It’s been a while since I’ve put some time into a good, hard, rant.
Well, the topic of conversation today is one that could get any experienced Realtor going, and honestly, I think this post is long overdue.
With now over 40,000 licensed Realtors in Toronto, we’re seeing the quality of the “average” Realtor fall-off, in my humble opinion. There are a lot of reasons why, of course, but I believe that many Realtors hang on to a substantial number of mistruths and fallacies before they even get their license.
Today, I’d like to detail ten of those mistruths, and if you’re thinking about getting into the business – please, for the love of God, take what I’m saying to heart…
Mistruth #1: You’re Going To Make It Because You “Have To”
I hear this all the time from rookie agents.
“I’m going to make it, trust me – I have to make it.”
And so says every 18-year-old girl from Tulsa, Oklahoma who takes a bus to Hollywood to become a star, and she’s going to make it; she “just has to.”
“I have to make it – I just have to! I left a really good paying job to come and sell real estate!”
Well, that was either really smart on your part, or really careless.
A lot of agents come into the business and believe that they won’t fail, because they can’t fail. And I don’t mean “can’t” in a sense as though it’s impossible, but rather because they believe that they’ve put all their eggs in this basket, and doing so is enough reason to make it.
When I was a kid, I used to stare for hours on end at the Sears Catalogue and then close my eyes and hope really, really hard that when I opened them, the G.I. Joe Battleship would magically appear in my bedroom.
I was four-years-old. I didn’t know any better.
But many rookie Realtors come into the business, full of piss and vinegar, acting like they can’t fail, because “this is it” for them. They act as though once they walk through the door of a brokerage, there’s no turning back.
But this mindset helps rookies develop bad habits, since they convince themselves, “I won’t fail, because I can’t fail,” when they should be busy learning the ropes instead of dreaming of a Hollywood real estate ending.
Mistruth #2: All Brokerages Are The Same, And Commission Is What Matters
I can’t name names here, but there are a LOT of really crappy brokerages out there, and I can’t understand why any new Realtor would go join them.
I mean, I know why, but I can’t understand why. It all has to do with commission.
When I started at Bosley Real Estate in 2004, I was on a 60/40 commission split. Some people told me I was crazy, since I could have signed up with ABC Realty and got a 90/10 split. I’m sure today, there are business models that allow a 100/0 split, with a set-fee per transaction.
Well, I didn’t want to work for ABC Realty then, and I certainly don’t want to now.
Rookie agents need to understand that building a career in real estate takes time, and how much you make, and keep, in your first, second, or third year, means absolutely nothing if you’re planning on working in this industry for 30-40 years.
I chose to work for a top brokerage, with more experienced ownership and management than any company in Toronto, who has a training program for new agents, and who provides constant guidance and support. The Bosley “brand” has a value, just as J&D, Chestnut Park, Royal LePage, et al do as well.
If rookie Realtors are looking for the cheapest brokerage with the best commission split, then they’re going to end up so far behind the 8-ball, it might be impossible to battle back.
Mistruth #3: You Can Work From Home!
Ever see those banner ads, pop-up windows, or even flyers on hydro poles that say things like, “Make $170,000 working from your home computer”?
Well if you’re skeptical, it’s for good reason.
And I’m of the opinion that a rookie Realtor should be in the office every single day, and NOT working from home.
Experienced agents – fine, work from home. You’ve already made it.
But rookie agents won’t learn anything from home. The office is where the conversations happen.
“Did you see that listing on Withrow? Whaddya think it’ll go for?”
You don’t get that working at home.
“Hey anybody heard about bed bugs at that condo called “Groove?”
Want to ask a question to an experienced agent? Want support from a manager? Want help with anything? You don’t get that at home.
The discount brokerages WANT you to work from home. They encourage it! But that’s because it costs them money to have desks. They want to rent 600 square feet, put a girl at reception, and have nothing behind the wall but a fax machine. They want virtual agents who work from home, don’t come to the office (because there often isn’t one), and pay them a split of their deals.
Trust me, rookies – you need to be in the office. It’s no coincidence that the new agents who work in the office every day end up making it…
Mistruth #4: Your Friends & Family MUST Use Your Services
Raise your hand if you personally know three or more Realtors?
All your hands are raised. My dog even raised her hand as I typed this…
I can’t tell you how many clients I have that say, “My cousin is actually a Realtor, but we grew up together, and, um, well, I know him, you know?”
Or how about, “My buddy from school just got his Realtor’s license, but I really don’t want to use somebody new for a purchase like this. Just, um, if he ever asks – say you were the agent referred by my company, and I had to use you. Okay?”
Just because you are a licensed Realtor doesn’t automatically mean your friends and family are going to buy and sell through you. If you think you’ve earned their business just by association, then you fail to grasp just how monumental a transaction this is for them.
Mistruth #5: Your Brokerage Will Give You Leads
Really? Is it in their best interest to give leads to you?
Here’s a question, and answer it honestly: Who has a better chance of converting a lead into a sale – you, who has been licensed for six weeks, or one of the top agents in the company?
If it sounds unfair to you, then go become a social worker.
The brokerage doesn’t “owe” you anything. They are in the business to make money, and if the phone rings, and somebody says, “Hello, I would like to buy a house,” the best chance the brokerage has of converting that phone call into $$$$ is NOT giving it to you.
This isn’t unfair. It’s just reality.
Mistruth #6: You Just Have To Do THREE Deals At $1,000,000
I constantly see rookie agents doing open houses for established Realtors, for $2,000,000, hoping that one day, eventually, somebody will walk through the door and buy that house!
It’s never going to happen. That’s not the way things work in reality.
I heard a new agent say, “I don’t need to scratch and claw and do 40 transactions – condos and houses, sales and leases, entry-level crap. I just need to sell three houses at one-million-dollars, and that’s $75,000!”
Theoretically, I suppose.
But I don’t know of a single agent who has done three deals in a year, and all three were $1M.
If you want to work in this business long term, you WILL do leases for $1,200 per month, and take a $600 commission, which could be $400 after your split. You WILL do sales at $250,000, you WILL do houses and condos, and you will NOT be able to live off three high-end deals per year.
Nobody is going to help you. Nobody is going to magically walk into the open house and buy the house you’re standing in. It’s not that easy.
Some Realtors will spend 52 Saturdays and 52 Sundays opening $2,000,000 houses, thinking, “If I do this for 104 days, I’ll eventually get lucky.”
There’s no “luck” in becoming successful.
Mistruth #7: A Dollar Is A Dollar
So, so far from the truth.
Let’s say that you make $85,000 in commissions in your first year as a Realtor. That’s a lot, right? That’s much more than you made at your last job?
Well if you’re on a 70/30 split with your brokerage, you’re down to $59,500. Still a lot, right?
Don’t forget – becoming a licensed Realtor costs you about $5,000, and your OREA, CREA, RECO, and TREB dues are another $5,000. So you’re down to $49,500. But that’s good!
If you don’t spend $10,000 in your first year on your photos, business cards, open house boards, marketing and promotional material, courses, and other items that will help you get started, then I’d be shocked. So now you’re down to $39,500.
And what’s the cost of all those feature sheets and print-outs you bring to open houses? And the photocopies? And the countless other office expenditures you endure at your brokerage on a daily basis, as well as at your home office, and when you’re trying to do business? Another $10,000?
When all is said and done, that $85,000 gross commission is more than likely going to put $25,000 in your pocket, and that’s before you pay CRA.
I can name hundreds of expenses that a Realtor will incur (we haven’t even talked about what you spend on a listing – photos, video, virtual tour, floor plans, home inspection, staging…), and if a rookie Realtor thinks that $85,000 in commissions in his or her first year is enough to live on, they’re dead wrong.
Mistruth #8: You Don’t Have To Work 7-Day Weeks
This goes hand-in-hand with my mistruths about working from home, or making it “because you have to.”
If you think that you’re going to be successful in the industry with the highest failure rate, by not working every single day for the first 3-4 years of your career, then you were either born rich, and have a lot of yacht-club friends to sell houses to (this happens a lot in this business….) or you’re completely and utterly delusional.
Do you know how many Realtors come to the office at 9am, drink their coffee, walk around the office and make idle chatter, and then leave at 1pm? What the HELL do they do with the rest of their day?
And is it any coincidence that these people haven’t sold a property since January?
I’ve been in this business for going on eleven years, and only now am I at the point when I have a day off: Sunday. I work six days, and most of them are 12-hour days. But that’s the life! And that’s how every other person in every other industry works!
How many of you work 60-hours? Most of you who are reading this? You work 80-hours? Awesome – keep it going! This is what it takes! Show me an investment banker who leaves at 1pm, or a lawyer who says “Peace, Out” to his office at 3pm every day.
I’m fascinated by these Realtors who work 3-4 hours per day, and then bitch and complain about how tough the market is, and how they’re having trouble finding clients. It’s always somebody else’s fault, right?
Mistruth #9: All Realtors Drive Fancy Cars
Quick math here – if you owned a $1,000,000 house, but you had a $1,000,000 mortgage against it, how much equity would you have?
Don’t tell me you’re a “millionaire” or that you “own a million-dollar-home.”
Just because a Realtor drives a Mercedes, doesn’t mean he or she makes money, is liquid, is good at his or her job, or all of the above.
I know many, many successful agents who don’t drive fancy cars. The Sotheby’s agent who beat me in multiple offers last night was sitting out in the parking lot in her Fiat.
Don’t judge a book by its cover, and don’t assume that after you get your business cards printed, you need to go lease an Audi.
Spend that money on your business, not your image.
Mistruth #10: Getting Into Real Estate Is A Great Way To Get Rich!
Every office has poor Realtors. Even mine, to be perfectly honest.
I work for a top brokerage, who attracts top agents. But there are still full-time Realtors in my company that will gross less than $20,000 this year. It’s unavoidable.
And do you know how many of the 40,000 licensed Realtors in Toronto gross less than, say, $30,000 in a year? HALF, I’d say. Probably even more. And once they pay their split, and expenses, they’re flat broke.
That’s a lot of people, who spent a lot of money to get started, and lost out on a lot of income from their previous job, or other potential career path.
These HGTV shows that take place in NYC and L.A. make it look like every Realtor is rich beyond belief, but that’s entertainment, not reality.
Real estate can be a career, but it is not a get-rich-quick scheme.
Just ask that to the 20,000+ Toronto Realtors who are wondering how they’re going to make their next mortgage payment, or pay next month’s rent.
How’s that for a Friday piece?
Sorry for the longevity – 2200 words and counting. But I could have written double, and I probably could have come up with 20-30 mistruths.
This was a long week, folks. I’m looking forward to a Sunday on the couch with Phil, Rory, Bubba, Ernie, Dustin, Zach, and maybe even Jose Maria, who knows.
If you don’t know what I’m talking about, then clearly you aren’t a fan of bowling…
Have a great weekend, everybody!