Sales Machine reader John Blicha sent me a link to his excellent blog entry about his experiences in real estate sales. After I'd picked myself up off the floor from laughing, I asked if he'd mind if I re-posted it and he agreed. Here's John's Post, slightly edited:
So You Want to be a Real Estate Agent? Good luck!
by John Blicha
CHAPTER 1: SOME QUICK BEGINNER'S TIPS
- Tip 1: There is a ton of money being made in real estate. It's just not going to be made by you. In truth, much of it is actually going to come FROM you. The real estate companies themselves make an obscene amount of money in part by churning people through their "programs" and spitting them out with emptier pockets.
- Tip 2: There's no salary. Make sure you have enough money in the bank to eat and pay your bills for six months. And start looking for a real job NOW. By the time you get it, you'll be out of money. I landed a position at a company six months and 1 day from the day of my layoff. If it wasn't for Unemployment, I would have been living in a cardboard box waiting for my real estate career to blossom.
- Tip 3: Everyone you know will feign support while questioning the decision and making fun of you. I'm serious, and you know this already. You've hated every real estate agent you've dealt with, didn't you?
Real estate offices are constantly listing open positions, so it's easy to get an interview. Don't be too nervous, because guess what? You're hired. This isn't an interview, it's a pep talk. You could walk in and urinate in the lobby, you're probably still hired.
Their ideal agent: someone who is divorced and miserable, sitting on a pile of alimony cash or an available line of credit, and just needs something to keep them busy. Next in line: unhappily married, sitting on a pile of cash or an available line of credit, and just needs something to keep them out of the house and away from their spouse. If you're not one of these two, that's ok - they'll take you.
CHAPTER 3: LICENSING
How do you make things better? You get the state involved!
This company that "hired" you will now send you to a training "school" (these are companies that, for a price, teach you all about the real estate industry and help you pass the state required test). This is 2 weeks of classes that have very little to do with the actual career.
A quick story: There are laws that say that even though your licensing training is taking place in a Real Estate office, that no one from that office may "recruit" you. Expect to be recruited. One of the instructors was a Company X manager and took a special interest in me. He took me to open houses at expensive homes during the weeks of training, introduced me to everyone in the office, took me to lunches and took me out for beers after the training was over. The entire time, he talked about how Company Y (who had sent me to this training) was horrible, and why Company X was far superior, and definitely the place for me. Ethical? No. Fun? Yes. I still went with the company that sent me to the training.
CHAPTER 4: FEES, FEES and MORE FEES
You didn't think that was free, did you? Here's the rundown on fees:
- Licensing. If you talk to a real estate company before you take the class and get licensed, they'll pay for the class. Well, sort of. They'll pay for it, then take the fee back out of your first commission. Wait, who paid for it then? Yes, you did. You didn't think that was free, did you?
- The Multi-List System. You simply cannot be a real estate agent without access to the MLS. It must be free right? No. Have you been paying attention?
- Cardkey. You need this to get into any house that's up for sale. Yes, you have to pay for it. And they can't ship it; you need to drive 30 miles to pick it up.
- Associations. The County Realtor Association. You have to join it. It costs money...every year. The State Realtor Association. You have to join it. It costs money...every year. The National Realtor Association. You have to join it. It costs money...every year. Join this organization. Join that organization. You'll get a magazine, and maybe even a pin. It's all mandatory, and it all costs money. Sometimes they have free cookies at the meetings though.
- Signs. Small signs, big signs, plastic signs, metal signs, name signs, for sale signs, open house signs. You have to have them, you have to pay for them, and they cost hundreds of dollars.
- Business cards. They're free! Well, kind of. The basic, crappy versions are free, the ones that scream "I'm new to this!" To get nice ones, with a picture, you have to pay, and you have to pay for the picture.
- Automobile. They'll pay for your car! No, they won't. If you're one of the top 2 producers, and are willing to put a God-awful giant sticker on the sides and back of your (correctly colored) car, they'll pay a nominal amount to you. Why shouldn't they? It's the cheapest advertising they could get.
- Free trips! 5 years from now, if you beat ALL the odds, work ridiculous hours and sell everything you get near, you might get a free trip. Don't hold your breath.
- Name tag. Good news, the name tag is free. The bad news, you have to wear a name tag. Back when I had a real job, I knew a gentleman who always said "If a man has to wear a name tag during his job, he's not very successful."
- The "Realtor" pin. This is the most expensive pin you'll ever hate wearing.
They hate you.
When I say "old-timers", I'm referring to the agents that have been working in the office for more than a year. They will rarely make eye contact at first because they expect you to be gone in a few months and they don't want to waste their time. Once you've been there for 2 weeks, they'll start offering you the "opportunity" to sit in their open houses for them. What they're actually asking you to do is sit in a house for three hours that no one will visit, and basically sell it for them, on the off-chance that you could get a client out of it.
I'll pay you (never) to do this for me!
When there aren't enough newbies in the office, they'll fight over your house-sitting efforts, and may even offer you cash (don't get excited, I'm talking about $20.) Get paid FIRST, I never did get paid for helping someone out.
Top producers use exclamation points!
Lots of them! In everything they do! Just an FYI. I mean: Just an FYI!!!!
CHAPTER 6: THE CLIENTS
They hate you.
You will be asked to basically alienate everyone you know and make social situations incredibly awkward by begging for referrals. Parties, church, school, the gym - anywhere...you need to be fishing for house buyers or house sellers. It is painfully awkward for all concerned. Don't forget to wear the little R pin everywhere you go!
If you're lucky enough to get someone to say they'll use you to sell their house, you should know now that their house is worth much more than the one three doors down that is exactly the same. Why? I don't know. Maybe they're delusional. Maybe they're dumb. Maybe they're greedy. Maybe they're upside-down on the house. Maybe they just need the money. Probably all of the above.
It's weird to be involved in such a significant financial project for someone you know. They will use you to buy or sell a house, but no one wants you to know their personal financial business, so it's hard. Your friends and family might want little favors, like....they'll want all their money back. Yes, seriously. I had a relative ask if I would give them back all of my commission if they used me to buy a house. I declined, and her request was probably the nail that sealed my real estate coffin shut.
CHAPTER 7: YOUR LIFE AS AN AGENT
Say goodbye to fun and leisure. Here's your week:
- Monday. Mandatory meetings and house tours, all day. The meeting is useless, which is why you'll rarely see old-timers there, they veer off after the first house and end up God-knows-where. They're probably at the bar. The tour is fun, though. You get to hear everyone complain about everyone they work with and everything in the houses. You get to walk through a stranger's house and hear your co-workers (proudly displaying their name badges) criticize the homeowner's choices in everything. Examples: What were thinking with this carpet? Have they ever cleaned this room? Wow, those are some ugly kids in that picture. I can't believe they left Prozac AND Paxil on the sink, what a basket case.
- Tuesday. In-house training, or "how to waste 3 solid hours of prime work time."
- Wednesday. "Twilight" open houses. This means your night is shot.
- Thursday. Nothing is required. This is your weekend, enjoy. Don't spend money though, you don't have it.
- Friday. Mailings, client hunting, sitting around.
- Saturday. Mandatory training...all freaking day. Done with the mandatory 15 week training? Start ongoing training that repeats what they taught you in the 15 week training!
- Sunday. No more football games, family picnics, etc., because you need to sit in Open Houses.
I had a gorgeous Mustang GT when I got this "job". I sold it because I was told that you have to take your clients all over the place to view houses. Out with the sportscar, in with the Volvo station wagon (in the horrid corporate color, of course.) As it turns out, no one wants to ride with their real estate agent; they want to follow you around in their car. This is for many reasons: so they can escape you when they want, so they can talk about the houses without you hearing them (even though you are their trusted advisor)...oh, and they hate you. I really miss that Mustang.
CHAPTER 8: "SUPPORT" (note quote marks)
- Computers. Don't know a computer from a toaster? Don't worry, no one else does. I don't know why, but everyone I worked with was horrible with any technology-related tool. They constantly needed help with the computer, and the PC's were always down with a virus of some sort.
- Your web site. The company has set up a page for you on their website, you need to fill it with useless things that no one cares about, like "resident of (our general area) for umpteen years" and Realtor and "Member of (Our County) Real Estate Club. None of this helps them or you, but it does fill the page, even though no one will look at it. You can put a picture up there too, unless you're ugly or hideously disfigured.
- Office Help. They hate you.
- Mailings. I lucked out with Company Y, they pay for mailings. This means they provide the marketing materials and they pay the postage for a certain amount to be mailed out. The database of addresses that you could send mail to was protected by a rotweiler in our office, a man I'll call Travis. Travis was tremendously tan year-round, with slicked-back hair, and he was dressed like a 1970's JC Penny mannequin every day. I don't know if he was gay, but I bet his boyfriend was.
CHAPTER 9: "ETHICS" (note quote marks)
Ethics rule #1 is "just get the listing."
This means that if you have a person that wants to sell their house for $330,000 but you and everyone know it won't fetch $250,000, you tell them that you will list it for their price, and then slowly let the price drop when people laugh at the house.
Story: My wife and I were selling our townhouse for $122,000. We received a bizarre offer from a woman for $116,600 with $5,000 of seller-assist (that means we get $5,400 less than we're asking AND give her $5,000 for the privilege of selling our house to her. Their real estate agent justified this fun math exercise by saying that a townhouse down the street sold for $120,000 with a tremendous amount of seller-assist, so ours was clearly overpriced. His mistake was in not knowing that we were in fact friends with the owner of the $120,000 townhouse and the house was bought for cash with no seller-assist. In fact, the buyer gave the owner an extra $25,000 for all his furniture! Being a jerk, I made sure he knew that he was busted. A sheepish "oh" was I got back.
By the way, we ended up getting $124,000 for our townhouse after a bidding war...and NOT to the lowball woman.
CHAPTER 10: AFTERTHOUGHTS
I am one man. The Realtor's Association is a huge conglomerate which no doubt has numerous lawyers on the payroll. My brother-in-law is a lawyer. ...but I still feel outnumbered. So you'll notice I only refer to real estate agents, not Realtors.
Keep in mind though, that you have two choices here: you can either become a Realtor or you can become a Realtor. Yes, you read that right. I'll make no judgments on the value of the organization, except to say that sitting through the most boring training ever nets you a tiny R pin. Nothing says I'm a success better than a pin with an R on it...right next to your name tag.
Referral Status means that you've quit the day-to-day grind of trying to sell/buy houses. You become inactive, but now if you point someone who is looking to buy or sell a house to your real estate company, you get a percentage of the commission.
All you have to do is pick up the phone, tell the company their name and telephone number and where they're looking. The irony? NOW it's payday. I know people who made more on referrals than I did as a real estate agent, many times over. Of course, there's a fee to be in the program, but you didn't think that was free, did you? And to stay in "referral status" you need to take ongoing training.
This is just my story. Don't let it change your mind if you want to enter the world of residential real estate. Heck, I had a former real estate agent tell me what a horrible idea it was and I still went forward with my stupid plan.
I'm sure it's completely different in YOUR area though, and they're telling you the truth when they say so...
READERS: Comments particularly welcome from former or current agents. And, of course, a huge vote of thanks to John for providing his unique perspective!!!