Why Not Be A Realtor?

[Guest Guest]

why dont some of you become realtors? I am not trying to convince anyone I am just curious why some of you chose investing instead of being an agent. If you are in a market where houses are in the 400-500k range, you make 15k per house you list. You are servicing 80% or more of the population as opposed to the other 20% or less who want to do it themselves. Plus you all are already experienced in advertising the hell out of your own business, so advertising a home for sale by an agent (you) would be easy for you. Not to mention just advertising yourself all over the place.

Did anyone choose to NOT be a realtor for any specific reason?

[JerseyJeff 0]

One of the many reasons would be because as a licensed realtor you are required by law to disclose this information to the seller which is a cold-calling killer. You will be making your creative RE pitch to a dial tone because many owners will hang up when they find out you’re realtor.

 

Jeff

[jtlab 0]

why dont some of you become realtors? I am not trying to convince anyone I am just curious why some of you chose investing instead of being an agent. If you are in a market where houses are in the 400-500k range, you make 15k per house you list. You are servicing 80% or more of the population as opposed to the other 20% or less who want to do it themselves. Plus you all are already experienced in advertising the hell out of your own business, so advertising a home for sale by an agent (you) would be easy for you. Not to mention just advertising yourself all over the place.

Did anyone choose to NOT be a realtor for any specific reason?

 

What jeff said reguarding cold calls is one point. The other point is that in becoming a realtor you have to split your commission with your sponsoring broker. So while you do all the work your broker can sit back and reap part of your benifits. I do not have to tell you how that compares to owning your own buisness.

 

It is true that your servicing a bigger percentage of the population by being a realtor. However, it is also true that your competition is alot bigger in that sector of real estate. In lease optioning, while this business is increasing in numbers on a daily basis, it is still a new concept to alot of people in general and thusly your competition is not great.

 

Lastly, it can take months, depending on the type of market, to sell that house as a realtor. As a l/o specialist, as far as I know, you can relatively find a t/b with in 45 days in any market.

 

Jacin L.

[Guest Guest]

yea in my area there was just a conference by david finkel, and jesus christ! i see about 5 million i buy houses signs on my own street! its like the entire neighborhood went, and everyone is doing l/o, so thats kinda my enthusiam in that area. i am trying to figure out how to start my re investing career, and it seems in a hot market like mine, (im in cali) the best way is to get some upfront cash and buy at a huge discount. i thought about becoming a car dealer for awhile and making some fat comission checks for some time to earn the money. i dont know, just seems a realtor would be easier, and more profitable. yes there is a ton of competition, if not millions of tons. but being a realtor is something that your efforts can really shine through on right away, where as an investor you cold call for days and months until you find that deal, and then get paid. idk, i really want to invest in re somehow, just am not sure how yet.

[MichaelC 160]

I am not anti Realtor by any stretch. I think they serve a needed function in the community. From a personal standpoint, the thought of being an employee, which is what I am if I am a Realtor, grates on my nerves to no end. I want no part of dressing the part, sales meetings, required office time, sharing my commissions, etc. Again, that's just me. And another big thing with being a Realtor is that it costs money to get started. More so than most people imagine and can afford.

As for Realtor specifics, there is an interesting read here, from Realty Times.

As for the Conti and Finkel conference, don't be dismayed by the large turnout and resulting number of signs all about town. In a month, the overwhelming majority of those folks have already packed it in and quit. Sad, but true. We are a nation of folks who demand instant gratification. If a business is legit, and requires effort and time, most people want no part of it. Those signs, and your "competition" will be long gone, leaving the deals and the dollars to those who can see the bigger picture and stick it out.

Bottom line: you can make more money as an investor and with less corporate BS than you can as a Realtor. My two cents.

[Jason (AL) 1]

Here's another article (posted from someone else) that may answer your questions:

It pretty much turned me away from ever thinking about becoming a realtor.

Besides, the MLS is way overrated.

Enjoy:

 

 

By Rachel Peterson

Sun Staff Reporter

09/04/2005

 

After 20 years with the Arizona Department of Economic Security, Patricia Peck was ready for a change -- something fresh and more challenging, she said.

 

"I'm a native Arizonan and I also am an NAU alumna," and she didn't want to leave Flagstaff, she said.

 

So two months ago, she earned her Realtor's license and is diving head first into the high property values and short supply in the Flagstaff housing market. "It just seemed like a great career move," she said.

 

Peck is not alone.

 

In the past three years about 250 Realtors have joined the Northern Arizona Association of Realtors, according to association statistics. But the number of those who will be able to hang on for more than five years is limited, said Stu Bernstein, instructor of Best School of Real Estate.

 

"Unless somebody's willing to make a commitment to the business and jump in with both feet and their eyes wide open, they're not going to make it," he said. "A lot of people get into real estate, but they don't really know what they're getting into."

 

HIGH DROPOUT RATE

 

Bernstein estimates only about 75 percent to 80 percent of his graduates get into the field, and five years later merely a quarter of those are still actively selling, he said. Part of the struggle is the time commitment -- Realtors work round-the-clock to make a sale -- and the frustration of constant rejection, he said.

 

But some also quit because of the low earnings many Realtors see in the first two years. Each year about 20 percent of new Realtors quit, said Howard McBride, president of NAAR.

 

"They see the housing market and they have this vision that it's easy money. The turnover's just horrendous because it's so difficult getting from year one to year six," he said.

 

National statistics show the median income a Realtor earns is about $13,000 a year in the first two years. That increases to median income of about $59,000 by the sixth year for those who can hang on, McBride said.

 

These figures aren't a hard-and-fast rule, though. Eric Davis, who's been in the business one year in November, is one of the lucky ones, he said. Already he's earned more than he did as a 15-year employee of NEBS.

 

"I know the statistics and I feel very, very fortunate that my business has taken off. I attribute that a lot to where I work and the training that I got," the Dallas Real Estate sales agent said.

 

It also hasn't hurt him to be a native of Flagstaff with lifelong friends. "Most of my clientele has been people that I know and have lived in the area for a long time."

 

The trick to being a Realtor, he said, is to have strong communication skills, and make your presence known, he said. "My advice would be for somebody that really wants to get into real estate is that you be a people person."

 

CONSTANT MARKETING

 

Brian Wilson, a Realtor in Flagstaff for four years who's been involved in real estate 30 years, would agree.

 

As a second-year sales agent for Elk View Realty, Wilson regularly mails fliers to potential clients so he can "become your Realtor long before you actually need one," he wrote in one flier. Much of the time the fliers don't even advertise a sale property or the agency, per se. He's used them to advertise for community garage sales, encourage residents to vote on Proposition 100, or to inform potential clients of new building materials.

 

The cost of the high-color fliers is returned to him through "ancillary benefits," he said. His name, photo and Elk View Realty are mentioned in all of them, heightening his presence and making him known around town.

 

Bernstein agrees in the need to constantly market, whether on paper or in person, at every party and outing a Realtor goes to. That is what really separates those who are successful from those who aren't.

 

"It's not because they can't earn. They can earn. It's because they weren't prepared to make the transition" to a career, rather than just a job, he said. It can be a 24-hour job to cultivate contacts.

 

Working in real estate is similar to buying on the stock market, added the 30-year industry veteran. Right now things are high, but they won't always be. The Realtors who last are the ones willing to swing with the highs and the lows.

 

"Things get better the more you devote to this business."

 

NOT YET SATURATED

 

What hasn't been a factor in a Realtor's success here is market saturation, Bernstein added. There currently are 67,000 licenses in this state of 5.6 million people, and Arizona has the third-highest growth percentage in the nation.

 

Florida, the second fastest growing state, has a much higher ratio of Realtors to residents, and is still thriving, he said. That's because everybody needs housing, whether it's rental or owner-occupied.

 

"And with real estate you catch them coming and going," Bernstein said.

 

While Peck is just getting her feet wet, she's been successful thus far and is excited for the continued growth in Arizona, she said.

 

The rookie seller closed her first buyer's transaction in mid-August, and closed on her first listing this week. In the next couple of months she also will be relocating to Williams to be the branch manager of the new Liberty Properties office there. The trick to continuing her success there is in finding people interested in working with a new Realtor until she builds a name, she said.

 

"I'm also hoping that some balanced growth that's good for Williams happens there. That of course will help with my success."

 

TOP FIVE TIPS TO BECOME A REALTOR

 

1. Be prepared for the toughest job you've ever had.

 

2. Make sure that you are organized and have goals and objectives.

 

3. Make sure you are well-trained and never stop learning. The business is constantly evolving.

 

4. Don't lose your motivation when you face rejection. More people say no than yes.

 

5. Be persistent. This is not a get-rich quick business.

 

A CROWDED FIELD

 

Exams given in the first six months for new sales agents 19,971 so far in 2005 12,026 in 2004 10,074 in 2003 7,214 in 2002 5,207 in 2001

 

Percentage of applicants who passed the exam...

 

2005: 66

2004: 71

2003: 76.7

2002: 79.6

2001: 79.8

 

What does it take to become a real estate agent? Be at least 18 years old. Complete a 90-hour licensing program at a state-approved school Pass the school's final exam. Pass the Arizona State Real Estate examination ($90 fee). Pay state fees including application and fingerprint processing ($119 to activate license for two years). Before license is activated, complete six-hour course on introduction to contract writing and submit proof of employment.

[Adam King (MI) 1]

400-500k range, you make 15k

 

I did a deal on a $500K house and made over $150K on it. Does anyone need anymore reason why being an investor is better?

Just my two cents and $149,999.98

[Doug Pretorius (ON) 9]

Sorry I guess I missed this post. I haven't become an agent specifically because of the excessive fees and restrictions. I got into real estate so I could work for myself, the last thing I want is a broker-boss breathing down my neck, telling me what I can and can't do.

[MichaelC 160]

I got into real estate so I could work for myself, the last thing I want is a wife breathing down my neck, telling me what I can and can't do.

Fixed. I'm amusing myself this morning.

[steve55121 0]

It depends on what you are wanting to do. Being a realtor means a 30k per year job if you are just average. A good investor can make that in just one transaction. There is to many laws that govern being a licensed agent and things that are considered non ethical being a agent is ok when you are not.

 

-Steve

[filthyphil55 0]

Not that i have one, but does anyone know if having a real estate lic. might screw things up being an investor, do you have to follow laws of an agent?

[Doug Pretorius (ON) 9]

The only people I've heard say anything negative about being an investor/agent are people who don't have their license (including me!) The investor/agents I know all say the same thing: "Getting my license was the best thing I've ever done for my investing." They generally cite the following benefits:

 

1. Greater access to information

2. Do your own comps

3. Get half the commission when you buy off the MLS

 

There are a few I know who promote themselves as investors to their fellow agents and get deals that are never listed from sellers who would not call a "we buy houses" ad.

 

I've asked many of them about the restrictions and not one has ever said that they regret getting their license.

[filthyphil55 0]

Hey Doug thanks,

thats great info, sounds good, cause i assume that in the future i will be getting a RE lic.

but not tobe a realtor,

while on the subject i just talked to a good family friend who is a real estate agent, she advised its always a good idea to get the lic. but becoming a realtor at this time isn't so good, atleast in the sacramento area, so i told her i had no planes of being an agent, as she was telling me how hard it was to become established and successful, and i was thinking to myself it sounds like to much work and not enough pay-off tobe an agent as displayed in earlier posts

 

thanks philip :xbiggrin: :xcool:

[Adam King (MI) 1]

Phil,

 

Not that i have one, but does anyone know if having a real estate lic. might screw things up being an investor, do you have to follow laws of an agent?

 

Doing an acquisition where it goes against the Do On Sales Clause can (Check with your state) violate the Realtor code of ethics. This would mean that you could lose your license if you did a subject to.

 

Also, when you do deals you MUST share your commission with a broker. That is money that you could have had that you would normally get as an investor. A perfect example is buying a FSBO that has lowered their price to make up for a Realtor commission. Say it's lowered $15K and you get that as equity when you buy as an investor. Now let's say there's a $15K commission that you have to split 50/50 with another Realtor. Now you've lost $7,500.00. "Not including what your broker gets to keep"

 

In MI if you do more than 5 deals (Through the chain of title) you must have a license or use a broker to mediate the acquisition. Now what sounds better to you; having a license and giving 50% up, or hiring a broker to mediate your acquisition and a much lower agreed upon rate?

 

These are just a couple of examples. In my experience I have never seen someone get their license and not have it hinder their investing. There are too many rules that can be broken as a Realtor whether you mean to or not. Don't believe me? Look at your state's real estate lawsuits and you will see the majority of them against Realtors. This doesn't mean to give them a bad name, it's just that most of the lawsuits and fines are slaps on the wrist by avoidable mistakes. Like, not getting your license.

Just my two cents.

Adam

PS You want to do it right without the headache? Do what I do, have a partner that has a license. You get all of the benefits without the constraints and if you do a deal together you can split his/her commission.

[filthyphil55 0]

thanks adam,

so basically real estate agents can't do investing on the side without still giving thier boss a cut

guess i won't be gettin one of those,