Is your real estate agent a hobbyist or a professional? The
reason I’m asking; are you aware, 70% of real estate agents who get their real
estate license this year, (or any year), will be out of the business within
seven months and 87% of real estate agents fail after five years? You could
probably say that about any new business and being a real estate agent is being
an independent contractor, small business. Real estate is one of the few
businesses you can start with limited capital, and that is where the problem
begins. Most new agents fail to follow these few small details which will lead
to their business failure.
·
Lack of Planning - Achieving a real
estate license is the easy part of the business and finding a brokerage who
will allow an agent to hang their license is even easier. Most new agents enter
the business without a business or a financial plan and have unreal
expectations of the industry.
·
Lack of Capital – Many new agents use credit
to begin their business and continually use credit to maintain their monthly
expenses. As their debts rise and with limited income, financial frustration
sets in and many will find a part-time job or even a full-time job to cover
their cost of living. Once that happens, the amount of time finding, or
servicing customers is limited, and their real estate business goes on the back
burner.
·
Lack of Profit – You might think lack of
capital and lack of profit is the same, but it’s not. Real estate agents work
on commission and the broker determines the commission split, often 50/50, then
there are transaction fees, errors and omission fees, desk fees, advertising
fees, referral fees and other business-related fees. If the agent doesn’t have
reserve capital, every dime they get to keep is for their survival.
·
Lack of Leadership – Many real estate
offices offer training during the initial interview and what often happens,
training get put aside as other issues arise from other agents, often from the
complexity of many transactions. All to often there is a competing broker who
needs to work in order to keep the office lights on, and the leads that come in
are scooped up by the broker.
·
Lose Focus of the Customer – Desperation for
a commission and the lack of negotiation skills makes many agents order-takers,
just working to get a commission. When the focus is on the financial gain of the
agent and not for the customer’s well-being or needs, the reputation of the
agent as well as the brokerage goes down the tubes.
These are just a few issues which causes hobbyist agents to
fail. How would you know the agent you are working with is a hobbyist or a
professional? You can always ask for a
referral from someone who knows of an experienced agent or you can check with
the state. Just because an agent is new to the business, doesn’t mean they have
limited skills, ask how many transactions they have completed within the last
year and ask about brokerage support, (there are many 100% commission companies
that offer zero support, the agent is on their own). If you are selling real
estate, ask about their marketing plan and experience.
A professional real estate agent will ask you from the beginning;
Are you qualified for a mortgage or will this be a cash purchase, and do you
have the documentation or proof? How do you want to communicate and how often
and best times and what are your expectations? How soon do you need to move?
It doesn’t matter if you are buying or selling real estate,
choosing a hobbyist over a professional will cost you time, energy and money.
Choose wisely, choose a professional.
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