I’ve been an active real estate agent for quite a few years now. Every so often I am approached by friends saying they’re interested in getting their real estate license. While that’s fine and dandy, I always have to keep it 100.
Sure there is a bunch of glitz and glamor that go along with real estate. Not to mention, real estate commissions are probably the most any sales person can make on a single transaction. However it would be remised for me to say the same sunshine fluff that all the propaganda has lead you to believe. There is a corrupt undertone and a lot of shady money being swayed around in this industry. I want to give you the truth behind the facade before you start blowing a ton of money in pursuit of that Dan Bilzerian lifestyle.
There are quite a few issues with this industry but I’ve outlined four cases in point. If you’re interested in getting your license, please consider each one of these arguments before pursuing a career in real estate. I want to make sure you know what you’re getting yourself into before you waste your time and money chasing “the dream”.
The Education Price Gouge
Before you can even start selling a home you need to get your license. You may think the process is really easy. You know, pay a few hundred bucks to an online school, complete you classes and take your test. Quite the contrary my friend. Sure it costs between $300 – $500 to take the classes and get some school credit. It also cost another couple hundred bucks for a test prep and at least another $150 to take the exam.
Congratulations! You passed. Now you need to connect your license with a broker. If you’re lucky, you have a hommie that is a broker and will not tax you to put your license under him or her. Unfortunately, this doesn’t happen too often. You’ll end up having to go to a big firm like Coldwell Banker or Keller Williams where they charge you fees (I’ve seen some fees go up to $1,000 annually) to be under their office and use their marketing material. Oh, and let’s not forget the sh*tty commission split of 60/40 until you reach some ungodly quota.
Now comes The MLS (Multiple Listing Service). You know, that service used to search or list homes. Annual membership for access is another $300+ bucks!
Next comes your Realtor title because, you know, a real estate agent is different from a Realtor. Realtor’s have to pay upward of another $600+ to take some ridiculous class about ethics (which most Realtor’s don’t even follow) to get a fancy pin and the title “Realtor”.
You’re already $2,000+ in the hole and you haven’t even thought about marketing or a sales strategy. Oh and let’s not forget your website and branding, because you know, you have to be the purple cow.
Real estate, it’s easy to get in but it’s very expensive to play.
I know what some of you are thinking. Online is the way to go! If I show up on the first page of Google, I’ll make millions!
Well, take it from experience. Online marketing doesn’t work. Umm, let me rephrase that, it works if you pour endless amounts of cash and man hours into it.
My main hustle is web dev and online marketing. It’s only natural that I SEO and PPC the stinky tofu outta my real estate business. Well, you know what, I did! I sat pretty for a very long time for fancy keywords like “Echo Park real estate agent” or “Silver Lake real estate“. I even spent a few bucks doing Zillow ads. Well dudes, the harsh reality is, it doesn’t work (unless you spend $1,000/m and that’s even a crap shoot).
Sure I received a ton of leads from people interested but the unfortunate truth is many of them were either unqualified or just putting out feelers. Let’s get this straight. You are not likely going to get any listings here. About 99% of the people contacting you are interested in either buying or renting. It’s a seller’s market right now and if you know anything about real estate, you know that buyers have next to no power in persuading a negotiation.
I spent more time chasing a ghost than converting. In about 2 years of marketing online, I closed a handful deals. If you know anything about conversion rates, you know that this is totally not a quantifiable strategy. Sure you can find some success in online marketing but you have to realize that it takes a lot of time, hard work, and funds.
If you really want to find success in real estate, it boils down to cold calling and door knocking. This seaways me into my next point…
Face Spit and Sh*t Talk
It’s not all that bad. You can absolutely find a huge amount of success in real estate. To date, I currently am managing about 100 real estate agent websites including some of the biggest producers in the world. I have the inside scoop on what they’re doing right to find success in real estate.
Of the 100, less than a quarter are actually financially ballin’. I’ve had a conversation with several successful clients about their strategy and the great one’s started with cold calling and door knocking. During their early years in real estate they grinded their way through the commas. I’ve heard stories from agents cold calling individuals only to get ridiculed and verbally defecated. I even know a number of agents that would go door to door looking for new clients only to get greeted by saliva to the face.
But you know what, they were resilient. It’s a numbers game. For every 1,000 cold calls made or doors knocked, you’re bound to get 1 client. If you push hard enough, by the time you hit 1,000,000 you should have a solid client base. Just like Malcolm Gladwell eloquently said, put in your 10,000 hours!
The Double Ended Deal
I’ve been a part of a bunch of real estate deals and almost every one of those deals has had some shade sprinkled all over it. All agents (particularly listing agents) should keep their clients best interest in mind. You would be surprised at how many times they withhold offers from their client. One in two deals that I’ve been a part of had a listing agent hold off on an offer just so they can find the right buyer that does not have representation. They would then only show the seller that buyer’s offer to double end the deal. Double end means they would represent both the buyer and the seller to make the full commission.
This is totally dishonest. Why is this point relevant? It’s to show you that there are a bunch of shady practices like this that happen more times than you think! Let’s face the facts, you’re going to get the rug pulled from under you more times than not.
My Wrap Up
At the end of the day, if you’re interested in getting into real estate, by all means please do! I just want to make sure that you really consider what you’re getting into before pursuing a career as an agent. I’ve found my niche to success and I’m sure you will too. You’ll need some really thick skin, not afraid of hard work, a cut throat mentality, and some big cojones if you want to be successful in this industry. There are no shortcuts here.
The honest truth is, if you really want to make money in real estate then you should get a good job, save some money, buy property and start flipping, developing, or renting. That’s where the true real estate ballers stack their chips!
As I stated earlier, there are a bunch of things wrong with this industry. These are a few of them. The list goes on, but I’ll save the rest for another day. I hope you found this post intriguing. If you’re an agent or aspiring to be one, please let me know your thoughts! I’m a complete and total cynic when is comes to this stuff but I’d love to hear some feedback.
– Til the next post, l8r!