Chris Kennedy, founding partner at Mayfair Real Estate goes through some do’s and don’ts for those of you who are just recently licensed as real estate agents, or those of you who are about to get the license.
First of all, congratulations for getting a license that is awesome. You’ve just entered into an industry, a business, that has almost unlimited potential. You can do extraordinarily well. And if you work at it, you can be very, very successful.
So, well done for getting into that business, but I do want to give you some do’s and don’ts and set some expectations for you, because what happens is when you get that license or when people are encouraging you to get that license, they tell you all the good stuff and how much money you can make, how easy it is to make commissions and how big those commissions are. And while some of that is true, the first year or the first two years, it is generally not true unless maybe you’ve been in a real estate family, you’ve been surrounded by real estate your whole life and you really understand the game and how it works. If you’re coming new into the industry, which a lot of people do, there’s a steep learning curve. And if you’re coming into it out of a non-sales related background it’s an even steeper learning curve.
Now I’m not saying that to discourage you. I just want to set the expectation for you and give you some pointers for things that are going to help you be more successful and will increase your likelihood that you’re still going to be in this one year from today. I’m sure you’ve heard this statistic and if you haven’t you’re hearing it here. It’s something like 80 or 90% of realtors drop out of the business in the first year, because it’s just that hard. Or it’s actually not that hard it’s that those people do not do the right things to be successful. It’s actually pretty easy and if you put your mind to it and work hard, you can be very successful in it. So that’s the key. But there’s a high dropout rate.
So, a couple of things that I’ve seen that a lot of people do that are not good decisions. I will tell you probably the most common mistake that new realtors make is that they quit their job. Whatever job or income they have before getting a real estate license, all of a sudden you get the real estate license and almost immediately you quit your job and say, hey, I’m going to focus full-time on real estate. Now that is commendable. And it’s great to put all of your time and effort into real estate and learning how to be an agent. The only time I would recommend you do that is if you have at least a year’s worth of money saved in your bank account, where you can live for a year without having to make a paycheck. Because the first year is, like I said, it’s pretty tough.
If you are not in that position, which most people are not when they get their real estate license, then my recommendation personally (other brokers would not recommend this), but I personally recommend that you keep your job, at least part-time, keep a paycheck coming in while you learn the business of real estate. That way you’re going to not be so stressed about paying your bills, which is going to mean you’re going to be able to spend more time learning the business and learning the smart way to do things, and you’re going to, in the end, be more successful. So it’s better to take your time initially, make sure you’ve got some money coming in rather than quitting your job and just winging it for the first few months until you run out of money and then say, oh, I couldn’t be successful in real estate in three months, I’m out of here. I’m going to go back to working for someone else. So that’s mistake number one and it’s a very common mistake. So unless you’ve got, I would say, at least six months to one year of savings that you were okay burning through then do not quit your job.
The other big mistake people make when they get the real estate license or when they close their first deal, is leasing a brand new car. So it’s cool to have a nice car. People think that because you’re in real estate, because you’re a realtor, you’ve got to have a beautiful new luxury vehicle or something just brand new. Again, not a smart move. Don’t create a liability for yourself immediately when you’re not creating consistent income from the real estate business yet. So a lot of people do that, they lease a car right away and it puts additional stress on you that you don’t need. I will tell you from when I got my license in 2012, right up until 2016, when I’d been a licensed broker for two years and had done some very large deals and made a lot of money in commissions, I was still driving a 2000 GMC 1500 pickup truck. I drove that thing into the ground and it had 300,000 miles or close to 300,000 miles on it when I eventually then went and leased a nice car, I leased an Audi after that. But I had already made good money and bought a bunch of rental properties at that point and I could easily afford the lease.
So, the thing is you have people with this misconception that you have to have a really nice car in order to go and sell real estate. You don’t. You can have a decent car, you can keep it clean and tidy and be presentable in how you show up as a person. You don’t have to have the nicest car in town or anything luxury. So don’t fall into that trap, don’t let your peers pressure you into that, don’t let your office pressure you into that. Just be smart with your money and take the stable road on this. And don’t create extra expenses for yourself, build yourself a good foundation, learn the skills and then when you have good income coming in, then you can get yourself a nice car. So again, it’s just something I’ve seen frequently.
Some things I recommend you definitely do at the beginning when you first get your license. Do spend time really learning the business. And there are different things to learn. You need to learn first and foremost, you want to get the technical knowledge of being a realtor. You need to know some basics like how to write up a contract, what do the contracts mean. You don’t need to be an attorney, but you do want to know what the contracts that you’re going to be working with mean. What are the different types of contracts and addendums to those contracts, what are the functions of those things. So spend time learning. What I did, I’ll tell you my first six months, which was a good thing that I did in my first six months. I attended the board of realtors here in South Florida, Fort Lauderdale Board of Realtors, I went to as many of their free educational classes as I could. There were tons of great instructors there. I still go to some of their classes. I know some of those instructors personally now, and I learned a ton that way. So take your time initially learning.
What happens with a lot of brokerages is that they have this business model where just get as many new licensees in and some of them are going to work out. And once you’re in there, once you join that team, they are going to be pushing you to go out marketing, prospecting and getting leads. The problem is when you’re brand new, you don’t really know what you’re doing. And I actually believe you end up giving yourself less of a chance by going out and putting yourself in very difficult situations initially, because of just some simple stuff you should know by spending some time getting educated. So you should get educated, spend your first couple of months, really spending most of your time learning everything you can about the business, learn about the product, learn about the contracts, learn about the market. Start making connections with other people in the business, your title agents, attorneys, lenders, all of that just start to get yourself together. Get connected with a really good brokerage.
Therefore, the other thing that you should do is find the right broker. It’s a personal thing, one mistake that I definitely made at the beginning was joining the wrong brokerage. I joined the wrong office, it was a small office. There were not many successful realtors in that office, I later found out. It’s kind of hard to tell when you’re new because a lot of people talk a good game, but they actually don’t do that well. So I made the mistake of joining a too small of an office that didn’t have very good training as set up and although the broker was a great guy and he was personally successful, the culture that he created and the meetings and sales meetings were not very educational informative, and I didn’t get much from them.
So definitely take your time, selecting who you’re going to go hang your license with. Don’t worry so much initially about the commission split because quite frankly, at the beginning you’re not probably going to make a lot of commission. What is far more important to begin with is that you get the knowledge that you need to be successful. Remember the knowledge you get will serve you the rest of your life. So invest the time in getting that knowledge above everything else. And the way to get that knowledge is to surround yourself with people who are successful, doing what you want to be doing and getting with brokers that have done what you want to do. So either find a company that has a really good training program, there are lots of them out there, or get with a broker that you just connect with and will show you the ropes and has a track record of doing a good job and doing what you want to be doing long-term.