The Human Being Rental Business
The world of general real estate is to a large degree in the Human Being Rental Business. As one of my agents once stated, “Residential Real Estate has to be one of the lowest bars of entry for any profession or small business on earth.”
Let’s face it, someone can get started in Residential Real Estate with literally “zero” experience, no college degree of any kind & relatively little money.
There are really no prerequisites to sign-up at a real estate school and most courses cost only a couple of hundred dollars. Then with some basic luck, a little effort and a cooperative economy a new agent can hopefully start to earn a commissions within the first six months to a year!
Furthermore, the staid members of the industry perpetuate this process because the larger companies have a predominate business model built on “recruitment”, i.e. getting bodies in the door…
A more looming question remains…How many residential real estate organizations are designed to foster and cultivate an actual career? Seemingly, not too many…
Residential real estate is a great business with a high degree of freedom, no income limits & great camaraderie. I’ve practiced in some form or another for over 30 years. The best part is that in many ways the industry is better and more popular than ever before because of modern media.
However, because of the “Low Bar of Entry” and the hope of a quick uptick in income. That very phenomenon is in and of itself the industry’s biggest downfall.
Buying Leads or Cultivating Leads
In my opinion, the individual agent is really wired to fail. They are set up from the “get-go” for a quick adrenaline rush and then slow economic doom. And, this perpetual cycle is why new agents are literally preyed upon by both the Big Franchises and Boutiques alike.
Worse, agents are now preyed upon by a plethora of 3rd Party Marketers pushing expensive software programs, seminars and generally bad advice. The new generation is focused on “buying” leads in a constant search for the Magic Bullet.
New agents don’t just wash out like in the old days. They are at risk of washing-out owing “aggregators” like Zillow and others hundreds or even thousands of dollars for fees they have run up on their credit cards in an attempt to “buy” their way into a career.
So why is the wash-out rate in real estate so high? Because the emphasis is on Recruiting and not Retention.
It’s fairly easy to recruit. This country has a love affair with real estate. Whether the economy is up or down there are new Realtors being minted all over the country at record rates. Why? Well for the same reason I’ve already cited. It’s cheap and easy to get started and offers the lure of financial freedom.
If you really want to build a profitable, respected & sustainable career you have to think long-term and have a clear and concise strategy.
It’s a disservice to sugar coat a career in real estate. The first year in many ways the easiest. Many agents are simply propelled by the raw energy of something new. However, that wears off pretty quickly.
The Problem is…You Literally Cannot Be Fired
Ultimately, the key to success for everyone concerned (meaning the Agent and Brokerage) is to treat it like a “real job” and set rigid goals. I might even advise using that “Big Bad Word” from the old days: Sales Quotas. One then needs to work each week on a systematic and quantifiable process for reaching their established quarterly & annual goals.
If not, the worst part of General Real Estate is that you probably won’t be fired! Remember brokerages collect bodies. As an Independent Contractor no one is going to call you onto the carpet some Friday afternoon to “let you go” simply because you didn’t meet your sales goals. Instead you may languish around indefinitely in a sort of Sales Purgatory.
So, recruiting is one element of the game. But, it is only the first step to embarking on a successful career. In actuality, it’s a small percentage of the process if you compare it to a 25-year career or more. A Retention Plan with written strategic goals are key for both Management and Sales in becoming a legitimate success in real estate sales .
It’s a tough process that takes high levels of discipline to master. In the long run, however; it is not only the best way. It is quite possibly the only way to succeed in today’s market.