Under most
circumstances, I am one of the most upbeat, positive, and encouraging
people you'll ever meet. But I'm also straightforward and direct, which
sometimes compels me to be the bearer of bad news.
For 27 years I have been attracting people to the real estate business.
That's been the easy part. Getting them to do what they need to do to
succeed has been quite another matter.
According to the one million-plus-member National Association of
Realtors, 86% of new real estate licensees exit the business within a
year. And only 7% go on to their first license renewal.
Obviously, the high turnover rate has negative consequences for
consumers as well as for practitioners. Limited experience and
inadequate training contribute to frustration and anxiety for
consumers. This in turn has lead to negative stereotypes, and a general
sense, as evidenced by the growth of discount brokerages, that we get
paid more than we are worth.
In most states it is relatively easy to obtain a real estate license.
In some states, such has California , anyone with a four year degree
can obtain a broker's license without having any experience in the
field. You can't teach what you don't know.
The low barrier to entry, combined with the misguided perception of
high pay for anyone with a license, draws people who simply do not
possess either the business acumen or the necessary people skills to
have long-term success in real estate and mortgage lending.
From the outside, it looks so easy. How hard can it be to unlock a door
and fill out a couple of forms? If that were all there were to it, you
still wouldn't have much of a chance. The lure of real estate riches
obscures the fact that there are far more practitioners than the flow
of business can possibly support. The national average is only five
closings per practitioner per year. Unless those are million dollar
properties you aren't likely to earn enough to even afford the median
priced home in your own marketplace.
Do the math if you want to, but consider that a small percentage of
licensees are doing volumes of two or three hundred closings annually
leaving even less for the rest to fight over. And fight they do, with
other agents mostly, but also with transaction coordinators, loan
officers, escrow officers, inspectors, and sadly, even their clients.
It's the same level of desperation that develops when there are twenty
hungry mouths to feed and only food enough for two.
There used to be a certain sense of unity among practitioners from
competing brokerages. But that was before large international marketing
companies replaced local independent brokers with their corporate
brands, their colors and their "high-school" like ethnocentricity.
Now, powerful totems such as rocks and balloons attract a steady stream
of hopefuls to real estate license school intent on getting their share
of the easy money. Nobody tells them that we already have ten times the
number of licensees that even record volumes can support. Or that it
takes years to learn and master the competencies of a highly technical
and legal business.
With the vast majority of new licensees exiting the business quickly,
there is a constant need to keep replenishing the supply and the cycle
continues to repeat itself until the market slows and greater abilities
are needed.
The real estate industry is largely a run-away bulldozer with no one at
the controls. It unleashes an army of inexperienced, untrained newbies
on an unsuspecting public who can't figure out why it should be so
difficult and confusing to buy or sell a home.
The new licensees can't figure out why, after doing everything their
company told them to, and working seventy hour weeks, and maxing their
credit cards, they still aren't earning a living.
Which all leads me to the following observation: if you come to the
real estate business and you do what everyone else is doing, you'll get
the results they're getting. Here's my advice:
Approach it like a business, not a sales job. Write a simple business
plan and follow it every day. Never waiver from the schedule. When in
doubt, always do what you planned to do. Never forget that the goal is
to build a referral business focused on building and maintaining an
ongoing portfolio of property listings.
You are paid for your knowledge and your time. Commit to life-long
learning. Education is a process, not an event. Budget at least two
hours everyday for training and education. Everyone that is already
licensed in your marketplace has more experience than you do, and there
is so much more to learn than you ever imagined.
Learn financing. Forget that baloney about the three most important
things about real estate being location. They are in fact, leverage,
utility, and tax-free profits. Leverage is the most important of all.
If you want to increase your income and have a better relationship with
your clients, you must master financing.
Understand the importance of personal growth and development. See the
business as an arena in which to use your experience to build a better
you. We are all works-in-progress. As you are the heart of your
business, as you improve, so will the quality of the people and
opportunities you attract.
Keep your passion alive by sharing the joy of building your own
business with those around you. Be nice to every one because you don't
know who they know or could refer you to. |