What Does it Take to Succeed as a Realtor?
I was at the TAR (Texas Association of Realtors) Winter Meetings in Austin yesterday. One of the events I dropped in on was the Professional Development Open Forum. It was announced at the forum that the Texas Association of Realtors is going to start providing a pre-license course for those thinking of obtaining a real estate license in Texas.
The course will provide an opportunity for those thinking of becoming a Realtor to get the straight skinny on what being a Realtor in Texas is really all about. This way, before you waste a bunch of money taking classes that don’t really teach you anything useful about succeeding as a Realtor in Texas (but which are required before you can obtain a Texas Real Estate License), you can decide if you’re willing to do what it takes to thrive in this profession.
This idea is a result of complaints from Texas Brokers about the the fact that most newly minted real estate agents are fairly clueless about and unprepared for the real estate career they just entered into. The state-required classes that are mandatory to become a real estate agent do not prepare one to become a successful practitioner. Those classes are designed to help you pass the real estate exam, that’s it. Your ability to pass the Texas real estate exam does not at all correlate with the actual skills and attributes needed to be a successful Realtor. In fact, few, if any, newly minted real estate agents are ready and able to write up a mistake-free sales contract, or even properly explain the real life implications of each paragraph of a standard contract.
This pre-license education makes sense to me. If was the instructor, I’d make sure those contemplating real estate as a career know about the extremely high failure rate and why the failure rate is so high. I’d make sure they know the truth about what “business” you are really thinking about entering. (hint: it’s not really a “real estate” business). And I’d make sure you understand the harsh financial realities of being self-employed with a highly unpredictable monthly income stream.Let’s see what it takes to become successful Realtor.
what does it take to succeed as a Realtor ?
What “Business” is the Real Estate Business, really?
To be a successful Realtor, you are in one business, and one business only. That is the Lead Generation Business. Without leads, you have nothing, period. You’ll either have to learn to generate your own leads, or pay for them.
In 2008 when the real estate market in Austin tanked, Sylvia and I had or busiest year ever. Other agents in our office (back when we were still with Keller Williams in Austin) would ask “how are you guys staying so busy?” The answer was 5 words – we have plenty of leads. That was it, nothing more. Without leads, you’re toast. With them, you are in business.
Leads are generated through one of only three ways – Networking, Prospecting or Advertising.
Networking and Prospecting
If you have no money but a lot of time (which is the case with most new Realtors), you prospect or network. This means, from day one, you are on the phone every morning from 9AM to 11AM calling people you know (family, friends and acquaintances) and asking for business. You are letting the other team parents at your kid’s sporting events know that you’re now in the real estate business and would appreciate any referrals they can send you. You are handing out cards and asking friends and family to please remember you if they need help or know someone who needs help buying or selling real estate in Austin.You are, in short, spreading the word and reminding people that you’d appreciate their business and referrals – constantly, all the time, everywhere you go. That’s your job.
And you are either sitting long hours in open houses every weekend (for other agent’s listings when you’re new) waiting for qualified buyers to come through who might decide to let you become their buyer’s agent, or you’re knocking on doors in your new “farm” neighborhood, passing out door hangers and asking those who answer if they or anyone they know is thinking of selling their home in the next 90 days.
Sound like fun? Or would you rather stab yourself in the left hand with an ice pick than do these things? Many, if not most, new agents are either revolted by the idea of bugging their family, friends and acquaintances in this manner, or are too scared to actually do it.
To those of you unwilling, there are no short cuts or easier paths. What did you think, that people were going to line up to hire you, even though you have no experience and don’t know how to (properly) fill out a sales agreement? No, you have to let people know who you are and what you do. This means working your “Sphere of Influence”, building relationships, obtaining referrals, and prospecting for people you don’t know who might need your help.
The biggest reason most new agents wash out the first year is their unwillingness to prospect and network, or the inability to do so effectively. This is the business you’re getting into. If you are unwilling or unable to do it, you’ll have to pay for your leads either through Advertising or by working for a Broker that provides leads in return for a bigger slice of your commission pie.
Advertising , Marketing or Paying for Leads
Agents who don’t want to network or prospect as outlined above, have the option of advertising instead. Mail out postcards to your farm area and hope you get a call. Or purchase pay-per-click advertising on Google and hope that you get enough website traffic to generate some calls. I don’t recommend this for newbies though. Even if you have the money to invest in advertising, and even if it’s effective, it is a very expensive way to generate leads. It also requires that you be willing to stick with it. For example, mailing a batch of postcards just once is a waste of money. You need to budget for a 6 or 12 months campaign because it’s the repeated exposure to your message that really starts to generate the leads down the road, not the instant response. Pay-per-click can bring instant web traffic, but it costs a lot.
Finally, if you don’t want to network, prospect or advertise, you can work for a Broker who does know how to generate leads, and pay for those leads through a commission split. Brokers who use this business model expect you to convert the leads though, and you have to close a higher volume of business to make your numbers work. Or you can work for a very busy listing agent as their Buyer’s Agent, working the leads that come from the sign calls. This is a good way for new agents to start also, as part of an established Brokerage or Team.
The above summary is just a thumbnail sketch of what you need to understand before deciding to become a Realtor. If you’ve read this far and are thinking “I can do (at least some of) that”, then I have some more hard news. Generating the leads is just the start. It’s what allows you to get out of the gate, but you still have a long race to run.
Many agents can’t convert the leads they do generate or receive. Their buyers never actually buy. Their listing appointments never turn into listings. They are getting leads but are spinning their wheels and unable to turn any of the leads into a closed sale. It only take 2 or 3 months of this for despair and discouragement to set in.
The inability to convert leads is a curable problem though, and can be solved with good mentoring and training, learning some simple scripts and learning how to weed out buyers who are not ready to make a decision and sellers unwilling to price and prepare the home properly. But you have to be able to tough it out and survive long enough for that to happen, and you need a good Broker or mentor to train you and teach you how to earn the trust of the people you deal with so they’ll respond to your advice and suggestions.
Finally, the last piece of the puzzle, after you successfully learn to generate and convert leads, is the ability to execute deals. Agents have to be competent and able to shepard transactions through the myriad of hoops and hurdles that are part of the business. Not only that, you have to be able to do this with multiiple deals simultaneously, year after year, in order to sustain an ongoing income. It’s more tiring than it sounds.
Many agents, even the ones capable of generating and converting leads into executed contracts, come to find that the actual transaction phase, or what we call the “contract to close” period, is one unbearable nightmare after another. It is during the contract to close phase that the ugliest side of buyers and sellers can come out. Not always, but often enough that if you can’t deal with it you have a problem.
All the fears, misgivings, second thoughts, anger, anxiety, frustration, distrust, doubt and worries, which are the normal part of being a human being and going through a major purchase decision, reveal themselves in the form of “deal problems”, which are really “people” problems, during the contract to close phase. It’s your job to solve those problems and make sure your client gets what he or she wants and needs, both from a transactional logistics standpoint and an emotional support standpoint.
If you don’t have the patience, communication skills, problem solving abilities, compassion and intuition to get people and deals over the humps that invariably arise, you will come to view the real estate business as “not fun”. And if it’s not fun, you won’t be happy, clients will sense that, and you won’t survive.
And, to complicate matters further, if your financial well being, and the personal stress of that, is also added to the equation, because you really, really need this next commission check to be able to pay your rent, feed your kids, or make the next car payment, your ability to be a fierce advocate and a competent “fiduciary” for your client is compromised.
This will affect your ability to give clients the hard advice, which is often to walk away or pass on a particular deal because it’s not the right deal for them. For some agents, separating their own financial realities from the deal can be difficult if not impossible, and this causes problems.
The failure rate in real estate is extremely high. Very few of those who get in remain in past a year or two. Real Estate is a “Lead Generation Business”. Generating leads requires repeated daily efforts that most people find unpleasant, difficult, time consuming and costly. Converting leads is difficult as well. Converted leads that turn into deals require a broad and deep set of transaction competencies and dedication to your client’s best interests. Hopefully the TAR pre-license class will offer an opportunity for those considering a real estate career to rule it in or out from a more informed perspective.