The life of a real estate agent can be extremely appealing. It’s freedom with unlimited earning potential, and in NYC, a few deals can go a long way. Sometimes, it seems that money falls from the sky and into your lap. You meet exciting people, celebrities, and titans of industry. One day you tour a $30,000 West Village triplex rental, the other your showing a $5,000,000 million dollar Townhouse.
Is it that easy? Yes.. and no.
There’s a long road that must be taken to have such great clients and showings. A road paved by the bones of many agents before you. So let’s start at the beginning.
Your in real estate school such as NYREI (Recommended) and about to take the the school exam, then the next day or so take the state test. If you fail these test, reassess your future in real estate but by no means retain any of the information you’ve learned. Most of which isn’t applicable to NYC real estate. As is the case with most education.
What most people don’t realize, is that underneath the seemingly simple act of showing an apartment or house, lies a complex industry with thousands of moving parts.
Now comes the fun. You have to select which brokerage can handle your future superstar status and dealmaking abilities. So, you interview, but what are you looking for besides a cushy corner office with a desk and skyline views?
Things to consider when selecting a brokerage
“WAIT!! I want to know about splits first and how much money I can earn ASAP!” Then this isn’t the business for you. Yes, splits are important but having patience to learn the business is what will earn you more money in the long run.
Choosing a brokerage with stellar training should be on top of your list, even if that means earning less in the beginning. A good brokerage will have a couple of weeks worth of initial training as well as classes year round. Mentoring programs and joining a team are also excellent ways to get the knowledge you want from experienced professionals who’ve worked the trenches and have insight into not just deals but client psyche. Don’t dismiss training, it probably adds to your odds of staying in the business longer if trained properly and by good people.
Now the flip side, these days every brokerage has some sort of training so it may seem hard to tell which programs are well planned and others that basically tell you how to use a computer. Ask questions about what you’ll learn, and ask for a schedule of upcoming classes and training. Make sure the people training you have actual experience in the field their training. Having a “coach” on staff doesn’t necessarily mean they understand what it is to be an agent.
Commissions & Fees
Obviously one of the most compelling reasons for choosing a broker is the commission structure and how much you will get paid per deal. Below are examples of firms commission payouts or splits. (Between you and the company) As you can see, 50% is most likely where you’ll be starting off and it’s mostly used as a standard in the industry.
GCI: Gross Commission Income, is the annual commissions you’ve earned, which will be the basis of how much percentage you will earn on deals.
Most firms adjust the structure annually, so if you earn $400,000 the first year, your split will adjust the following year. (Some brokerages vary when they will give you an increase and will even negotiate with you during the same year).
Example of traditional Commission Splits
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Hybrid Brokerages and Commissions
Nothing is sweeter than making 100% of your commission, but this sort of structure is reserved for seasoned agents. That being said, there are decent firms offering amazing splits for monthly fees. Below is an example of how it works and how much you could expect to pay back in fees. Please remember that it varies from firm to firm so always ask questions about the structure and what fees to expect.
Example of Hybrid or 100% Commission Splits
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The next question you should ask is when will you get paid, this often varies depending on the firm you choose. Some companies pay within a week and others pay when your client takes possession of the property (rentals) either way, make sure you understand when accounting doles out those checks. If you require a consistent stream of income then maybe a broker who pays out when you complete a deal is better for you. If you already have some income or low monthlies, then maybe you can wait longer for a paycheck.
Most of listings come from marketing, does the brokerage have exposure to all the aspects of real estate you might be looking for? Do you see signs, television, Internet, magazine, or outdoor advertising? Is the brand recognizable or a household name? Maybe, maybe not, let’s say it doesn’t, how much marketing are they willing to put behind you or your future listings? Do they have an active social media campaign or just a twitter and Facebook account that just spits out listings? Do they have relationships with developers? These are some things to consider when looking at brokerages.
Because let’s face it, if their not investing in marketing themselves, they’re sure as not going to invest in you.
Geography & Locations
Finding a brokerage with a few offices has some pluses, especially if you find a location near your home. This eases commutes and showing schedules while at the same time gives you flexibility to change or if you forget something, run back and get it. A brokerage with different locations also means that they can afford to expand into other areas, providing you with additonal resources that you may not have with a one or two location firm. So when sizing up a potential company, see how many location they have and how many people are staffed in each office, also look for which office produces the most in terms of deals. This will give you a good sense of where the brokerage allocates funds and marketing dollars.
Benefits & Amenities
Many brokerages have started offering discounts on uber and other car services, some even provide health care reimbursements and club memberships. Office amenities can be free drinks, food and sweets, pool tables and foosball. Company outings and parties are also a staple at most firms, while mostly for celebrating holidays, some have monthly or even weekly nights out for bonding and morale. This can lead to distractions in my opinion but hey, I’m never going to say no to an open bar.
Free or discounted ads, such as NY Times, Craigslist, Renthop, and Naked Apartments plans. Some firms will give you free credits for showing up before a certain time. Others will give you a budget and you can spend it on whichever is your preferred method of advertising. You should choose a broker with a broad range of advertising opportunities, free and discounted. This is a good way to save money in the beginning and you can always purchase more from the company as you grow your business.
There isn’t any brokerage that’s not about making money but the firm you should choose should reflect your ideals. Customer service is number #1 in this business, so go with a firm where it’s the mantra. (If you care, if not, then don’t worry, there’s plenty of operations that run like an assembly line through clients). A good brokerage that takes care of their clients will also take care of you. This will be evident by the other agents your surrounded by, are they positive? Do they really believe in excellence and the goals of the firm? Do you care? You should ask yourself these questions. Because it does come back to bite you.
A client’s first impression means a lot in the real estate business so a nice office can go a long way. This doesn’t mean a hole in the wall can’t do a ton of business, but the hole in the wall will lose more business then it gains. Working in a nice interior can give you confidence, as well as your clients and those around you. Clients want to be greeted and feel comfortable in the presence of a positive atmosphere. If they’re going to conduct business they want to make sure it’s in a secure environment that’s grounded in the businesses sustainability. Where you work is also a reflection of you, if you work on a broken desk with a slow computer, dim lighting, walls peeling, and the people around you are from the cast the walking dead, well then don’t be surprised if clients treat you just as shabbily.
The lifeblood of your business. How does the firm get you leads? Will they show you how and help you get and maintain a steady stream of customers? Do or will they give you a certain amount of leads monthly? If a broker provides leads then that’s great but you should not rely on this. It’s your job to generate business and maintain a certain flow of clients. A good brokerage will teach you how to get business and be there to supplement additonal customers. Some brokerages get leads by partnering with other websites or services, others solely rely on their own site. Make sure the brokerage has the right combination of tools, partners and traffic for you.
Another important factor is considering where a brokerage stands technology wise, what kind of computers do they work on? Are they networked, do they have up to date software? This can mean the difference between productivity and calling tech support every other day to reboot your computer because it’s so slow. Nothing is more frustrating when your working on sending out emails, putting up listings and the PC your working on freezes for no reason. This also means software, what CRM does the company use?If any, how do you keep track of clients, scheduling, email archives and documents. If your used to Gmail then you might find a firm that uses Google as there back office. If your more of an Microsoft Outlook and Word person, then maybe you’d feel more comfortable with that platform. The small things can make a difference in productivity, it’s about easing your work flow. If it’s a free for all, meaning, you use your personal email, own computer, etc… then you might want to look elsewhere.
This also means MX and OLR, both of these are listing platforms that populate the company website with listings and also syndicate those ads across a network of websites. This is vital so make sure whatever system you see has these capabilities.
Some firms now offer apps for your mobile device, this is a relatively new phenomena but I’m sure more will be coming. These apps let you keep track of clients, data, scheduling and some even let you register customer for open houses.
The core of the brokerage, listings are what makes the firms go round. When choosing a firm it’s best to look for one that has an in-house listings database, a database developed internally. Most major brokerages have them and in some cases they’re tied into other listings databases such as RealPlus, OLR, and ACME for supplemental information. When doing your due diligence make sure you know how often that database is updated and how many people or listing managers are working to keep it current. Other things to think about is how easy it is to access and if it syncs with other software or services the firm offers.
Note: No brokerage firm has every listing
Owners & Managers
Nothing, and I mean nothing can beat a good manager. This is tricky because you might not know who will be better and who won’t. After some interviews you should Google manager names and see if there’s any consensus or at the very least what the manager has done in the past. A good manager is the difference between getting deals done and not giving a hoot about you. Owners and managers are there because, theoretically, have the experience and relationships. So they can tell you outright if a deal can get done or not, or, if they can push a deal through solely based on their word. Don’t think you won’t need a good manager on your side, it really will make your life so much easier. You want a manager with a breadth of knowledge of the market and understanding of how deals get done. Someone who has answers to your questions or will find out if they don’t, as well as being accessible and honest.
Make sure the owner or manager has a track record or history of success in the business
Owners, well, there are good ones and bad ones, that’s just par for the course. You may never meet the owner of a firm more than once or maybe at company functions but know this, if the owner of a firm isn’t constantly out their pitching for new developments, exclusives or advancing the their firm in some way, then you should find another place to work.
Signing the Contract
You will be signing a contract, most are boiler plate with riders, these are tied to your success at the company. It will go over commission structures in detail, as well as advertising guidelines, company policies, confidentiality, termination and so on.
Click Below to see an example of an independent contractors agreement or salesperson agreement.
Make sure you read it completely and when you’re done signing, ask for a copy for you’re records.
Initial Startup Costs
You’ll most likely have or will be spending about $1000 initially. From school ($395) to REBNY ($250) Some firms will pay for your first run of business cards, but if not, that could go to $80 and up. (For quality business cards, not vistaprint) Then there’s a camera with wide angle lens (25mm or less), I suggest a Panasonic Lumix DMC-ZS3 ($100 – $200) depending on where you get it and the newer models. You will also spend more on transportation and buying ads or plans from website aggregators such as Naked Apts, Craigslist, and Renthop. Or premium accounts at Zillow or Streeteasy. All of which range in price and how much a discount your brokerage gets.
First Day on the Job
Play around with the listing software, get comfortable with some of the ins and outs especially creating listings and syndicating ads. If your using MX or OLR then they’re pretty straight forward.
Know where your ads are going. When you finish adding a listing, visit all the website that there going to be syndicated just to get an idea of where potential customers may be coming from. Sites such as Renthop, Naked Apartments, Apartable, NY Times all have unique web IDs, customers may give you those instead of your listing ID. See how ads are displayed on the sites and make sure they look good, if not, readjust your listing photos or information. Also send yourself some inquires to see who they might look when you eventually do start getting leads and to make sure they don’t end up in your spam folder.
Select inventory that will get you off the ground fast. Many beginning agents advertise $20,000 dollar apartments to make that huge commission and first big deal, DON’T DO THAT. You will be waiting for months for someone to respond to that ad. Those clients already have brokers searching for apartments for them. Don’t waste your time. Start off with middle of the road priced apartments and maybe even some lower priced deals. This will get your phone ringing and inbox full of leads, perfect for honing in on your customer service skills.
Work your neighborhood or near your office so you can easily preview and show apartments.
Work your neighborhood or near your office so you can easily preview and show apartments. It will make it easier for you to learn the inventory if your easily accessible to it. Another rookie mistake is to work areas of the city your unfamiliar with but are the expensive and hot places to be. This will eat into your commute time, and that means less client showings per day which reduces your odds of doing deals. Also racing back and forth will cost you more money for trains, taxis, buses, etc…
- Learn the paperwork and how to process deals yourself. Even if you don’t have to. There will be a time when someone or something will happen and it will be up to you to carry it through.
- Read a lease, yeah, read it. Know why clauses are in it and for what reasons. Clients will always ask you about the lease. (Rug covering 75% of the floor is a big one) Also a Sales contract.
- Make copies of keys you use often.
- Buy comfortable shoes.
- When you get a lead via email with a phone number, CALL IT!
- Always confirm your commission.
- Keep all your leads and build little profiles of each in a spreadsheet.
- Get yourself a good camera with a wide angle lens, wifi and video.
- Organically build relationships throughout the industry
- Don’t assume anything.
- If your brokerage expects you to do deal ASAP, get out of there, it’s a chop shop. No reputable brokerage expects you to deals the first day on the job. If you do, then great, but a solid firm will let you get up to speed and give you a month or two to acclimate.
- Be prepared for wasted time, lost causes, negative feedback, broken deals and more.
You will not receive a salary or health insurance, everything you do comes out of your pocket. So budget accordingly, make sure you can survive a month or two without a deal. Don’t get into a massive amount of debt doing this job. If you find yourself borrowing money from other agents or managers then you should to take a step back and look for alternatives careers.