Is Your Real Estate Agent a Professional or a Hobbyist?
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