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- So, you want to
sell real estate?
Everybody thinks it's easy to sell houses,
but not everybody doing it is getting rich.
August 17, 2005: 3:17 PM EDT
By Les Christie, CNN/Money staff writer
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- NEW YORK (CNN/Money) - Sell real estate for fun and profit. It
sounds almost too easy. You drive clients around for a day or two. You
show them several nice houses. Then -- boom -- hello fat commission.
- No wonder there are now some 2 million licensed real estate agents
in the United States, according to estimates from the National
Association of Realtors, and more signing up every day.
- Not all licensed real estate sellers are members of NAR, but that
organization has, nationally, 12.7 percent more members today than it
had a year ago, a total of 1.2 million.
- California has 172,320 NAR members, more than any other state and up
16.6 percent in the past year. Florida, with less than half the
population of California, has nearly as many NAR members, with
131,052. That's up 16.8 percent over 2004.
- The fastest growing market for agents is Arizona, where there are
18.4 percent more than a year ago.
- Reality check.
- Well, before you quit your day job to join their ranks, take a deep
breath.
- "Everyone thinks it's an easy way to make a living, but it's
not," said Pamela O'Connor of RELO/Leading Real Estate Companies
of the World, the largest network of independent real estate firms in
the United States. "People don't realize how much effort goes
into it."
- "They come into the field with rose-colored glasses," said
Daryl Jesperson, CEO of RE/Max International, a franchise system with
more than 110,000 sales associates throughout the world. "But
most agents do not start out of the block successful."
- One reason: The business has become very complicated. There are many
more financing options, for example, and additional ways, such as the
Internet, to market properties.
- Legal protections for both buyers and sellers have also become more
arduous. There's a lot more for a new real estate agent to learn. And
with prices sky-high, both buyers and sellers are nervous about
trusting their transactions to greenhorns.
- Jesperson said, "It used to be common practice to give the
business to Aunt Sally or Uncle Don. Let them make some money. Now,
it's 'Wait a minute! I'm buying a million dollar home in Southern
California. Do I want to trust it to Uncle Don?'"
- How much can you earn?
- There's little doubt that realtors can make some coin. The last
figures available from NAR show median gross personal income for all
its members, which includes both brokers (median earnings $65,300) and
sales agents ($39,300) hit $52,200 in 2002, up nearly 10 percent from
2000. Earnings have probably climbed since then.
- Success, however, comes closely tied to experience. NAR brokers with
26 years or more in the business had median earnings of nearly $70,900
in 2002. Those with less than five years' experience made almost 25
percent less, about $53,400.
- "Experienced agents are getting more and more market
share," said Thomas Innes, CEO of RE/Max Commonwealth in
Richmond, Va. That's not to say, however, that it's a bad time to go
into real estate. "A newcomer with business experience and a good
work ethic should do well," he said.
- A big advantage for newcomers is the low barriers to entry. Most
states require just a short (40 hours or so) real estate course to
obtain a license. And it's not hard to get hired.
- "There's a wide-open front door," said Innes.
"There's also a wide-open back door."
- In other words, the turnover rate for new agents is high. "I've
been told the drop-out rate in the first year is close to 80
percent," said Jesperson. "You have to be very committed and
ready to work full-time."
- Successful Realtors have built up their clientele, according to
Jesperson, "just like a jeweler or a clothing store or a
shoe-shine stand."
- Established agents get a large portion of their business from past
customers and referrals. Newcomers don't have that luxury.
- And you only make money after a successful sale. "Some people
jump right in and do well," said O'Connor, "but most need
six months or more before they have an income stream."
- Before that, all they have is expenses.
- O'Connor says successful real estate agents need several attributes:
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 | Honesty. In a business where relationships count for so much, a
broker's integrity is key to establishing a clientele and getting
referrals.
- The ability to focus on clients' needs. Brokers have to be able
to match customers with houses they like and can afford.
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| Work ethic. They have to be ready to put time and effort into the
process. |
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- If a newcomer has all that, they can make it in the business. And
it's an industry where potential earnings can be extremely high. Top
brokers make well into six, even seven figures, according to O'Connor.
- For some of the hottest zip codes in America, click here.
- Having a hard time selling your property? You're not alone. Click here
for that story.
- For more articles on Real Estate, subscribe
to money magazine.
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