If you are reading this, then you have likely reviewed and completed the preceding learning modules. So, lets recap what the intel has told us:
- The military and Veteran U.S. home buyer market is significant in size
- There is a considerable increase in sales commissions when using VA Loans
- Veterans buy homes at a higher rate than the general public
- And, you can create increased interest in yourself as a Veteran Real Estate Specialist by offering to help disabled Veterans with a VA Home Grant
Congratulations! You are now armed with a great arsenal of information, and you may be eager to storm the beach. But, before putting boots on the ground it’s best to do some reconnaissance and have a strategic plan of action to ensure that your new skills do not become collateral damage in the field. Let’s evaluate.
Tips For Successful Real Estate Agents
It is generally accepted fact that the Real Estate business is a dynamic and thriving industry. This is why so many people gravitate to it. In fact, there is no better way to earn a living. You practically set your own hours, you are selling a great commodity, and home ownership is a large part of every American’s dream.
According to the Case-Shiller Index housing prices have appreciated nationally at an average of 3.4% per year from 1987-Present. And, some areas are luckier than others. As of 2010, Austin, Texas actually averaged 8.9% yearly appreciation over the last 20 years – even taking the downturn of the Great Recession into account!
And yet, nearly 90% of agents fail within the first 5 years.
As you likely know, there are a ton of blogs, websites, and seminars dedicated to teaching the magical techniques to becoming the top agent. We are not touting ourselves to have the magic bullet, but we have compiled what we believe to be some common sense tactics in your overall success strategy.
1. It’s Your Business
“A man who doesn’t know how to count his own money is soon separated from it”
In our opinion, the main reason for failure is simply because most agents think of their job as primarily a sales position – and do not fully understand that it is a business.
Let’s assume you sell five (5) homes per year at the September 2017 new home average selling price of $385,200; and, your share of the commission is 3%. How much did you earn for the year? Is this revenue or earnings or both?
This may seem straightforward, but this is the most common error people just starting out in business make. For most agents, you are not simply a sales representative, rather you are operating your own independent business.
Three percent of $385,200 is $11,556, and multiplied by 5 home sales per year equals $57,780. But let’s not mistake this amount as take home pay. Many folks will just put this money in the bank, and simply think of it as their earnings. But, that would be misleading.
Even assuming there is no further split with another agent, that $57,780 is gross revenue. Your net income will be less.
Everyday, huge corporations with gross revenues of millions of dollars go out of business because they have NO earnings, and the real estate business is no different. You must understand the difference between revenue and earnings to succeed in any business.
Whatever is left from that $57,780 after deducting all business expenses is your earnings.
So, how much should you expect in business expenses?
According to the National Association of Realtors Member profile for 2015, the yearly average expenses for a sales agent is just over $6300 or $525 per month.
Thus, our example agent would earn a net income before taxes of $51,480. According to National Association of Realtors 2016 Member Profile, the median income for an agent working between 40-59 hours per week earns $60,100.
However, many agents neither anticipate or accurately account for their business expenses such as, MLS fees, taxes, marketing costs, ongoing training, clothing, transportation, fuel, lockboxes, signs, office supplies, and the myriad of other expenses that must be deducted from the gross revenue earned.
Boot Camp Tip #4: Just as with any new business, expect to invest heavily in the first few years on marketing. Your business is like a snowball. At first it is small, but as you roll it along it gets bigger.
If you have not already done so, it is critical that you either invest in an inexpensive accounting software, or hire a local bookkeeper. Generally, you should be able to find a bookkeeper for a relatively low monthly rate.
Then, it is advisable to have a separate bank account and debit/credit cards that you use exclusively for your business. This will help you focus like a laser beam on your expenses, and it also keeps things simpler for you or the bookkeeper.
We guaranty that once an efficient bookkeeping system is established you will likely discover some of your own expenses that will shock you.
For example, I always knew that fuel was a high expense. Heck, I was driving a full size quad cab pick-up truck. But, after setting up a bookkeeping system that generated reports of my costs, I was shocked to discover that my fuel cost was nearly $170 each week! You can bet your bottom dollar I re-evaluated the need for a fuel efficient auto, and then reduced my annual fuel expense by nearly $4000!
The bottom line is to keep books, records, and know the results. We cannot overemphasize this enough. Count, recount, and manage the results. Treat every penny earned like a dear friend. And, as with all friends, show them you care and only allow them to permanently depart if absolutely necessary.
3. Consider Joining A Team
Often, real estate agents just can’t afford all the expenses associated with getting started.
An immediate solution to this is to join a team of Real Estate agents and share the costs. The downside is you will have to share commissions also, but there is a lot of upside.
You will be surrounded by tons of experience and the power of multiple lead generating sources. On balance, the vast majority of agents make far more NET income on a team than they do going it alone because of the often overlooked expenses of going it alone.
Boot Camp Tip #5: As pointed out in Module 2, selling homes using the VA Home Loan equals higher purchasing power for the client, and increased earnings for you!
4. Appearances vs Competence
I remember once as a little boy in the 1970’s a financial planner came over to the house to meet with my Dad. I specifically recall being impressed because the guy pulled up in a brand new Pontiac Trans Am. After he left I asked my Dad how it went and he just kinda gave me that father-to-son look that said – the guys an idiot. I asked what was up, and my Dad said:
“Did you notice the $5000 Rolex on the guys wrist? Even if he is making $50K that’s 10% of his income, and I’m not going to let a man manage my money who can’t manage his own wristwatch”
Point taken. If this guy would have pulled up in a Datsun B210 while wearing a Timex I definitely believe my Dad would have respected his financial prowess much more if coupled with expertise and competence.
There is always the temptation to try to impress the customer, but often times the perception can be something completely different than expected. My advice is don’t chase the Joneses, and keep it prudent. Folks appreciate common sense and efficiency when dealing with anyone responsible for their investment – and a home is an investment!
Boot Camp Tip #6: Concentrate on showing off your competence. Hand out VA Guaranty Home Loans and Specially Adapted Housing Grants For Disabled Veterans handbooks to your Veteran clients. Showcase how you can save them money while simultaneously increasing their purchasing power. This will impress more than a shiny automobile.
Hopefully, your takeaway from this module is that it is critically important that each sales agent know her own numbers, counts them often, and concentrate on competence rather than appearances.
When ready, lace up your boots and report to – Into Action II.
The Hometown Hero Project encourages agents to adhere to Fair Housing guidelines in your location as limited areas may interpret military status as a protected class. Agents in Massachusetts should not inquire about military status, instead should allow clients to self-identify. We may share customer information with our trusted partners. Veterans News Network is not affiliated with any government agencies, including the VA. We may share customer information with our trusted affiliates to assist you with your home search. Veterans News Network fully supports the principles of the Fair Housing Act and the Equal Opportunity Act | 7400 N. Oracle Road, Suite 310, Tucson, Arizona 85704