Many of you reading this will already be in Real Estate or certainly thinking of a career in Real Estate Sales, and today we are going to bust some myth's about what a career in Real Estate actually looks like...because it seems no one is having the hard discussions...
Hopefully by reading this article, you can decide if a Career in Real Estate Sales is really for you and if you will be one of the 18% or so that actually go on to make it a proper career!
My advice is to read this article first and follow all the links throughout to learn more.
You will be 90% more clued-up than most after this...
Of course there are a myriad of "Operational" type Salary Jobs you can go for in Real Estate, like Property Management Jobs, Admin Jobs like PA's, EA's, Sales Admin, Lead Gen, Reception and Management type roles, but today I will focus on the Real Estate Sales Jobs as it seems everyone loves the idea of being a Million Dollar Sales Agent...
What's the Problem?
As Real Estate Recruiters, we see so many people with their Real Estate License in-hand, calling our team to hopefully get them a salary paying Job in Real Estate Sales... I had someone recently ask me to help them get them a Job paying no less than $85k + Comm on wages, before they would entertain going for interviews... (this is normal).
They had just spent the last year driving for Uber and worked in a small family restaurant for 6 months before that, and a few Jobs in big hotels on $80k, but never actually sold anything (even a pen) and thought, now they had their Real Estate License, any Agency would be lucky to have them. They quickly explained to me, they had bills to pay, would continue to drive Uber until they got a few sales under their belt to keep the money rolling, and probably couldn't do a Job in Real Estate unless they got no less than $85k a year wages... seems reasonable right? Wrong...
I tried to explain the below, but he had just arrived at his next Uber pickup, so I told him I'd get back to him when a job like that came up...he's still waiting...
The Reality:
Firstly, did you know, 82% of people who get their Real Estate License don't go on to renew it in year 2? Did you know, the average Real Estate Agent (75% of them) are lucky to take home about $75k a year?
To me, this highlights a serious disclosure gap in what people are not being told about starting a Job in Real Estate before they decide to get their Real Estate License. The barrier to entry is just too low...and the education/training around the different Jobs is Real Estate is just not there...
It's not necessarily about what you did before, let's be clear. I have met some extraordinarily successful Real Estate Agents who used to be Chef's, Truck Drivers, Stay-at-home Mum's for the past 10 years or BDM's for big companies and refugees etc. It's certainly not about what you used to do...it's about understanding what you're about to embark on and ensuring you are properly set-up to make the best go of it. You have to commit and go all in!
If you are prepared to be a business owner (can last 6 months or so without making any money) and realise it has to be all you (your efforts) to list and sell Real Estate, then you're on the right track.
If you have no-idea about what hunting for new business and closing deals actually looks like, my advice is to get a normal job. If you don't need handouts (wages), and you're prepared to work 8 days a week and know how to generate business...then you might be ready to have a crack...
You can read this inspiring article on QLD's No 4 Agent, Will Torres. Will was a refugee and started with literally nothing...and made Real Estate his passion. Read Here
As Recruiters for Real Estate, we know what most people are asking us in a round-about way..
1) Can I get Rich selling Real Estate? = Yes, most certainly.
2) Is Real Estate a Normal Job? = No, it's a business.
3) Will I get paid a wage like a normal Job? = Mostly no, it's a commission only industry.
Credit/Debit vs Commission Only:
Some people may ask, if I don't get paid a wage to pay my bills when I first start, how will I make it? My mortgage/rent is is super expensive, food has gone up, fuel has gone up...everything has gone up...but I want to do Real Estate Sales....
That's a harsh reality...but getting a Job in Real Estate is not going to solve all your financial problems in the short-term. It's not the Agencies responsibility to support you. You have to bring the listings to the table, not the other way around. Real Estate is certainly not all long lunches and Porsche's. It can take Agents a few years or more before they start getting the bigger financial rewards from doing Real Estate Sales and you need to be prepared for that... Nevertheless, it's a good question and most Agencies, if their willing to give you a shot, offer new Agents a Credit/Debit Salary while they learn (Usually about $50k), but if you don't move your butt and start listing and selling within the first 3 - 6 months or so...you may be faced with a hard and fast decision by the Principal that Real Estate is not for you...and you certainly won't get rich on this setup.
Agencies only offer a short-term financial safety net for you. It's a starting point to learn, and no, it doesn't matter what job you had before or how much you were on...you start from the beginning and hope whatever you did before will help you get your head around listing and selling property fast... They don't care you were a Senior Manager on $150k a year. In Real Estate, you are lucky to get your $50k or so to begin with and the rest is up to you to start selling...
Most Agencies don't want anyone on this setup. Sometimes they do it if you can show them you are a better risk than others, but fundamentally, Real Estate is a commission only industry...and no Principal is going to want to keep any non-operational staff on wages for very long...
Legally, any new entrant to Real Estate that can not demonstrate they have earnt 125% over the basic minimum wage for a 12 month period, at any time in the past 3 years, the Agency is mandated by Fair Work to pay them at least "Minimum Wage" ( around $50k PKG) or better until they can demonstrate they can earn more than that on Commission Only. Read the Real Estate Award Here.
You can certainly understand that not many Agencies are excited to take green people into their business. If they do, you are super lucky and should hold onto that Job.
Credit/Debit:
All Credit Debit means is, that the Agency will pay you the equivalent of someone on $50k or so a year, but as soon as you list and sell something, they will take what they have paid you out of your next commission. If it takes you 3-months to list and sell a house, and they paid you $1000pw up until then...you will owe them around $12,000.
Say you sell a House or Apartment at $600k @ 3% commission to the Agency. = $18k Comm. (You're not entitled to all of this. You have to split it with your Agency for paying to keep the lights on, Pay the Office Rent, Pay the Receptionist, Pay the Social Media Marketer, Pay Subscriptions for the business and wages of the other staff etc).
Say your split with the Agency is 35% of the 3% +, you get your $1,000 pw in wages. This is the trade off... your security of income VS your comm split. It's what you wanted remember... It may be even less if you are splitting your comm with another Agent in your office that you listed the property with (maybe your Lead Agent).
The Math: Say you're on roughly $1000pw x 3-Months (12 Weeks) = $12,000 in wages paid to you.
Your Commission Split with the Agency for Credit/Debit Salary Job = 35% Comm.
Comm to the Agency for selling the $600k House or Apartment @ 3%. = $18k
$18,000 x 35% = $6,300.00 (your commission on the sale).
The Agency will take back the entire $6,300 and you will still owe them $5,700.
(This is where most people eject from Real Estate).
Your Principal will be pushing you to get another sale fast because you still owe them $5,700 + whatever wages they keep paying you until you make your next sale. If you are not doing the work consistently to show the Principal you are worth the continued risk...you're gone...
Your debt to the Agency will just keep ticking up...and it's very hard for anyone to make big life changing money selling Real Estate under this structure...
With the statistics the way they are, and we already know 82% of Agents leave the industry in their first year, you can understand the Principal has a limited appetite for this risk, especially if they have 2 or 3 new Agents in the team already on Credit/Debit and they have had a trail of new Agents bailing-out with the first year, leaving gaping holes in their balance sheet...
They also deserve to re-coupe their costs on you in exchange for teaching you and paying you while you learn . The goal is to get off this structure as soon as you can...
Commission Only:
This is the most desirable setup for all Agency Principals. It limits their risk and puts it all back on you. If you don't perform, you don't get paid, but the trade off is, you get the lions share of the commission when it arrives.
The average "Commission Only" split with most Agencies is around 50% but you can find Agencies offering upward of 65% to even 90% and anywhere in between.
You have to realise, the higher the commission split, the less support you get. No leads, no Agency paid branding on your behalf (you pay for that) etc... You hunt, you list, you sell, you get paid.
This is where most Agents get ahead. They work 8 days a week, head down, bum-up and their aim is to list and sell as many properties as they can, as fast as they can.
Agencies usually charge between 2% - 3% Commission (some more) and depending on the value of the property sold, the commission cheque could be pretty phat.
E.g. List and sell a $1.2m Property.
3% Comm on $1.2m = $36,000
$36,000 divided by whatever split you're on with the Agency...lets say 65%.
65% of $36,000 = $23,400.00 to you. Don't forget to take 30% of this and put it to one side for TAX and GST. (Most comm-only people come unstuck with this).
Do 2 or 3 of those every month and it's game-on.
You also need to understand, Agents already doing these figures consistently are the most desirable for Agencies... When giving us Recruitment Assignments, Agencies usually task us to go out into the world and find them as many of these experienced Agents as we can. Apart from finding Property Managers, Admin Staff, Receptionists, Sales Managers EA's and PA's (Operational Staff), Finding top-performing Sales Agents for our clients is what takes up 80% of our time as Recruiters.
It cost Agencies nothing to give us Recruitment Assignments. We get paid our Commission when we find the right ones and the Agency want's to take them on.
Real Estate Licenses.
I am baffled why the licensing providers aren't tasked with educating prospective Real Estate entrants on the above information? This is the reality of Real Estate. It's a hard gig and if people aren't told what to expect before they apply to get their Real Estate License, it becomes a huge waste of effort, time and money for all involved...
Literally, none of the recently Licenced graduates I speak with have any Idea about "How Real Estate actually Works". They come to us with their new Real Estate License in-hand, with stars in their eyes, thinking they will be smashing through $3m listings and driving Lambo's by Christmas. If I ask them if any of the above has been explained to them...they say "no...I had no Idea".
You can literally hear the let-down in their voice when the penny drops.
If graduates had an option of doing a "Ready for Real Estate" type course immediately after becoming licensed, before they start Job Hunting, on the fundamentals of Real Estate Sales, it would be a huge win for the industry as a whole...
1) Relentless Cold Calls
2) How to Generate Business.
3) Building a database of prospects
4) Nurturing a pipeline
5) Pitching / Presenting
6) Filling out a form 6
7) Listing a property for sale online
8) Agency Structure
9) Real Estate Terminology
10) The Selling Process from start to finish. Unfortunately, the industry is flooded wannabe's who watched a few episodes of Million Dollar listing and think their going to get rich quickly by getting a Job in Real Estate...and it just not how it works...
Most of the Agents in the REB top 100 have small teams helping them and most have been Selling Real Estate for over a decade or 2 already.
Do some people pick-it-up and take to Real Estate like a duck to water? Sure they do! Look at Will Torres above and just about every other Agent out there grinding daily and doing good numbers. My hat is off to you all.
It's not as easy a gig as some outsiders may think. The risks in becoming a successful Agent in this day and age, both financially and personally, are huge!
They call it the REB top 100, not the top 10,000. If it was easy...everyone would be doing it.
Where Recruiters play their part...
Our Job as Real Estate Recruiters is to wade through the masses of wannabe's looking for the right ones. We also headhunt the most desirable Agents already working in the field and kicking goals. It's all we do...We learn about all the different Agency structures from the Principals directly and connect them with the right candidates, saving them time, effort and expense...
We try to take the risk out of the hire by identifying the ones that have the best chance to make money for the Agency...taking the pressure off Principals by doing the legwork for them, so they can concentrate on helping their existing team achieve more sales...
Your Recruiter should also guarantee the placement for the first 3-months, meaning, if the person they placed with you bails out within the first 3-months, the Recruiter will replace the role for you for no charge...
We also inadvertently educate people on the realities of working in Real Estate, so people come in knowing what to expect so there are no shocking realisations after the fact...
More so, we have regular discussions with Experienced Agents, so they know who to come to when they need advice on where to move to next so they can level-up in their Real Estate Careers... We make suggestions, discuss different Agency structures and dynamics, agree on an approach plan and represent them to the best opportunities for where they are in their career now.
Conclusion:
Hopefully this article has opened your eyes to a few of those realities of working in Real Estate Sales and how the pay structures work. Can you get rich selling Real Estate? Absolutely, that's the attraction right...but it all depends on what you bring to the table.
Every Agency has their own model, and you can't possibly know which ones are good ones or not unless you understand the majority of them. We do, it's our Job... We can save you a heap of time and effort in making the wrong decisions and put you in direct contact with the best opportunities in the market. Pick up the phone and ask us.
If you are an Experienced Real Estate Sales Agent looking for a new opportunity, please reach out to any one of the Recruiters at Placed Australia for a confidential chat today. You can find out Recruiters numbers on our website www.PlacedAustralia.com.au or call me direct (Andrew Turnbull - Founder of Placed Australia) for a chat on 0474 947 545
