Advice for a new Real Estate Agent-from a dad

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

Hi, my daughter is thinking of making a personal career move from apartment leasing management to residential real estate in the Nashville, Tn area. She already applied and has passed the testing to be an agent in TN. She has found a company that she is interested in and they would like her to join their team. As always she asked me for advice on reading her agent agreement, etc.

I read the agent agreement and it is very straight forward and looks okay. There is a startup fee of $380 and I guess that might be standard because of setup fees. They also charge a base of $120 per month as a technology and support fee, plus other additional costs as needed for business cards, signage, etc. I recognize that she is an independent contractor working within the agency, so again, I guess that is standard.

The problem is I hate guessing especially if I am helping with the advice. I already recognize that she will have additional costs with self insuring (she is 33 and single). Added costs because of auto liability with her carrying clients. Maybe added costs for a bigger car, but she may be okay for now. And most importantly NO income for X period of time.

She has always been frugal and has some money saved, but I am afraid it is not enough. How can I advise her? Any experience, insight and opinions would be appreciated.
A concerned dad :shock:
mogg
Posts: 60
Joined: Mon Aug 22, 2016 9:33 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by mogg »

Hobbyist agent here.

My annual expenses are:
$480 - mls
$500 - office fees
$70 - license renewal classes
$180 - electronic key
===
about $1200

As a new agent, the high office fees might warrant the educational opportunities and support that the office provides. The high fees might also provide a better agent/office split, though this particular benefit is more for experienced agents who can produce high sales volumes.

Since she already has a career, she might try working as an agent part time to make sure she enjoys the work, and then transition to full time after she has a couple sales under her belt.
rich126
Posts: 2318
Joined: Thu Mar 01, 2018 4:56 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by rich126 »

I'm not an agent but I think agents driving around clients doesn't happen much anymore, especially currently. I can only recall one time, during a relocation (and maybe I was still awaiting my car's arrival), was I driven by an agent. The rest of the time it was meeting at various locations. Maybe this varies.

While RE can make good money, I think it is usually a slow climb upward. Often they are helping out a more experienced agent and get stuck with a lot of grunt work. I know right now I am usually dealing with the main agent and then after my house got an offer, the other agent (who I'm assuming is newer/less experienced) gets stuck with the tasks of reminding me to do paper work and asking me basic questions ("Is it ok to do the final walk through at xxx?").

Good luck.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

mogg wrote: Wed Oct 07, 2020 3:24 pm Hobbyist agent here.

My annual expenses are:
$480 - mls
$500 - office fees
$70 - license renewal classes
$180 - electronic key
===
about $1200

As a new agent, the high office fees might warrant the educational opportunities and support that the office provides. The high fees might also provide a better agent/office split, though this particular benefit is more for experienced agents who can produce high sales volumes.

Since she already has a career, she might try working as an agent part time to make sure she enjoys the work, and then transition to full time after she has a couple sales under her belt.
Great advice about part-time. Will ask her if there is an option for that. Also, thanks for the financial info. :beer
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

rich126 wrote: Wed Oct 07, 2020 3:59 pm I'm not an agent but I think agents driving around clients doesn't happen much anymore, especially currently. I can only recall one time, during a relocation (and maybe I was still awaiting my car's arrival), was I driven by an agent. The rest of the time it was meeting at various locations. Maybe this varies.

While RE can make good money, I think it is usually a slow climb upward. Often they are helping out a more experienced agent and get stuck with a lot of grunt work. I know right now I am usually dealing with the main agent and then after my house got an offer, the other agent (who I'm assuming is newer/less experienced) gets stuck with the tasks of reminding me to do paper work and asking me basic questions ("Is it ok to do the final walk through at xxx?").

Good luck.
Many good points. I did not think about the new world order during covid, so she will dodge that expense for now.
The grunt work I like because she would learn the fundamentals of the industry which would help her.

Yes, i am very worried about the "slow" climb.
In fact, that is my biggest worry, because of the economic survival rate. I know that she could do it and be very good at it, but can she survive in the interim.
Thank you so much.
phxjcc
Posts: 668
Joined: Thu Aug 23, 2018 3:47 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by phxjcc »

It is a math problem.
She makes x, let’s say $60,000,

Now to clear $60,000 gross of costs at 2% commission (one side of a sale minus the broker’s fees) she needs to list/sell $3,000,000 worth of real estate. To make the numbers easy, let’s say Nashville MSA’s mean sale is $500,000.

That is a sale/listing every other month.

Is this a reasonable expectation?

Why?
User avatar
Eagle33
Posts: 1135
Joined: Wed Aug 30, 2017 3:20 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Eagle33 »

One plus is she will be able to reduce her income by the amount of her self-employed health insurance. An income adjustment found on Schedule 1, line 16.

A negative is is she gets to pay both the employee & employer sides of her payroll taxes - 15.3%.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
000
Posts: 4059
Joined: Thu Jul 23, 2020 12:04 am
Location: Ursa Minor

Re: Advice for a new Real Estate Agent-from a dad

Post by 000 »

I wish her luck. My big concern for her is that the industry is ripe for disruption, e.g. 6% commissions and buyer's agents being misincentivized on price.

I'm not saying she shouldn't do it... but as with all careers, be ready and on the lookout for the next move.
bob60014
Posts: 1787
Joined: Mon Jul 31, 2017 8:59 pm
Location: The Land Beyond ORD

Re: Advice for a new Real Estate Agent-from a dad

Post by bob60014 »

Agents in most locales are independent contractors, (and the DD will be as the op has indicated) which also means no benefits (HUGE) and they pay most expenses. The expense of getting her name out there like pens, calendars, notepads, trinkets, ads in the paper, even those billboards the agent pays for.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

phxjcc wrote: Wed Oct 07, 2020 8:40 pm It is a math problem.
She makes x, let’s say $60,000,

Now to clear $60,000 gross of costs at 2% commission (one side of a sale minus the broker’s fees) she needs to list/sell $3,000,000 worth of real estate. To make the numbers easy, let’s say Nashville MSA’s mean sale is $500,000.

That is a sale/listing every other month.

Is this a reasonable expectation?

Why?
Great analysis. The why part is that she wants to break out of the office environment and also be more entrepreneurial. She doesn't mind the hours or working the weekends. She is ready to be more independent.
Yes their is uncertainty for sure, but also (hopefully) rewards that financially exceed that of her current position.
Nashville is growing like crazy with new properties being built daily, so lots of room for growth.
A sale every other month is a good starting point and base.
Thank you for your input.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

Eagle33 wrote: Wed Oct 07, 2020 11:35 pm One plus is she will be able to reduce her income by the amount of her self-employed health insurance. An income adjustment found on Schedule 1, line 16.

A negative is is she gets to pay both the employee & employer sides of her payroll taxes - 15.3%.
Thank you for that information. Hopefully additional business deductions could be found relating to her expenses as well.
I appreciate the advice.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

000 wrote: Wed Oct 07, 2020 11:41 pm I wish her luck. My big concern for her is that the industry is ripe for disruption, e.g. 6% commissions and buyer's agents being misincentivized on price.

I'm not saying she shouldn't do it... but as with all careers, be ready and on the lookout for the next move.
Disruption. One of my favorite new words in the 20th century. Based on your previous posts I believe that you might be one of those disruptors (and I mean that in a positive way). My son is one of those in tech and he has enlightened me to it's powerful nature.

So, you are correct that it might be changing, but the industry will have to change with it.

The art of a saleswoman is valuable and hopefully she is the disruptor :D

Thanks for wishing her good luck and best of luck to you as well.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

bob60014 wrote: Thu Oct 08, 2020 5:42 am Agents in most locales are independent contractors, (and the DD will be as the op has indicated) which also means no benefits (HUGE) and they pay most expenses. The expense of getting her name out there like pens, calendars, notepads, trinkets, ads in the paper, even those billboards the agent pays for.
Yes, those expenses can really add up and a very valuable reason for concern economically. Those expenses are what I am helping her grasp and plan for in making her decision.
Thanks
User avatar
AerialWombat
Posts: 1976
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Advice for a new Real Estate Agent-from a dad

Post by AerialWombat »

The #1 skill she will need to learn is marketing. Buy her a copy of “The Millionaire Real Estate Agent” by Gary Keller. Tell her to read it three times, pay attention to the financial models and marketing plans. Adapt the 12-direct and 8x8 tactics to add some digital marketing components, but not all digital.

Even better if she goes to a broker that provides leads. For example, Keller Williams has a sweet deal with Facebook to lower lead gen costs for agents.

I’d also suggest she read “The Art of Listing and Selling Real Estate”, by Tom Hopkins. It’s old, but it’s great sales training.
User avatar
jfn111
Posts: 1225
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Advice for a new Real Estate Agent-from a dad

Post by jfn111 »

One thing she might consider is joining a team. The team leader will take a cut of her commissions but will also be the one paying for marketing and lead generation. Somewhere around 80% of new agents leave the business within 3 years. It can be a tough grind going it alone until you have enough recognition where you are getting referrals from past clients.
smitcat
Posts: 6957
Joined: Mon Nov 07, 2016 10:51 am

Re: Advice for a new Real Estate Agent-from a dad

Post by smitcat »

Skeeter1 wrote: Thu Oct 08, 2020 11:09 am
bob60014 wrote: Thu Oct 08, 2020 5:42 am Agents in most locales are independent contractors, (and the DD will be as the op has indicated) which also means no benefits (HUGE) and they pay most expenses. The expense of getting her name out there like pens, calendars, notepads, trinkets, ads in the paper, even those billboards the agent pays for.
Yes, those expenses can really add up and a very valuable reason for concern economically. Those expenses are what I am helping her grasp and plan for in making her decision.
Thanks
Our daughter was an independent contractor for a while (unrelated industry) please do not disregard these 'expenses' when helping to prepare a comparative budget and/or business plan.
- retirement access/budget
- liability insurance
- vacation pay
- sick and disability
- health benifits
- small business software or bookeeping costs
- extended benifits such as maternity
- professional fees (legal and accounting)
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

AerialWombat wrote: Thu Oct 08, 2020 11:17 am The #1 skill she will need to learn is marketing. Buy her a copy of “The Millionaire Real Estate Agent” by Gary Keller. Tell her to read it three times, pay attention to the financial models and marketing plans. Adapt the 12-direct and 8x8 tactics to add some digital marketing components, but not all digital.

Even better if she goes to a broker that provides leads. For example, Keller Williams has a sweet deal with Facebook to lower lead gen costs for agents.

I’d also suggest she read “The Art of Listing and Selling Real Estate”, by Tom Hopkins. It’s old, but it’s great sales training.
Excellent, excellent recommendations.

She graduated with a bachelors degree in Advertising and Marketing, so maybe she could actually justify the (my) expense. :oops:

Thank you.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

jfn111 wrote: Thu Oct 08, 2020 11:22 am One thing she might consider is joining a team. The team leader will take a cut of her commissions but will also be the one paying for marketing and lead generation. Somewhere around 80% of new agents leave the business within 3 years. It can be a tough grind going it alone until you have enough recognition where you are getting referrals from past clients.
I like the idea of joining a team and shared costs. It would resemble sort of a paid internship and a safety net while learning.

Another excellent recommendation.

Thank you :beer
andypanda
Posts: 554
Joined: Sun Nov 12, 2017 9:11 pm
Location: Richmond, Virginia

Re: Advice for a new Real Estate Agent-from a dad

Post by andypanda »

"Somewhere around 80% of new agents leave the business within 3 years."

I have always been told 80% leave within 2 years, but I'm old and probably behind the times. But either way it explains why there always seems to be an empty desk availble for a new hire.
User avatar
LadyGeek
Site Admin
Posts: 68565
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Advice for a new Real Estate Agent-from a dad

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (career guidance, insurance).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Topic Author
Skeeter1
Posts: 297
Joined: Sat Jul 06, 2019 1:50 pm

Re: Advice for a new Real Estate Agent-from a dad

Post by Skeeter1 »

Does anyone have any advice about working with Residential builders and/or condo developers?

Thank you
User avatar
jfn111
Posts: 1225
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Advice for a new Real Estate Agent-from a dad

Post by jfn111 »

andypanda wrote: Thu Oct 08, 2020 12:43 pm "Somewhere around 80% of new agents leave the business within 3 years."

I have always been told 80% leave within 2 years, but I'm old and probably behind the times. But either way it explains why there always seems to be an empty desk availble for a new hire.
The numbers are all over the board but you are probably closer with 80% at 2 years then I am with 3 years.
"According to the National Association of Realtors, 87% of real estate agents fail in the first 5 years of entering the industry. 75% of them fail in the very first year!Sep 17, 2019"
Post Reply