Having been a real estate instructor over the past twenty years in New York City and the Hamptons, I am asked by aspiring agents what they should consider when entering a career in real estate. Since this is a subject of interest to many who have similar thoughts on the East End of Long Island, I have decided to explore the topic.
First, an often, unrecognized reality is the ability to sustain oneself financially independent of any income from their real estate activities for an extended period, two to three years is not uncommon. Like any other business, start-up capital is essential. For the overwhelming majority of agents, there is no paycheck and no company sponsored health insurance or retirement programs. The agent may not be reimbursed for out-of-pocket expenses such as automobile and entertainment. The sponsoring broker may provide office space, administrative support, advertising, and training. You don’t receive any compensation other than commissions earned for work performed. You file quarterly estimated taxes with the IRS, and may deduct from your income certain expenses incurred in the course of doing business. You are not covered by workman’s compensation or unemployment insurance. As an independent contractor, the sponsoring broker will have limited control over your activities. While part-time employment may provide income, it will also delay success in your real estate career.
The most frequent question I am asked is how to go about choosing a sponsoring broker. My first answer is work where you live. The demands on your time will be such that the less time traveling around, the better. My second answer is, become associated with a brand-name firm. It offsets the fact that starting out, you are unknown, and it is likely to have a significant number of listings which you will be able to sell or rent, and agents from whose experience you will benefit.
I also suggest that a quicker path to earning income is to go after listings. All of your experienced colleagues with their customer bases will be trying to sell those listings for which you will be compensated. Sales take longer although pay higher.
One way to earn and learn is to attach yourself to a top producing agent in your office. The many activities involved in listing new properties for sale, arranging showings, open houses, and the gathering of information related to the properties are critical but time consuming tasks, often ones that the top producing agents would like to delegate to an administrative assistant, which provides the new agent with experience and income.
Becoming part of a team is a common method of doing business. It provides the team members with the opportunity to divide responsibilities and benefit from the mix of skills, and has a defined method for sharing commissions.
It is important to realize that when going on an interview with a potential sponsoring broker, that will be your first “sale.” Do not approach it as you would a job interview. The broker will want to know how you intend to achieve success. The broker can’t make dollar two until you make dollar one. You should want to know the kinds of support that will be provided, some of which I have already mentioned.
Your biggest investment will be your time. Spend it to its maximum benefit.
Real estate is a highly competitive business. You will be competing against not only highly skilled agents from other brokerages, but also your own, while at the same time, having to develop a reputation for professionalism and trust.