Five things to know if you want to be a real estate agent – Orange ...

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Five things to know if you want to be a real estate agent By JEFF COLLINS | [email protected] | Orange County Register April 25, 2016 at 6:44 am

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In the wake of the housing crash, Real Estate Trainers cut its staff 80 percent and used its reserves to keep the lights on. With home sales plummeting, hardly anybody wanted to become an agent anymore. And real estate schools like Anaheimbased RET were feeling the pain – big time. But since the housing market started getting back on its feet in late 2012, the number of Californians signing up to become agents is up 77 percent, state figures show. And schools like RET are back in the black. RET’s classes – lucky to have two or three people per session during the downturn – now have 15 to 20 students per session. “Business is good,” said Lance McHarg, RET president. “It’s going up at a steady pace.” Bureau of Real Estate figures through June show California gained more than 20,000 new agents in 2014 and was on track to add 20,000 more in 2015. In 2012, by comparison, just 11,400 people became agents. New agents include people like Mission Viejo resident Austin Glass, an intense, newly married 25-year-old two years into his new career. As a member of a 44-person Keller Williams Realty team in Newport Beach, he typically starts each day with cold calling and door-to-door prospecting. “The energy is unreal,” Glass said. Glass said he became an agent because he wanted to work for himself. “I had been doing valet for eight years, getting beat up, running to get cars,” said Glass. “I wanted to do something more with my life than get people’s cars.” Tom Render, 74, a retired business owner, is another recent recruit. “When you get to be my age, you have to be careful not to sit too long in front of the TV,” said Render, one year into his latest career. “I just needed a challenge.” Young and old, Californians long have been attracted to home selling, a business with few barriers and the promise of lucrative returns. The pros make it seem simple, driving fancy cars and living the good life. Well dressed agents on reality TV shows burnish that image, closing a deal in time for the next commercial and earning six-figure commissions in the process. The typical beginning agent commission – roughly 1.4 percent (it varies) – approaches $9,000 on a median-priced Orange County home. Sell 10 of those a year, and you’re well on your way to a six-figure income. How hard could it be? Hold onto your refrigerator magnets, friends. The reality of the real estate game isn’t so rosy. Even for industry top guns, selling is hard work. Very hard work. And even after working nights, weekends and holidays, there’s no guarantee of a payday until the escrow closes. And escrows have a way of falling through. Here are five key things every prospective real estate agent needs to know before getting into the business, according to brokers, agents and real estate schools. 1. Have a cash reserve You need a bundle of cash before you start because chances are good you won’t make a lot of commissions in the first year. Once you’re career is underway, real estate can be an avenue to a decent living without the kind of capital needed to start other businesses like, say, a small restaurant. Still, you need to have something to live on – enough to cover three to six months of living expenses. In addition, you need to pay business costs such as broker fees, errors and omissions insurance, lockbox rentals, business cards and buying real estate signs. “Typically, we tell people it takes around $5,000,” said Georgia Murphy, education manager for Coldwell Banker’s Southwest region. That’s on top of your living expenses. 2. Get your “A” game on Being a real estate agent is not a cushy job. And while the possibility of riches exist, it’s not a quick-rich scheme. Just a fraction of Orange County’s “active” agents – those with at least one sale a year – get the bulk of the business, according to a report by real estate consultant Pat Veling of Real Data Strategies in Brea. Consider: • Ten percent of active agents transacted 50 percent of Orange County homes sales dollars in 2015, Veling reported. And the top 25 percent of this group transacted 73 percent of last year’s sales dollars. That left 90 percent of agents fighting over half the business. And about 75 percent of the agents fighting over 27 percent of the market. • Even worse, half of active Orange County agents generated 91 percent of the revenue. That means 50 percent of all active agents were fighting over 9 percent of the business, Veling’s figures show. • Veling found that 29 percent of agents affiliated with active brokerages – nearly 6,000 agents – failed to close a single transaction in 2015. “The majority of the work is done by the top 5 percent, maybe 10 percent, of the agents,” Veling said. First Team’s Sanchez estimated about 20 percent of new agents will make it in the industry. What happens to the rest? “They go back to doing what they were doing,” Sanchez said. So how you do you become one of those successful agents? Hard work. Dedication. Perseverance. Luck. Successful agents treat real estate as a business – and often work at it full time. “Real estate agents typically work when other people don’t,” said Al Ricci, an Orange broker who teaches a course for new agents at Pacific West Association of Realtors. “Sundays are our busiest days.” New agents need to put at least 50 to 60 hours a week into getting their business going, Sanchez said. “I don’t think people coming into the industry know how much work it takes,” she said. 3. Do your homework Before you can sell real estate, you need to get a California salesperson’s license, then find an “employing” broker. First order of business: Go back to school. Prospective agents must complete three real estate courses and pass the state licensing exam. Course options include both brick-and-mortar and online classes, which can be found at community colleges, private outlets like RET and Allied Real Estate Schools, and at some of the brokerages such as First Team and Coldwell Banker. Costs vary from around $200 to $700, including books. Some schools promise to get you through all three courses in as little as 54 days. But when picking a school, keep this in mind: 51 percent of Californians flunk the test on their first try, said Joyia Emard, a spokeswoman for the state Bureau of Real Estate. Say you do pass. The next step is to sign an employment contract with a broker. A real estate “salesperson” can’t work on his or her own. They must work under a licensed broker’s supervision, usually as independent contractors. Trainers and brokers recommend researching the broker you’re going to sign with: What kind of training does the office provide? Will he or she mentor you? “There’s some brokers who say, ‘Welcome to the office. Here’s your desk. Here’s your cubicle. Good luck,’ ” McHarg said. “Find the broker that you can be successful with.” 4. Get more training A license is not enough, unfortunately. The courses that helped you pass the test don’t really prepare you for selling real estate. Agents need to know local and national housing markets. They must understand finance and economics. They have to know how to negotiate, be versed in the minutia of real estate contracts and forms, understand technology, social media, marketing and know how to use the multiple listing service. And on top of that, they must be skillful in working with buyers and sellers – and in particular, in getting nervous or timid clients to sign on the dotted line. “You’re a psychologist, a marketing director, an IT director,” said Murphy, the regional education director at Coldwell Banker. And sometimes, she said, you even have to be a marriage counselor. Coldwell Banker, First Team and both the Pacific West and Orange County Association of Realtors all have courses for new agents. The association’s “New Realtor Essentials” program consists of nine courses covering at least 34 hours. Pacific West’s “Power Start” course is five days long. “It’s easy to get a license,” said Mike Eagan, director of admission and marketing for Allied, a national real estate school based in Laguna Hills. “But you need to work for a good real estate company that can train you and teach you how to do the job.” 5. Develop a business plan An agent is his or her own boss. That’s cool. But you better know what you’re doing, or it’s back to waiting tables, selling shoes, teaching, or processing mortgage applications. Allied’s “Beginner’s Guide to Real Estate” outlines five steps to building a business plan: • Determine goals that are measurable and achievable. • • Choose an area in which to specialize, such as condos, short sales or relocations. Or pick a specific geographic area to “farm.” • Determine a target market, then tailor marketing materials and efforts to that audience. • Set a budget and determine how to reach that goal. • Develop a plan for promoting yourself. McHarg says you also need to find a good accountant who’s versed in real estate business deductions. Lastly, agents and trainers say you need to network. That means getting involved in church, synagogue, civic groups, clubs, the library or the little league. “Join groups. Have meet-ups. Just be out there in the community,” McHarg said. “You never know who you can get your next listing from.” Contact the writer: 714-796-7734 or [email protected]

Tags: Real Estate

Jeff Collins

For more than a decade, Jeff Collins has followed housing and real estate, covering market booms and busts and all aspects of the real estate industry. He has been tracking rents and home prices, and has explored solutions to critical problems such as Southern California’s housing shortage and affordability crisis. Before joining the Orange County Register in 1990, he covered a wide range of topics for daily newspapers in Kansas, El Paso and Dallas. A Southern California native, he studied at UC Santa Barbara and UC Irvine. He later earned a master’s degree from the USC School Follow Jeff Collins @RegJeffCollins of Journalism.

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