Losing my job - thinking of becoming a Realtor... - Posted by Tim (CT)

Real Estate Investing
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Posted by Jim (NJ) on January 29, 2004 at 16:15:06:

Dave,
Many thanks for the reply. Access to the MLS would provide comps for me which I really need due to the fact that I run ads that reach 4 counties. I can’t possibly know the values intimately for that much area.

Plus, I have been struggling because my marketing has been insufficient and I am in the process of fixing that. Further I went to a REIA meeting last night and listened to a guy from Atlanta (won’t mention names) that claims that his direct mail program to expired listings is his single greatest lead source.

As I need to further ramp up my marketing, that is why I made the comment. Anyway thanks for your thoughts.
Jim

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Losing my job - thinking of becoming a Realtor… - Posted by Tim (CT)

Posted by Tim (CT) on January 29, 2004 at 07:59:36:

… at least that’s the idea. My company is getting bought out in another 3 or 4 months and it looks like I’ll be losing my job. Seeing as though my computer programming skills are old and out-dated (thanks to my current company for not training me when I asked for it!!), I’m thinking about changing careers over to Realty. I know a bunch of people in the local realty groups. So, I think I can get in relatively easily. But, I’m concerned about income. I know me. I bust my tail in everything I do. I have to. I’m the bread-winner in my family of 5. How have others faired (sp?) in making the move? I’m still somewhat active in the local investment arena. So, I’m kind of hoping my license would help in that regard (from an MLS listing/comps standpoint). But, I believe the average realtor makes anywher between 45k and 65k. For CT, that’s not great. I need to be in the 80’s just to make ends meet. And, I’ll bust my tail to do it. Question: Do realtors get a base pay or is it 100% commission? (I’ll obviously ask this question when I speak to the local Brokers). Is this a geographical issue (i.e. some do - some don’t)? If I knew a base pay was involved, I think I’d feel a little better about it. I know the average sale pulls in about $1,500 for the agent (after all of the splits). Average sale is about 160k. If there’s no base pay, I’ve got to sell about 50 houses per year. In my opinion, that’s alot of houses!! Not sure if I can do that.

Any thoughts are greatly appreciated.

Thanks.

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Re: Losing my job - thinking of becoming a Real - Posted by Alvin Teabag Hartman

Posted by Alvin Teabag Hartman on January 29, 2004 at 20:39:36:

Maybe you could get a job putting up bandit signs.

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Losing my job - thinking of becoming a Realtor… - Posted by Paul -Maine

Posted by Paul -Maine on January 29, 2004 at 17:06:43:

Being a realtor is a lousy way to make a living? Yeah I hate making about $4000 a month and having such a flexible schedule that I get to spend a lot of time with my 9 month old son. I have been in it for exactly a year and I love it. I am now getting into the investing side as well and currently looking at a 4 unit to buy and live in with my family while the equity grows. The contacts I make everyday as a Realtor are invaluable. How many newbie investors here have formed great working relationships with investors, several title companies, mortgage lenders, home inspectors and contractors?
Listen, the first few months are rough, you are getting the feel for the business and you need to cultivate relationships, but since that first few months it has been great. I sold 1.3 million in real Estate from May to December last year and for the first time I actually love what I am doing. A lot of people think its easy money, and they are the ones that quit after the first year and then cry about what a crappy way to make a living. It is relatively easy to get a license, but to keep it (a lot of continuing education is required) and prosper is what makes the pretenders quit.
To be a realtor you need to be a problem solver and a people person. You have to be good at negotiating and to be able to juggle several things at once. You are your own boss, some people can’t handle that.
Hopes this helps. Seeing the MLS listings as soon as they hit the market isn’t a bad perk either.
Good luck at whatever you decide to do.

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Re: Losing my job - thinking of - Posted by Nate(DC)

Posted by Nate(DC) on January 29, 2004 at 16:57:35:

You are almost always on straight commission. Some brokers do a “commission split” e.g. you get 60% and the broker gets 40%. Others do a flat fee e.g. you pay me $1000 per month and whatever you earn above that is yours. Obviously if you are a high volume agent you can make more money on a flat fee plan, but when you are just starting out you may or may not be a high volume agent.

I just read an article in the Realtor magazine that noted that due to the combination of a weak job market and strong real estate market, that over 200,000 new Realtors have joined since 2000, increasing the number of agents by over 25%. That’s a lot of competitors going after the same listings.

Additionally, I was told prior to becoming an agent that I should have 6 months of living expenses saved up because it might take that long to make ANYTHING and it will definitely take that long to start making money on a consistent basis.

I am not a full-time agent. I do my own investing and also have other sources of income. So I have never had to live solely off the proceeds of my agent business. However, that’s a good thing, because they are not sufficient to live off of.

To be perfectly blunt, I think the chances of you starting from scratch and making $80K in your first year are not wonderful. I’m not saying you can’t do it, but it will be an unbelievable amount of work to try, and you may find that you come up short.

Good luck in whatever you end up with,
NT

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It’s a different mindset… - Posted by DaveD (WI)

Posted by DaveD (WI) on January 29, 2004 at 16:06:59:

… that is about 180 degrees out of phase to an investors. Real agents like pretty houses that can sell for retail with enough equity to insure their fee will be paid. Investors like just about anything else. The two are a very different game and frankly a tough one to straddle. If you want to get paid well enough to support your family that means working about 80 hours a week. (You work all the off-hours to be available to your clients, then work during the day as well. It is a lifestyle.) You spend your day dealing with barely motivated sellers and savvy buyers, home inspectors, qualifying issues, co-brokes, a different title company each deal, etc. Note that every one of these issues take control out of your hands.

If you like getting prematurely grey and not sleeping very well, it can be fulfilling. If you stay at it and get lucky along the way, it can even pay well. I regret to inform you, however, your estimate of average earnings is grossly overstated. The average is closer to about 18K.

IMHO, you are better off finding some other kind of work, and starting an investing program on the side. Good luck.

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Losing my job - thinking of becoming a Realtor… - Posted by E.Eka

Posted by E.Eka on January 29, 2004 at 13:45:47:

50 houses a yr is about closing 1 house a week.
Unless your current market is hot, that’s going to be difficult. All the other questions you asked depend on the particular real estate broker company. Also look at getting another job in your field until you can get your self over to CRE. You don’t want to put your proverbial eggs in one basket. Good luck, nonetheless.

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Re: Losing my job - Posted by Jeff TX

Posted by Jeff TX on January 29, 2004 at 13:45:27:

Tim,

I have been laid off before and it is not fun. In my case, I had no advanced warning. I thought my job was secure. I hope that you have a little time to make a plan.

I now work full time, and invest in real estate part time. So far, I have bought 4 houses.

I would recommend finding steady income in a day job, and start a business on the side. Keep your living expenses small. Stay in the day job until the business cash flow can cover your living expenses. Set a date that you will be out of the day job, and full time in the business.

As far as what business to start, I highly recommend buying and selling houses. If you bust your tail as hard as you say, it would not be unrealistic to be unemployable in 2 years or less. But, that’s up to you.

Back to the day job: You might consider paying for your own training to bring you back up to speed in the IT world so you can have that day job.

I have a friend who is an RE agent part time. He is getting a broker’s license, and will soon move full time to RE brokerage. He has been building his clientelle for over a year now. If you want to be an agent or broker, I would suggest doing it that way.

Best of luck,

Jeff TX

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right there with ya - Posted by Carl(ontario, Canada)

Posted by Carl(ontario, Canada) on January 29, 2004 at 13:10:34:

I?m in the same boat as you. But it was more a case of being sick of working in the IT field and enjoying working with real estate. One thing that I have been doing while getting my license is getting some training with a Real Estate brokerage. They have been really nice to me and provided excellent training to give me a head start even though I don?t have my license. I?m not sure if I can name the company but the initials are KW :slight_smile: I also have been getting tons of help from my real estate agents. PLUS I talk to any agent I see and get advice. Agents have a rep of being nasty to each other but where I am(Ontario, Canada) I have found this to be quite the opposite. I have never had a nasty reaction and they were very open. As a landlord I know the false impression people have about us.

Anyways everyone has told me to have at least 6 months of money saved up for that ramp up period. Another piece of advice is to be totally honest with everyone and to RETURN phone calls. But you know what? From the training I have had investing has a lot of similar techniques. Instead of phoning people to buy their house we phone to see if they want to list their house. Its just a numbers game, keep calling and calling until someone says yes. If you never call you will not get anywhere. Well at least I hope that works. I have yet to start :wink:

Oh and the split depends on where you work. Where i am going its 70/30 agent/broker until you reach a certain sales level. And i have heard 90% of agents quit in their first year. Buy some books. there are quite a few for new agents.

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Try the IT Sandwich? - Posted by Dave

Posted by Dave on January 29, 2004 at 12:39:18:

Tim,

I went to rentacoder.com for the first time the other day was shocked?it becomes clear what is going on with compter jobs.

When Yuri Yankoff in Rumania bids $35 (and is happy as a peanut) to do a computer programming job that would cost an american $1000 to do, it?s no surprise American IT folks are getting layed off left and right.

My REI backgound brings me to the IT Sandwich?

If you, as an American IT professional, can somehow subcontract your IT work to India, China, Rumania (they all seem to have Phd?s by the way) for 1/10 the cost, you could keep the difference AND have pleanty of time for REI.

What do you think?

Dave

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Re: Losing my job - thinking of becoming a Realtor - Posted by Eric IL

Posted by Eric IL on January 29, 2004 at 11:46:09:

Tim, sorry to hear about your job. I am also in IT field but I am a network security engineer so my job is relatively secure (now that I said that the pink slip is coming). I went and got my broker’s license last year, joined the board and became a realtor to get to MLS. Here is what I had to pay in fees: prelicense class to become a broker - $500, annual dues to join the board of realtors - $378/yr, MLS setup fee (one time) - $500, MLS quarterly fees - $119/qtr. The only reason why I did it is to get to MLS as I have absolutely no desire to sell other people’s properties (at least not now while my salary is still in 6 figures). Here in Illinois (Chicago area) the real estate market is a zoo. Even though the market is hot the competition is severe!!! Getting access to MLS is a must in my opinion in this business so getting a license is worth it just for that! I don’t know the real estate licensing rules of your state but if you have an option to become a broker instead of an agent I would recommend taking that route. You get to keep all of your coop, you are your own boss & etc. Have you thought about possible IT consulting as an independent contractor on a side? Might need to update your skills a bit but I’ve been doing that during weekends for the past 3-4 years and it’s been decent. Look into house automation field such as installing wireless networks, personal firewalls, routers & etc in people’s homes (it’s very simple and rates can go up to $75/hr in Chicago). This way besides making some $ you might get to know some potential customers for future real estate transactions. Good luck to you!

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The way I see it … - Posted by Frank Chin

Posted by Frank Chin on January 29, 2004 at 11:05:18:

Tim:

First, I was in the IT field for a dozen years, the last several in SAP implementation. Second, my wife was a RE agent for a year, and a good friend of mine went into it after retirement, and had been at it for several years.

Having said that, both my wife and friend tell me that you have to build up a clientele because you start making the bucks. This comes about if folks you know make you their listing agent, and you make a cut of the commission whether you sell or not.

Otherwise, you’ll be depending on customers coming in the door or calling the brokers office, where you may be one of a dozen agents assigned.

My freind who retired to FL became a “million dollar” agent within two years, but since became a “two million” dollar agent. So what does being a “million dollar agent” mean??

It means he sold one million dollars worth of real estate, and the commission is split four ways, the selling broker and listing broker each split a 6% commssion, and the each broker splits the 3% with his agent, with each agent making 1.5%.

So the “one million” dollar agent collects $15,000 in commissions and pays from that gas, wear and tear on the car, business cards etc. Of course he get to deduct all of that from his taxes.

If you look at it, folks doing flips, rehabs, get there much faster and makes bigger bucks. But the question is “how’s your salesmanship”?

If the answer is good, “you’ll be successful doing deals”, and you’ll be successful being a computer consultant. I was a computer consultant for a while, and would have done better if I was a better salesman.

If the answer is your salesmanship is so so, then your chances of becoming a 80K/year realtor is not great.

My wife spent a year being an agent, and sold one house for the whole year and quit. She wasn’t the greatest salesman.

A recent article made mention of the exodus of IT people to Real Estate Sales. As a result, a veteran RE agent who used to make 150K a year found herself making only 40K because newbie agents offered to work for little or nothing to get the listing. She quit, and went into another field.

Frank Chin

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Losing my job - thinking of becoming a Realtor… - Posted by Hank FL

Posted by Hank FL on January 29, 2004 at 10:56:57:

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Hi Tim - Posted by phil fernandez

Posted by phil fernandez on January 29, 2004 at 09:47:08:

You’re too smart to be a realtor. Because I’ve known you for awhile. And as someone else said it’s hard work. I read somewhere where 20% of the realtors transact 80% of the business leaving the other 80% of realtors only doing 20% of the business.

I think to become a very successful realtor you need years in the field to build up repeat clientelle. A realtor does all the work and then gets 25% to 50% of the commission.

And how many realtors do you see with smiles on their faces. Not many that I have seen. It’s a lousy way to make a living.

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Thanks everyone for your Input! - Posted by Tim (CT)

Posted by Tim (CT) on January 29, 2004 at 09:41:42:

Everyone has certainly given me some things to think about. As always, changing your career is always tougher than you think. I guess my ultimate job would be to do 33% IT, 33% Realtor and 33% Investing. Might be possible. Heck, I’m certainly willing to try different options. I have a little time to think about it but it’s nice to be prepared if and when the time comes. I think I’ll be fine - just have to get my ducks in a row.

Thanks again!

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Being a RE Agent is really hard work - Posted by Anne_ND

Posted by Anne_ND on January 29, 2004 at 09:31:23:

Tim,

I don’t have a realtor’s license, and I don’t plan to get one. But because I know the local market quite well I have been asked by friends to help their new out-of-town employees or friends find homes to either rent or buy because they are pet owners (my rental niche). When they offer to pay me I’ve always asked them to make whatever donation they feel my help was worth to the local Humane Society (so far none of them have done it!).

Helping people find a place to live is a horrible way to make a living. Even though these people were friends of friends, and generally nice people, it was awful. I hated it. They were frantic, unrealistic in their expectations, prone to yelling or crying (it’s been a tough market for renters and buyers here) and it was a huge time sink.

It’s given me a whole lot more respect for real estate agents. I could never do their job.

good luck to you,

Anne

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Losing my job - thinking of becoming a Realtor… - Posted by IB (NJ)

Posted by IB (NJ) on January 29, 2004 at 09:25:59:

Hi Time. Long time no hear from. Sorry about your job. Of course you know I’m not a realtor. So I would suggest you get your license (even if it’s just for MLS access) and then get out there and bust your butt as an Investor as opposed to a realtor. Put more concentration on wholesaling and contract assignments. That will keep the cash flowing as you funnel some of the revenue into longer term investments like rehabs/rentals. Good luck with everything and feel free to email me if you have any questions. Email me at eeb88@yahoo.com if you don’t have my ‘regular’ email address.

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Your situation fits mine exactly… - Posted by Dean (IL)

Posted by Dean (IL) on January 29, 2004 at 09:20:06:

Tim,

…and I’m still trying to decide what to do.

My company was also acquired by another and my position (also in the IT field) is in jeopardy. In fact, anyone currently employed in the IT field has cause to be concerned, especially if in programming or application development. Unless you’ve buried your head in the sand and haven’t been paying attention over the last several months, the latest fad in IT is to see your job get outsourced to India or China.

Well, seeing the handwriting on the wall, I enrolled in pre-licensing classes to also become a real estate agent. Depending on the broker, some do indeed have a ‘career transition program’ where you earn a base plus commission…although this is probably the exception and not the rule. This was true about 6 to 8 months ago with a nationally known broker who has an office in my community. Recently, however, I’ve read articles in both the WSJ and my own local newspaper where there has been tremendous growth in the number of new real estate agents, so this may no longer be true with this particular broker since they no longer need to attract people. The cause, of course is the current state of the job market coupled with low interest rates. This made me rethink about becoming an agent because of the influx of new agents. A recent article in our local newspaper outlined the career briefly. One agent that was interviewed mentioned that you should have at least 8 months of living expenses saved because it could very well take that long to begin seeing the fruits of your labor. Someone else that already posted here mentioned expenses to get started. There are dues and fees and it all adds up quickly.

Since you stated you have some computer skills (albeit somewhat obsolete), have you considered continuing in the same career path but just update your skillset? Tech jobs are still out there and still pay very well. I myself am leaning heavily on learning some new IT skills just so I can remain employable in the field until I discover my next step. My investing is not producing enough to live off of at this moment. One other thing you mentioned about your company not training you. Well, times have changed since the late nineties when companies were flush with training dollars that they would throw at their employees as a means to retain them. You, as I quickly learned, are ultimately responsible for your employablility and should keep yourself trained.

If you decide to make the leap into becoming an agent, I suggest that you get your hands on a few books. One called “Your successful real estate career” / Kenneth W. Edwards will give you a flavor for it and will get you to thinking if you are ready to make it as an agent.

Good luck and feel free to drop me a line on whatever you decide.

A fellow IT guy,

Dean Christensen

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Re: Losing my job… - Posted by Jim Fox

Posted by Jim Fox on January 29, 2004 at 08:34:12:

You have a lot of homework to do. Brokers neither get base pay nor commission. Brokers get a percentage from each sale but have to share splits and commissions with agents. They also have to pay all the expenses. Some brokers now give agents 100% commission but charge them for desk space in the office. $500 - $1,500 a month is common, at least here.

If you are looking for steady income, being a broker/agent is the last thing you should consider. It takes years to make any real money and it’s “feast or famine” until then.

BTW, “realtor” is a useless term. For licensing purposes, you are either an agent or broker. You get to be a “realtor” by paying an annual fee so you can use the term in your advertising.

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Re: Losing my job - thinking of becoming a Realtor - Posted by Jennifer in NC

Posted by Jennifer in NC on January 29, 2004 at 08:33:11:

Tim,
In 2000, I left my field of nursing and became a Realtor. In my case, it was 100% commission. You are essentially self-employed, even though you have to be supervised by a broker, so don’t expect a base pay (of course it may be different in your area). You know how much money I made in the first six months? NADA. Plus I had to pay out several hundred dollars to join the MLS and monthly dues. After a while, I ran back to punching the timeclock with my tail between my legs (even though the last month I was in it, I made about $5000, I was so far in the hole by then I had no choice). Back then, I was much more green and naive than I am now, and I didn’t know a thing about investing, nor had it ever even crossed my mind. Now I’m back, getting my continuing ed credits caught up so I can rejoin the MLS and my broker, but this time I’m doing it with my investing career in mind.

BTW, I had to split everything with my broker 50/50. So if I sold someone else’s listing, I would get 3% of the 6% commission, then I would split that with my broker, which left me 1.5%. If I sold my own listing, then I got the entire 6%, which split with my broker left me 3%. So if the sale was $160K, my commission would have been $2400 or $4800, depending on whether it was my listing or not.

Hope this helps.
Jennifer