Choosing a broker.. I posted another board with no response :(

[Shannon Webb]

Hey everyone!! I'm back with new questions!! So... I'm super excited about what my life as a real estate developer will be, but at this time I'm still taking the initial steps to get there. I am set to graduate with my Associates in Commercial Construction Project Management in May, and I'm currently taking my real estate classes online. Well I hope to be done with those classes by the end of June, and being the planner I am, I'm thinking about my next step after that! ☺️

So I will be in the Atlanta area and really want to work with a broker who will push me to the potential I see myself reaching. I want experience with handling higher priced projects and homes and I also want to make sure that the company I work with is A1 in the ethics department. I'll be starting back school in Fall for architecture and will need flexibility as well. So what questions should I ask potential brokers? What are some red flags to look out for?

What do you all think??? I really appreciate y'all in Advance!!

[Joel Owens]

HI Shannon,

It can be very different when you are on the broker side of things.

I had 50 residential agents at one point way back many years ago. Lot's of grief as many do not close anything. The ones that do tend to be rusty or part timers. You get all kinds of crap from the state commission. The agents have student loan delinquencies so their license gets suspended, back child support license gets suspended, IRS tax levy requests to take the agents commission split when it closes, license lapse for not paying renewal fees to the state, the agent not keeping up with continuing education, etc.

On and on this goes with tons of papers from non performing agents.

Lot's of grief and they are producing very little revenue for the brokerage.

I got rid of all of them a long time ago. These days I do my own investments and work with clients one on one and I love it. Some of my friends that are also brokers hardly sell anything and instead watch over agents to make 60k or so a year with fees. 

The reality of this business is 90% of agents fail the first year and go out. Out of the next 4 years 80% of the 10% that survived the first year will be gone from the business.

If you do residential expect to put in many nights and weekends and hardly ever see your family.

If you as an agent did 1 transaction a month for 5,000 commission the first year for 60,000 then the broker typically gets half when you are new. So a wildly successful first year in the business makes you 30,000 before business expenses. Basically almost at the poverty level.

Now if you can stick things out over time things start to happen in a good way. You go from 80% prospecting and 20% referral to in about 3 years 50% prospecting and 50% referral. When you make it over the 5 year hump you go to eventually 80% referral and 20% prospecting as your reputation and track record grows. Also after the first year you are somewhat trained up and go with a higher split company to keep more of what you make. New home construction is hot right now so you could sit a subdivision and sell model homes. The commission should be faster than taking home buyers all over creation to multiple counties to get one deal done. In the beginning most sellers will not go with a new agent for a listing. They like experience on that side where as a first time home buyer will generally give new agents a chance.  

I am not trying to discourage you by any means. I want you to be mentally prepared and accept how tough this profession actually is going to be. The good news is the sales profession pays more than just about any other field out there. You get to decide how much you make and how successful you want to be. Even though you are at a brokerage it is your job to generate business for yourself. Even if a company hands off leads they tend to keep the best ones for themselves. The best advice I have over 13 years is to save and invest every cent you can to create passive income for yourself. That way you are not living or dying by the next deal closing. Find out what your break even number is to live comfortably per month (5k,6k,7k) and work toward creating that passive income. Once you hit that number you are now free from the rat race. You can work but you do not have to as you are self supporting. You work then because you are passionate and love what you do. It's very powerful to come from a place of experience and passion then nervousness trying to land your next deal to survive etc.

A critical mistake I see is agents living high on the hog right now. Real estate is good so all these people are jumping in. This business cycles like anything else. When everyone is blowing money is when you save it for the next downturn to have longevity in this business.

Mental toughness, embracing rejections, and constantly learning everyday to want to be the best is what it takes to thrive in this field.

Some brokers love agents so I am sure there should be a great fit out there for you.

All the best of success in your journey.