I have held a real estate sales license in the State of Wisconsin since 1994 and I worked from 2001 to 2004 trying to make a go of a career in residential real estate sales. I mean, I really tried. I had a cubicle at the Broker’s office, sign riders with my name and phone number, business cards, nice looking outfits, a 4 door Saturn sedan and a membership at the local Multiple Listing Service. Actually, I think the membership was really the Broker’s – I paid the Broker 50% of my commission on every deal that closed so I could participate in that MLS membership and other “perks” such as paper and pens at the office.
This isn’t an article to describe or debate the traditional real estate business model. Really, the time to debate traditional Broker / Sales Associate commission splits has long passed since there are creative Brokers in every market willing to work with their agents to do everything possible to keep them going (financially) in real estate.
The big mystery, to me, is why sales associates stay in the business of real estate sales when it’s beyond crystal clear that they will never, ever make it in the business. To quote the song by Mary Chapin Carpenter, why is it: “so hard admittin’ when it’s quittin’ time”?
Let’s start by making one thing very clear: a very small percentage of Realtors make really good money in residential real estate sales. It’s an industry joke that 20% of the Realtors conduct 80% of the business. It’s funny, sad, AND it’s true. According to the Bureau of Labor Statistics, the median income for a full time residential real estate sales associate was just over $40,000 in 2008. The range in the 2008 statistics was between about $20,000 and $100,000 annually. While these are respectable numbers, this is gross income based on likely working 6-7 days and 40-60 (that’s low, by the way) hours a week. Since real estate salespeople are most often self employed one would likely still need to deduct taxes, insurance, auto expenses such as fuel and maintenance, and much more.
When I sold real estate, I grossed just under $40,000 in my best year. I grossed $40,000 and I worked 7 days a week running around town trying to make any deal work. I closed about one transaction per month and by the time I was done driving clients around, treating for lunch, buying thank you gifts, marketing a bit and paying all of my expenses, I didn’t have anywhere near $40,000 to work with.
In the midst of my fledgling real estate career I met my husband who thought the hours and demand put on Realtors® by consumers was silly. The first time he suggest that opinion to me I thought he was from another planet and surely didn’t understand the fabulous world of real estate. But in the end I too no longer enjoyed the weekend work and round the clock deal chasing so I hung up my sales cape and went and got a j.o.b. at an insurance company.
Flash forward a few years and I left my insurance job to raise our son full time. Eventually I started a Virtual Assistance business from home and worked with many Realtors through the years providing administrative support for an hourly fee. I loved this role because it allowed me to still be involved in the real estate world with absolutely no “skin in the game”. I handled marketing and paperwork for my clients and that. was. it.
What I discovered as I observed the real estate world was just what my non-real estate world husband had observed a few years earlier: lots of people were coming in to the office every morning and heading home every evening and even heading out to BNI meetings every other week to market their services. But only a small fraction of those people were actually selling anything. What I was seeing was tons of people “coming to work” every day, but there was no “work” to come to. They had an office, but there was no reason to be there most of the time.
One day I met a long time friend and Realtor® for coffee and she was telling me how slow the business was and that she wasn’t making any money. Not a little money – no money. So I asked her if she planned to transition out of real estate and in to something else. Now it was her turn to look at me like I was from Mars as she informed me: “Why would I leave real estate? There aren’t any other jobs out there and at least someone may call me for buying or selling help.”
I was floored. I had been out of the business long enough that this logic didn’t make any sense to me. If there is no salary, no attendance requirements, no leads to be had at the office and no clients actively seeking help, why were agents showing up every day and sitting around like this was a salaried office job? Here is what I discovered:
Many Realtors® don’t know the difference between running a business and working at a job. So many people that I have met through the years in real estate have come straight from quitting or losing a job that provided a paycheck. Many agents don’t chose real estate as an appealing business or business model; they chose transition into real estate as a means to an end. The problem is, you can’t make it in real estate (or in any small business endeavor, frankly) without creating and executing a sound business plan. I am living proof that getting your license paperwork on Friday and showing up for your new Realtor gig the following Monday just doesn’t pay the bills long term.
To those that show up at the real estate office every day at 8am and head home at 5pm – just stop. If you aren’t doing anything that will move you in a direction of having a responsive list of customers and clients – and if you are putting in full time office hours, you’re not; you are taking up space in a broker’s office. For the record, doing MLS searches all day in the office is fruitless if you don’t have any customers or clients in need of the information. In business, we have to give people the information that they want, not what we think they need.
Many Realtors® think if they just hang around one more day something will happen. There are Realtors that show up at the office every day in the hopes that they will get a random floor call (this is when a consumer calls a real estate company and inquires about a property) or perhaps a busy sales associate will ask them to host an open house or two for them that week or watch their business while they take a vacation. While this may happen from time to time, this use of time will not produce anything substantial or sustainable.
Some agents think that they are simply one contact away from really hitting it big in real estate. The truth of the matter is that real estate sales is a really difficult business to “make it” in, period. That’s why so few Realtors make a really good living at it. It’s not because they are lucky – it’s because building a client roster and putting transactions together (and keeping them together) is HARD WORK. Thinking that waiting around the industry “just one more day” will produce sustainable results is naive.
Some Realtors® witness the success of their colleagues and think they can replicate with ease. It’s really quite disrespectful of the industry and the successful people in it for Realtors® to think that they can duplicate the results of a successful colleague. To think this is to think that there is a step by step guidebook for success in real estate. Trying to replicate the business of a colleague will never work. At its root, real estate sales is a business of dealing with people. Effectively dealing with people is an art that can’t be duplicated or replicated. You have to get in to real estate with concrete revenue goals and figure out how you can attain those goals based on your strengths and who you know or can get to know and build relationships with.
People often chose real estate as a last resort. It is rare to meet a residential real estate salesperson that is fresh out of their 2 or 4 year degree in real estate and they are setting out to grow a long term career in real estate. I have been around the business for almost 20 years and I have never met a person on this career path. Surely there are people on this career path, but the point is that they are far and few between. Selling real estate is often the career choice of people who feel they don’t have any other work options. While it’s fine for anyone that can secure a license to give it a go, it’s highly unlikely that those that enter the business with these motives and mindset will ever make a lot of money or have longevity in the industry.
If any of the above scenarios feel familiar, congratulations! You have just acknowledged that it’s either time to phase out of your real estate career or course correct and start treating your business like a business and write and follow a sustainable business plan. Whatever decision you make and course of action you pursue, it will feel a million times better than the frustrated and disappointed feelings you likely feel every day in your current situation. Give yourself the gift of doing what’s best for you and your business – it will lead you to success, whatever that means to you.