So you've decided you want to start a career in Real Estate... an opportunity to be your own boss, have a flexible schedule, help friends find their dream homes and make good money while doing it, great! But where do you start? Do you google real estate schools and start on Monday? Not quite.
According to Tom Ferry, about 87% of all agents fail within the first 5 years. This is due to a number of contributing factors, one of which is the lack of financial planning. Before you start your real estate adventure, outline a financial plan for how you're going to budget for the following:
- 3-6 Months of Household Bills
- Real Estate School Fees
- Licensing Fees (exam, background check, license application)
- MLS Dues
- Brokerage Fees (monthly dues, office fees, misc. fees)
- Branding (website, signs, business cards)
- And more...
Once agents obtain their license and pay their MLS dues, agents can often run out of the money they set aside and find themselves needing to go back to a part-time or full-time position quickly in order to pay the bills. Unfortunately, this doesn't allow them the time they need to focus on marketing their business and becoming familiar with real estate which leaves them unsuccessful and out of an industry they could have excelled in if they had been able to fully prepare.
If you're getting into real estate because of how hot your market is, that could mean there's also a shortage of supply due to out of town buyers moving in. So prepare for a waiting period of finding clients, finding their dream home and roughly 30 days to close before your next paycheck comes in.
"You're embarking on a journey of opening your own business. You need to budget and prepare months beforehand to keep yourself and your family protected during this exciting time."
Real Estate School
If you have friends in the industry, you'll hear all about it. Which school to go to, what you'll learn, how to prepare for the test... but do your own research as well. Search for real estate schools in your area and take note of their reviews online.
The first week of class, you'll mostly learn very cut and dry laws on requirements necessary to obtain your license and begin learning about different common terms relating to real estate to prepare you for the following week of heavy information.
The second week, the class will be more centered around legal terms to use when filling out documents. You'll learn about property lines, legal ownership of easements, how to properly calculate square footage and more. This portion of the class is to protect both you and your client in the purchase or sale of a home, which can certainly end badly if not worded correctly in a purchase contract.
Side-note: It's common to become friends with those in your real estate class. You'll quiz the people next to you before each small test, you'll ask your classmates which brokerage they're considering, and ultimately find them on social media to keep up to date which how they're doing.
Finally: The Big Exam
During the second week of the class, you should have already completed your background check and scheduled your final exam. The exam is completely different from the module tests in school. You may ace each module test at the end of each week and feel great knowing you've memorized every term in the book, but the final exam is all about applying those terms into outdated questions and scenarios that won't resemble your previously aced exams. Remain calm, apply what you've learned, and be confident.
If you don't pass the first time, you can retake the tests as many times as you'd like. While many people pass it the first time, many others take it 2-3 times before they pass. You won't receive a full report on questions you got right or wrong, but you'll receive a pass/fail paper upon completion of your exam.
Once you've passed your real estate licensing exam, it's time to turn in your application to your local real estate commission with a small application fee.
Once your application is accepted and approved, you'll pay your MLS dues and interview potential brokerages. Keep in mind you're still running a business, so find a brokerage that can will fill the gaps in your business. Click here for help on how to choose the right real estate brokerage for your business.
For more on how to get through your first real estate transaction, click here.
Having trouble explaining to a potential client the opportunity that comes with your commission? Click here.