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Going for Broke
The economy has created quite a healthy real estate market--which means that earnings are ripe for the picking. This potential income, along with fast-paced, yet flexible work-days, makes real estate an appealing alternative for people who dread the idea of sitting at a computer all day.
"It's not a race, it's a marathon. If you treat it like a race, you're going to lose." - Christopher Haas
In real estate, there's a well-known and oft-quoted axiom: "Ten percent of agents make 90 percent of the money." With these odds, why would anyone choose this line of work? "Unlimited earning potential, for one," says Andy Eichberg, 28, a real estate advisor in Washington, D.C. "You can be 22 and make just as much as someone who is 45 if you catch some breaks." And right now, it's easier than ever to catch a break. The economy has created quite a healthy real estate market--which means that earnings are ripe for the picking. This potential income, along with fast-paced, yet flexible work-days, makes real estate an appealing alternative for people who dread the idea of sitting at a computer all day.
Despite these advantages, real estate is not for everyone. All the agents we talked to agreed: you have to be aggressive--a go-getter who won't take no for an answer; a people person; a good time-manager; someone who's not in it for the short-term return. If you're any or all of the above, real estate may be the career for you.
Before we delve any further, let's start with basic definitions. Both agents and brokers help people buy, sell, or rent properties. An agent is essentially a salesperson and must work with a licensed broker. A broker provides a host of services in addition to sales, including appraising property, negotiating purchase, sale, or lease agreements, and maintaining escrow accounts. In most states, you must become a licensed agent before you can become a broker.
So, will you find instant success in real estate sales if you're the kind of person who could sell sunshine in Florida? Not necessarily. It takes much more than that to rent an apartment or sell a home. Organization is key, as well as confidence in your own abilities. "Your sense of self-worth is often linked to your job," says Tim Lauben, 26, a Boston-based real estate agent. "If you don't make a sale for several months, you can't let it get you down. Out of 100 cold calls, you may set up 10 meetings and get one client--and that can get pretty depressing at times," he says.
Besides having the strength to persevere, it helps to be a sympathetic soul. That's because there is a huge emotional component to people's decisions about where to live. Kristin Lawton, 29, a realtor in Philadelphia, believes that's one reason there are so many women in real estate--85 percent of real estate professionals in this country are women. "Women deal with people's emotions better and can relate to a couple's attachment to a particular home," says Lawton. Whether you agree with her or not, the fact remains that being a people-person is critical to succeeding in the real estate field.
But according to Christopher Haas, 27, an agent in Wayzata,
Minnesota, having some money in the bank is even more
important than being able to deal with people's emotions.
"You'll need at least six months' worth of living expenses,"
he says. "And that's on the low end, because you may not see
a paycheck for several months after you begin the job." Haas
was fortunate enough to join his father's real estate
business, which was already thriving in a Minneapolis suburb.
He receives a percentage of everything his father and partner
earn in exchange for managing the administrative side of the
business. Lauben, on the other hand, worked two jobs to save
up enough money to make the transition to real estate. He
suggests that newcomers start with rentals--"you'll see a
paycheck a lot sooner, since it can take months to sell a
house," he says.
Once you pass the examination and become a certified real estate agent, your next step is to find a home base. Most real estate agents we talked to recommend starting at an established real estate company as an independent contractor. But Haas suggests doing a fair amount of research on local agencies before selecting one. "Even though the pay structure may be less attractive at a larger agency, it's still a good idea to sign on with one that has a good reputation," says Haas. "Your name on its own is nothing. With the backing of a big company you get name recognition right away and will be more likely to get better clients."
As an independent contractor, you pay a percentage of your
commissions to the agency in exchange for a desk and a
computer at the main office, and to cover administrative
costs. "What you are really paying for," says Eichberg, "is
an established and reputable name to put on your business
Flexibility is one of the main benefits of working in real estate. Sure, you're your own boss, says Eichberg, "but the reality is that the guy who comes in at 7 a.m. is going to make more than the guy who strolls in at 10 a.m."
Haas also shakes his head at the long hours. "Your social life deteriorates," he says, "because you have to be available when the clients are." Expect to work late hours and weekends for the first couple of years without seeing a big return. "At our offices we always say, 'It's not a race, it's a marathon,'" says Haas. "If you treat it like a race, you're going to lose." In other words, you may need to cultivate a client for several years before you profit from the relationship.
For Lawton, flexibility was a necessity. When she entered the business two years ago, she and her husband knew they wanted to start a family in the near future. "I was working in retail, and I wanted a job that was a little less structured," she says. Today, she splits her time between home and office as she cares for her newborn baby.
All four brokers recommend networking with local businesses and civic groups. Eichberg says that he's active in charity organizations and the Greater Washington Board of Trade. Haas, too, is a member of his local chamber of commerce. "You need to do anything to let people know you're in the business," says Lauben, "so that when they want to buy or rent a house, they'll come to you first."
Although you may work long hours in real estate, you're definitely not glued to your chair watching the clock. "I leave the office for appointments at least four or five times a day," says Lauben. "I get to drive around to meet people outside of the office in different settings--and they call this work?" Don't be misled, however--there's still the obligatory desk time and cold calling to be done. Lauben says when he gets into the office in the morning he checks mail and reads the daily update from the Multiple Listings Service, which highlights new listings and properties sold. He follows up on tips on apartments for rent or folks looking to buy a new home. Plus, there are numerous calls back and forth with potential buyers who want to know more about a property.
Ultimately, the biggest lure of the real estate profession is the unlimited income, says Haas. "No one will ever tell you how much you're going to make in a year. You decide yourself by setting your own goals." But if your objective is to make a lot of money quickly, he adds, "then you're doing the wrong thing." Residential real estate agents usually earn between $20,000 and $40,000 in their first year. Obviously, the longer you stay in the business and the more contacts you make, the greater the earning potential. But the lure of earning beaucoup bucks with one sale can be a bit addictive, admits Haas. "This profession is for those who think $40,000 a year isn't enough, $75,000 isn't enough, and then even $100,000 isn't enough," he says. "The sky's the limit."
Julie Short is an associate editor at The Improper Bostonian magazine--but she is considering a move to the more lucrative field of real estate.
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