of the business for new sales people starting out. For that reason and the fact that the author of this article lays it out really well, I decided to share his thoughts as originally published on Activerain and more recently on Inman.com
This post by Greg Nino, real estate agent at Re/Max Compass in Houston, was originally published on ActiveRain.
Several times a year I am approached by people who want to become a Realtor and know how to get their real estate license and become a real estate agent. Many of them think it’s a great way to supplement their income while they keep their day job. A lot of others are interested in a career change. I decided to type this blog post to save myself time. Each time I’m asked I’ll simply send the inquiring person a link back to this post. So, with that said, grab your favorite beverage and read below, because you’re about to get a heavy dosage of what it’s like to start a real estate career and get your real estate license.
- Passing the exam is easy. Creating a business with real income is a different story.
- Now that you have your license and have become a real estate agent, be prepared to lose friends and get your feelings hurt. Most, if not all, of your friends and family will avoid using you the first year or two that you’re licensed. Simply put, you don’t know what the hell you’re doing. Earn your battle scars. Even after you’ve gained experience, you’ll have friends and family who will not work with you because you’re a friend or because you are family. It happens every day to Realtors across the country.
- If you don’t spend money, you won’t make money. You need to spend THOUSANDS of dollars to create a business. Most of what you are thinking is a cute and new idea has already been tried a thousand times. You will do what every new agent does: Spend money (A LOT OF IT) on the wrong things. Over and over again. There’s a famous saying in this business: “If you want to get rich in real estate, sell stuff to Realtors.”
- You and your smartphone will become inseparable. You will have to get up from eating, watching a movie and sleeping to take calls, return emails and respond to text messages. Of course, you don’t have to do this, but you also don’t have to make any real money in this business. You’ll get out of it what you put into it. Ignoring a call could be a $20,000 mistake. Or more.
- Be prepared to be second-guessed, doubted, questioned, accused and lied to repeatedly. Buyers and sellers have the propensity to lie just like you and the guy next to you at the grocery store. People have perceptions about lawyers, mechanics and police officers. They have them about us, too. Even after years of experience there will be clients who will second-guess your every move. This will never go away.
- You will show thousands of houses. Showing a house isn’t just about unlocking a door. Sometimes you get rained on while showing. Sometimes the house says active on the market when it’s already under contract with another buyer. Sometimes you are late to the appointment because of traffic. Maybe your buyer will be late. The number of things that can go wrong are practically endless.
- Almost nobody will respect your time. Almost everyone thinks you are overpaid.
- Expect people to ask for kickbacks both legally and illegally. Buyers and sellers will often want to haggle with your commission.
- You will pay taxes. A lot of taxes. Expect to pay for the gizmo you use to unlock doors. You will pay for this yearly along with dues to three different associations. You’ll pay for signs, lockboxes, tools, equipment, cameras, advertising for both you and your listings, leads, websites, and on and on and on.
- You will pay for your own health and life insurance. There is no 401(k) matching in real estate. You are an independent contractor. In fact, YOU will pay to be at your local real estate office! The broker will take money from you. You will also pay for an office if you want one. Your phone is your cost. Your Internet is also your cost. So are your paper, pens and everything else imaginable. You’re running a small business. It’s ALL your costs. You’ll also pay for errors and omissions insurance. The list is really long. Yay!
- You will get screwed in this business. It’s not for the naive, lighthearted, ignorant or thin-skinned. You will work your rear end off and sometimes not make a dime.
- You will deal with a certain number of psychopaths each year.
- You will meet criminals, convicts and felons, especially if you work in the leasing industry.
- Strange men and women will ask you to meet them at houses RIGHT NOW.
- You might get a gun pointed at you while showing a house or two.Sometimes rabid pit bulls will chase you down.
- Expect to get towed at least once.
- Eventually you’ll get in a wreck while showing. You better hope your clients aren’t with you. Is your auto insurance updated correctly?
- There is no disability insurance. So, if you break a leg while playing softball, you’re screwed. It’s going to hurt your business.
- You might get sued even when you aren’t at fault.
- When you become successful, your competitors might file complaints on you because they are jealous. You won’t like this.
- As you show houses you’ll be in questionable neighborhoods from time to time. You need to learn self-defense, and carry a gun or a can of mace. Everyone should be concerned about their safety.
- Be prepared to leave a social event early to run and show a house or to get yelled at by one of your clients for something you did not do. It doesn’t matter, you are the chew toy sometimes.
- It’s likely you’ll get audited by the IRS. You have too many write-offs and, once again, you make too much money.
- Lawyers are annoyed by Realtors.
- Expect to list homes and never sell them. No agent sells every home they list. You will waste time, money, energy and resources.
- Your signs will be stolen, spray-painted and eventually played with by the local kids.
- Your flier box will always be empty because kids, passersby and neighbors will take too many. Sometimes they’ll take all of them in one day. Then you’ll be chastised for not having fliers in the flier box.
- Did I mention you’ll deal with at least two crazy people each year?
- EACH real estate transaction you work means you are likely dealing with at least eight different people. You’re responsible for 15-20 things. Right now I am trying to close 11 contracts. I am a little stressed. Sometimes I wake up in the middle of the night thinking about my paperwork, my clients and my business.
- You will become an unlicensed therapist, divorced lawyer and counselor.You aren’t allowed to give legal advice, and you shouldn’t. You aren’t a doctor, but everyone will unload their personal lives with you. You will sometimes live their life.
- Your spouse will at times hate what you do for a living.
- Your wife or husband will despise the fact that you are always on your phone.
- When you’re sick, you still work. There’s no floating holidays.
- While on vacation, you still work. You can get an agent to cover your business, but NOBODY will care for your business the way you do.
- Sometimes when you make mistakes it costs people money. You can’t just apologize.
- You have to have a nice car. You must wear nice clothes.
- When you first get started everyone will know you don’t know what you’re talking about. It’s a fact. This sucks. But if you stick it out, you’ll be OK. Seventy-five percent of the new agents don’t make it.
- You get to work with agents! Not all of them are put together correctly. A lot of your problems in this business will be because of the other agent. You will get upset, angry, pissed and offended. Egos are here, too.
- Wait for it: Friends, neighbors and family will ask you for real estate advice while they are involved in a real estate transaction YOU aren’t.
- Other Realtors will give your client advice when they aren’t supposed to.Every buyer and every seller knows an agent somewhere.
- Each market is different. Very different sometimes, but that won’t stop friends and family from influencing your client. Your client will become confused at times.
- You have a better chance of meeting E.T. than you do working real estate part time and being successful. It takes time, effort and money to be a part-time Realtor. In fact, being a part-time agent can be even more difficult.
So why do agents do this?
You’ll have the amazing opportunity to reap what you sow. You can work when you want. No matter how bad your boss (client) is, you are working for them for only a certain period of time. You get new bosses all the time. You can make a real difference in a lot of people’s lives. You literally help shape dreams. YOU can be the difference in someone’s life as they look to sell and buy a home. And not all clients, buyers and sellers are bad. Most of them get it. It’s awesome when everything works out.
And sometimes the money is really good.
“So, what do you do for a living?” A question that most Realtors struggle to answer with any degree of clarity, conviction and enthusiasm. In a previous posting, I discussed the need for us to define our purpose as this sets the stage for how we approach our business and most importantly how we conduct ourselves during the course of helping clients.
I recently watched an excellent short video on this exact topic by Brendon Burchard, the online trainer, author, thought leader. He proposes a simple framework to come up with the answer, which, if anything, will help you stand out from all the others who say things like “I help people buy or sell houses”, or, “I help people with their most important purchase ever”. These are usually the same people who when asked why they are in real estate struggle to come up with a really authentic answer. Here is Brendon’s framework:
I help X (your audience) ______________________________ Do/Understand Y (your topic) ______________________________ So that they can Z (benefits) ______________________________ Example: X: I help authors, speakers, coaches, and thought leaders Y: discover, share, and monetize their content and advice Z: so that they can earn revenue and make a difference.
For more on this from Bredon Burchard I encourage you to get his book, The Millionaire Messenger. It is a quick read and will help identify a number of really important issues like this so that you are clear, focused and can enthusiastically get across how you help your clients improve their lives.
Having done this myself, here is what I came up with;
I help Realtors (real estate solo-preneurs) create, build and run, highly effective and profitable businesses so they can earn more $$ per hour and have a great life!
Province Announces 2017 Ontario Budget
April 28, 2017 — The provincial government has announced the 2017 Ontario Budget, which includes numerous items relevant to REALTORS®.
What does the 2017 Budget mean for Ontario REALTORS®?
- Non-Resident Speculation Tax: Implementing a new 15 per cent Non-Resident Speculation Tax (NRST) on the price of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations.
- Upon the enactment of legislation, the NRST will be effective as of April 21, 2017. Binding agreements of purchase and sale signed on or before April 20, 2017 are not subject to the NRST.
- The province listened to REALTOR® advice on the NRST and will be providing rebates or exemptions to students, workers, refugees and people who acquire citizenship within four years.
- Housing Supply: The government is taking positive steps to bring more housing supply into the market. This was a focus of REALTOR® advocacy leading up to this announcement as a way to help make home ownership more affordable for Ontario families.
- Specifically, the province announced plans to look at streamlining the complicated approvals process which delays and prevents housing supply from coming to market. They will also support the building of “missing middle” housing in the Greater Golden Horseshoe and work with municipalities to encourage developers to build on vacant land that is serviced and ready for development.
- Review of REBBA: While a review of REBBA was not announced in Budget 2017, as part of the Fair Housing Plan, the government remains committed to conducting a broad review of REBBA including looking at practices like multiple representation and representing the buyer and seller. A full review of REBBA will be an opportunity to discuss multiple representation but to do so in a much more thoughtful/rational way. It will also be an opportunity to lobby for other changes to REBBA like PRECs, specialty designations, greater fines, higher education standards and other changes which will help REALTORS® do business better.
- Rent Control: Expanding rent control to all private rental units in Ontario, including those built after 1991. This will ensure increases in rental costs can only rise at the rate posted in the annual provincial rent increase guideline. The increase is capped at a maximum of 2.5 per cent. Legislation will be introduced that, if passed, will enact this change effective April 20.
- Vacant Homes Property Tax: Budget 2017 reconfirms the government’s plan to give the City of Toronto the ability to levy an additional property tax on vacant homes. Amendments will also be made to legislation to give the Minister the ability, through regulation, to give other interested municipalities the opportunity to levy a similar tax.
- Paper Flipping/Assignments: The Budget outlines that the government will require a purchaser to declare at the time the transfer is registered whether they entered the agreement of purchase and sale through assignment or another similar arrangement.
- Revenue Tools/Hotel Tax: We are happy to report that Budget 2017 does not reverse the province’s commitment to not give other municipalities MLTT powers. However, the government will introduce legislation through Budget 2017 which will amend the City of Toronto Act, 2006 and Municipal Act, 2001 to give all municipalities the ability to levy a hotel tax. TREB and OREA will monitor the legislative process to ensure no additional revenue tools are added to the legislation.
- Tarion Warranty Corporation: The 2017 Budget reconfirmed the government’s plans to make changes to Tarion and the Ontario New Home Warranties Plan Act. The government has asked Tarion to introduce new deposit requirements to reflect current housing prices.
- Syndicated Mortgages: The government will introduce new regulations to place investment limits on syndicated mortgages and require mortgage brokerages to document their assessments of the suitability of such products for their clients.
- Land Transfer Tax: Budget 2017 will amend the Land Transfer Tax Act to restrict first-time home buyers from claiming their spouse’s interest from the first-time buyers rebate if the spouse is not a Canadian citizen or permanent resident of Canada.
- Pooled Registered Pension Plans: The 2017 Budget announced that Pooled Registered Pension Plans (PRPPs) are now permitted in Ontario as of March 31, 2017. Self-employed or independent contractors, such as REALTORS®, can now utilize this voluntary tool to help them save for retirement.
Other highlights from the 2017 Ontario Budget include:
- Deficit/Fiscal Outlook: The government is projecting a balanced budget for the current fiscal year. The budget will also remain balanced for the next two years.
- Infrastructure and Transit Funding: The Budget allocates $156 billion in infrastructure funding over the next 10 years. $56 billion will be invested in public transit and $26 billion will be spent to improve and build new roads and highways.
- Health Care: The government is going to be spending an additional $7 billion in health care over next three years to assist with the construction of new hospitals and decrease wait times.
- OHIP+: Children and Youth Pharmacare: Children and youth under the age of 24 will have access to universal drug coverage beginning on January 1, 2018.
- Seniors’ Public Transit Tax Credit: On July 1, 2017, Ontarians aged 65 or older will be eligible for the Seniors’ Public Transit Tax Credit which will provide a refundable benefit of 15 per cent for eligible public transit costs.
- Increased Child Care Spaces: Budget 2017 announces funding for the creation of 24,000 more licensed child care spaces.
- Basic Income Pilot: The Budget announced the launch of a Basic Income Pilot in Hamilton, Thunder Bay and Lindsay to provide voluntary participants aged 18 to 64 with regular payments to help them afford basic needs like housing or food.
- Natural Gas Expansion: The budget commits $100 million to be invested in a new Natural Gas Grant Program to expand natural gas access to rural, Northern and First Nation communities.
- Affordable Housing: The government announced that it would leverage provincial land for affordable housing by disposing surplus land below market value. In a pilot within the GTHA, Ontario will commit $70 to $100 million in land to develop up to 2,000 new housing units which will include both market and affordable housing.
- Tobacco Tax: Budget 2017 announces a $2 per carton increase in the tobacco tax. This is part of a plan to increase tobacco tax rates by $10 per carton over the next three years.
- Drive Clean: While the Drive Clean program will continue, the government has eliminated the $30 fee that drivers pay for the Drive Clean emissions tests.
- **Credit: Toronto Real Estate Board**
Absolutely everything! As opposed to the actual lyrics of the song “War” , a counterculture-era soul song written by Norman Whitfield and Barrett Strong for the Motown label in 1969, which ended with “absolutely nothing!”
I believe it was also included in a song performed by Frankie Goes to Hollywood. So you might be wondering what this is about. A quote by the well-known philosopher Socrates says it best: “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”
As Realtors, that is what we need to do on a constant basis. The same goes for Brokerages and their leadership teams. This is where true leadership is really tested; for it’s ability to come up with a vision for the future. How is the business going to be conducted in 12, 24, 60 months? Can technology be integrated to assist us in establishing, maintaining and building relationships with clients? Can brokerage firms incorporate technology, support systems and other new tools to support their agents and help them lead more productive fulfilling lives or will it be more of the same – keep “dumping” new technology in front of them to be able to say; “see what value we bring to the table every day”???
This is the challenge and it is a daunting one for brand new Realtors as they navigate the various offerings of some excellent brands who do offer some great tools and marketing resources.
During the second annual Chestnut Park Symposium, I was privileged enough to moderate a panel of some of our most experienced Realtors who generously offered all kinds of valuable information and feedback with respect to how they run their business as well as tips and success habits. One consistent theme throughout the session as they responded to various questions, was the ability to adapt to change; be it the market, technology, the customer or any other event that stood in the way of success.
The article in this link offers 7 reasons embracing change can be a good thing – it’s worth looking at from a “glass half full” perspective! Hope you enjoy it.
I have written on this topic before. A positioning statement is also referred to as your “unique selling proposition” (USP). Probably one of the more difficult things for a Realtor to identify.
In a recent research assignment for an MBA class, I reviewed the overall marketing systems and tools including the idea of the USP. Below is an excerpt from my paper:
(Beckwith, 1997) offers an excellent exercise to assist with this process – Creating Your Positioning Statement (p. 113). This approach takes the individual or service provider through a series of questions to help determine how they wish to be perceived. The questions are as follows: (p. 113)
Who: Who are you?
What: What business are you in?
For whom: What people do you serve?
What need: What are the special needs of the people you serve?
Against who: With whom are you competing? (Tip; not just other Realtors but your customer as well!)
What’s different: What makes you different from those competitors?
So: What’s the benefit? What unique benefit does a client derive from your service?
Once the Realtor has understood their unique selling proposition, they can really begin to focus on the group, community or neighborhood as well as their own personal sphere with a much clearer marketing message and campaign.
The section above is from the book Selling the Invisible which I have recommended in past posts. It is well worth reading. Beckwith, H. (1997). Selling The Invisible. New York: Business Plus.
I had the opportunity to get some further first-hand insight into how my fellow colleagues are doing when it comes to their level of knowledge, understanding of rules and overall professionalism as a result of overseeing offer presentations.
As a policy, our firm prefers to have management step in to represent its clients when one of our own sales people has their own offer presenting a potential conflict.
On one such occasion a listing generated lots of interest as they do in the Central Toronto Core which resulted in multiple offers including one buyer who elected to ask our listing sales person to represent them. As a result, yours truly stepped in to represent the Sellers and guide them through the process. The instructions on the listing were clear as was the process which was relayed to all participating sales people as required under REBBA 2002.
The first two presentations were professionally done. The paperwork was correct and the sales people were very thorough. Unfortunately the next five were a complete disaster and quite frankly an embarrassment to our industry. The sales people had missed clauses “pay the balance….”, a rather important one. Information was wrong. They could not explain or answer basic questions and had not included important schedules that were attached to the listing to disclose important information to prospective buyers.
It was clear, notwithstanding that these sales people were from reputable brands, that there was a complete lack of knowledge and understanding about the business. The question then becomes, why? Several of my colleagues and I have had numerous discussions as have had many others in organized real estate as to the quality of realtor education both during the licensing phase and the post license phase, i.e. continuing education. RECO recently announced that the licensing program will be taken over in 2020 by Humber College. A move to refresh and rehabilitate, we hope, a program that currently only seems interested in driving volume through its doors without regard for quality.
The finger can also be pointed at the Brokerage industry itself. There is no mandate for brokerages to have to train and monitor the professionalism of their sales people other than the Code of Ethics and laws as found in REBBA 2002. Again, the focus appears to be one of volume – i.e., collect as many licenses as possible. Hopefully some of them will make some money and the brokerage will too.
Of course, it’s not this simple and black and white, but if the Registrar and some of his staff were to sit in on some of these offer presentations, I think they would quickly realize that all is not well with the Ontario Real Estate profession! Obtaining a license is easy and cheap. It appears that that is how a lot of Realtors are conducting their practice as well.