Starting your new career in real estate is an exciting time. You’re entering an industry that provides great flexibility and work-life balance, while also giving you an opportunity to earn a lucrative income. But working in real estate is different than working in many other industries because you are starting your own business instead of getting hired to work for someone else’s company. This places a lot more responsibility on you to set yourself up for success.
As a business owner, you’re likely to face different hurdles and challenges than you’ve experienced in previous jobs and career paths. As a result, many new real estate agents find that they make mistakes as they learn the ropes and get established in their new career. While it’s impossible to avoid making mistakes entirely, understanding the common pitfalls to avoid can help you sidestep a few unnecessary hurdles and set your new business on a greater path to success.
In this chapter, we’ll review the most common mistakes made by new real estate agents. By keeping these items in mind as you start out, you’ll be able to gain a leg up on many other new agents who fall victim to these pitfalls.
We’ve discussed this in previous chapters, but it can’t be stated enough – choosing the right real estate brokerage is critical to setting yourself up for success in your new career. There’s no hard and fast rule for identifying the “right” brokerage vs. the “wrong” brokerage. Every new agent has different career goals, working styles, learning styles and specific needs as they start out. Therefore, this is more about choosing the right brokerage for you (or alternatively, not choosing the wrong brokerage for your specific needs).
Keep in mind that when you’re looking into brokerages to join, you’re interviewing them; they are not interviewing you. Many brokerages are always looking to add new agents, and your services will be in high demand. Therefore, it’s important to take your time, research your options and be selective to ensure you choose a brokerage that will set you up for success.
For most new agents, we strongly recommend prioritizing real estate brokerages that offer a strong training program and will provide you with a dedicated mentor. This is much more important than getting a favorable commission split, as your first couple of years on the job will be more about building a foundation for success than trying to maximize your commission on every deal.
There’s a reason why receiving extensive training from your brokerage typically comes at the expense of a favorable commission split. Training programs are expensive for a brokerage and a critical need for a new agent. To cover this cost, brokerages will offer a new agent a good commission program, but not as good as what an experienced, productive agent who doesn’t require as much hand holding will receive.
But don’t worry, this will change as you become more productive. To retain you and reap the benefits of their investment in your development, a brokerage will offer you a more favorable program. It doesn’t take long to progress to these programs. You can generally unlock a more favorable commission split after completing four to six transactions.
Initially, your focus should be on building your business rather than how favorable your beginning commission program is. This is especially true since you will graduate out of this beginning program rather quickly with the proper training and mentoring.
When speaking with potential brokerages, make sure to ask them the following questions to better understand the new agent support they will provide to you:
You should also ask the brokerage questions about their culture. This is also a critical component to landing in an environment where you’ll thrive. Make sure to ask questions that will help you understand how the brokerage communicates, whether there is a team atmosphere, and any other items that may make a work environment more or less attractive to you.
Anytime you change careers, there will be a bit of a learning curve over the first year or two, and real estate is no exception. While some of this learning curve is associated with general ins and outs of the industry, such as how to write contracts, craft an offer, market your business, and prep a house for sale, another important part of your initial education as a new real estate agent involves learning about your local market.
Your clients will expect you to have an extensive understanding of your local market. They will need you to provide them with educational information as they begin the process of buying or selling their home, and they will need you to guide them to ensure they achieve their desired outcome. If you are able to do this well, you will quickly establish a strong reputation and be able to attract more referral business.
Make sure you take the time to truly learn the ins and outs of your local real estate market as soon as possible. This process involves:
The more you’re able to learn about your market, the more effectively you’ll be able to position yourself as an expert in your area. This is the type of expertise that will make you a valuable asset to many potential clients.
As a real estate agent, you’re starting your own business. This requires the creation of a business plan that provides a roadmap to achieving your desired growth and success. Your business plan should outline the following:
In addition, you’ll need to invest some time and energy into marketing your real estate business during the first few years while you build up a sphere of influence and referral network. The good news is you don’t have to spend a lot of money on a marketing program as a new agent. This is one of the great things about real estate – you don’t need to spend a lot to make a living.
Many brokerages will provide you with a low or no cost web presence. This will help jumpstart your “official” marketing efforts and allow you to implement an effective marketing plan that includes social media and email marketing without investing much, if any, of your own money.
But for most new agents, your first deals (and commissions) will likely come from the people who know you – friends, family, acquaintances, and the people they know. This means that when starting out, you cannot be a “secret agent” with those who know you. This is no time to be shy.
A common beginner’s mistake is telling everyone that you love your new career, things are going great, and stopping the conversation there. Instead, you need to let all of these people know that you are in the business, and you need their help to succeed. If they or someone they know needs a real estate agent, you are ready to take brilliant care of them or their referral.
At some point, you will need to begin generating business from strangers as well. This is where your brokerage firm training program becomes so important. The right brokerage will provide the mentoring to help you implement an effective marketing plan, allowing you to meet people you don’t know – and earn their trust – without spending money.
For a more detailed discussion on how to market your new real estate business, we recommend that you review the information provided in Chapter 4.
While you have the potential to earn a lot of money in real estate, it may take a while for you to start generating income. Real estate is a commission-based income system. This means you won’t start earning money until you begin closing deals, and it can often take several months before your efforts result in a sale.
In addition, there are a variety of expenses associated with running a business, and you will need to plan ahead and put aside the money you will need to cover these. You’ll also need to figure out how much money you’ll need for your monthly bills to ensure you’re able to live comfortably as you’re getting started.
With careful planning, you can easily manage your expenses during the first 6-12 months in real estate until you start seeing significant income. But it’s crucial to put the time into planning your budget and making sure you don’t overspend while you’re trying to close those first few deals.
Here are some tips to help you avoid any budgeting mishaps during the first year of your real estate career:
One of the biggest mistakes new real estate agents make involves failing to put enough effort into client communications. Ultimately, being successful in the real estate industry involves building relationships with your clients. This ensures they have the best possible experience working with you, are more likely to achieve their goals, and are more likely to provide you with referrals in the future. Remember, word of mouth referrals are the most effective way to grow your business.
Make sure you set aside time every week to communicate with your clients. Getting into a regular communication rhythm will help you provide a great client experience and make it easier to build a referral network.
Good client communication involves a few important components:
When starting out in real estate, it’s often effective to focus on a specific field in the industry. There are a variety of benefits to choosing a field instead of being a real estate generalist:
Most real estate agents need to decide what type of practice they are going to have:
Real estate is a huge industry, and the possibilities are endless. You need to decide which one of these you want to make your focus.
A common beginner’s mistake is trying to be all things to all people. Any of these areas of practice can provide a fabulous career and income, but you need to become an expert on one of them to succeed.
The barriers to entry in some of these fields are greater than others. For example, fields such as commercial, industrial, or oil and gas may require contacts or expertise that you may not have as a new real estate agent. But that doesn’t mean you cannot have a plan to work your way into them if you want.
For example, you may have a friend already in the field that would be willing to take you under their wing. If not, you may choose to start in an area with a low barrier to entry such as residential or property management/leasing. It’s not unusual to break into real estate in one field and then migrate over to another as opportunities present themselves.
As with your business systems, many of these operating expenses may be provided or subsidized by your brokerage, which would reduce your expenses significantly. This is something you need to consider when evaluating potential brokerages. Just make sure the potential operating expenses you’ll incur make sense for you when choosing a brokerage.
The main takeaway is that while these expenses should always be factored into your budget and income model, they generally aren’t overbearing, and they shouldn’t deter you from embarking on a career in real estate. As long as you budget properly, these expenses are affordable and will not prevent you from building a successful business.
As with your business systems, many of these operating expenses may be provided or subsidized by your brokerage, which would reduce your expenses significantly. This is something you need to consider when evaluating potential brokerages. Just make sure the potential operating expenses you’ll incur make sense for you when choosing a brokerage.
The main takeaway is that while these expenses should always be factored into your budget and income model, they generally aren’t overbearing, and they shouldn’t deter you from embarking on a career in real estate. As long as you budget properly, these expenses are affordable and will not prevent you from building a successful business.
The tips listed above will help you sidestep a lot of the common issues many new real estate agents encounter. However, it’s impossible to avoid making mistakes entirely. We’re all human, and we all make mistakes on occasion. This is especially true when we’re engaging in something new. Until we amass more knowledge and experience, there will inevitably be moments when mistakes are made.
The key is to use each mistake as a teachable moment. If you learn from your mistakes and adjust your process to ensure they don’t happen again, you’ll be able to leverage these errors into greater success in the future.
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