There are a lot of women who have influenced me over my life. Lots of sisters, daughters, a very strong mother and of course, my wife. One thing I’ve heard said is that all the good men are either gay or married. Don’t worry, I’ll connect the dots.
In the real estate world, there’s a similar concept–
All the good agents are either…wait, are there any good agents left?
Don’t get me wrong, there are some really great real estate agents out there. Smart professional men and women who have the experience and training to truly make a meaningful contribution to your situation.
Unfortunately they are in the vast minority. Thousands of new agents are licensed every year. Of those new agents, only about half will make it through their first year and a startling 13% will actually make through their 5th year.
If you’re any good at math, that means you’ve already figured out that far more agents fail than survive. Scary? Yes. Surprising? No–not once you peel back the surface. So let’s peel.
Real estate is an extremely brutal business and like most industries, it’s even more brutal for the rookies.
First, this job has no salary, no benefits (like medical insurance and 401k) and very very little formal structure. Since most new agents transition to real estate from W2 type jobs, this comes as a shocker at first.
Its ironic that this “freedom” from structure (boss, rules, job description, having to wear pants) is one of the main things that draws people out of the career cage and into real estate. Well–that and the untold riches they will make. (Sarcasm implied). There’s a reason those riches are untold by the way.
Anyway, the financial strain on a new agent usually sets in fast and can severely affect not only the practical side (can’t afford to advertise or…eat) but also the mental side (hard to sell yourself to clients when you feel like a failure).
Second, no one really trains a new agent. Brokers are supposed to, but unless it’s either a true mentoring relationship (rare) or a very large firm with formal training, your new agent is basically thrown to the wolves.
But wait Glen–what about real estate school? The real estate exam? Huh? Doesn’t that mean new agents have some knowledge?
Um…ok. Yeah, they passed the real estate exam, but that’s like saying you passed the written drivers exam and are now a good driver.
Real estate school has exactly one purpose. It’s goal is to get you ready to take and pass the exam. Nothing more. They tell you repeatedly in real estate school (all 3 weeks of it) that “your broker will teach you everything else.” Yay.
After they “graduate”, pass the test and pay their fees, these agents are now licensed to sell. And yes, plenty of cheesy agents have taken out billboards holding cell phones like guns in the .007 pose with that slogan. If you see one, feel free to graffiti.
Now that they’ve been released into the wild, these agents are hungry and eager. Look out. That distant relative or high school friend who just got licensed will be calling to tell you the good news and ask if you’re looking to buy or sell. Just be ready for it. And don’t be too harsh unless he or she is a dickweed.
Aaaaanywho–let’s skip a few steps for the sake of your time and mine. Let’s say your new agent somehow manages to:
- Find a prospective client–
- Convince them to work with him/her exclusively–
- Get a buyer and seller to actually agree on some terms–
- Miraculously get through inspections–
- Get clean and solid financing–
- Get an actual closing date scheduled.
Wow! That’s a lot of what ifs but lets just say they did it. By now they’ve spent many hours and probably many gallons of gas and minutes of cell phone. Also, it’s probably been many weeks since the newbie agent met the newbie client.
The crazy thing is after all that, the deal can still fall apart in a New York second. The rule of thumb for any real estate deal is:
Every day that passes after the contract is written, the odds of a successful closing go down 1-2%.
Mind you, this agent still hasn’t seen one dime of income. The only time agents ever get paid is after the house closes and their broker cuts them a check (after the broker gets their percentage).
Why did I tell you all of that?
To show you that new agents have a very hard time succeeding. And that was only the first layer so just trust me on this one.
We have established the fact that this is a tough business and new agents get little to no training and are under constant pressure from every angle.
Another reason there are so few good agents is that while under all of this pressure to get a deal to close, it is very easy to start cutting corners. Cutting corners eventually leads to bending rules which inevitably leads to breaking them.
Good people who would otherwise never lie, cheat or steal anything will do some sketchy shit when the rent is due.
- I’ll just “forget” to mention to my buyer that the furnace was making a funny noise the last time I was here for open house. It was probably nothing. I don’t want to scare them off.
- The other agent’s buyers are about to walk away after 2 counter offers. I’ll just “accidentally ” mention that my sellers are in financial trouble and can and will go down another $10k.
- I forgot to have the buyers sign off after the inspections. I’m sure they won’t mind if I scratch their name in here. There weren’t any serious issues. After all it’s an older house–I’m sure they don’t expect it to be perfect.
- I need to pay my cell bill so I can stay in business so I’ll just use some of this earnest money until I close another deal. It’ll be fine and no one will ever know.
All of the above can get the agent fined, disciplined or even cost them their license. It’s actually covered during their 3 weeks of schooling. That plus common sense tells me they all know better, yet every month the real estate commission punishes agents for stuff just like this.
Are these bad people? No.
Are they in a terrible situation with almost no supervision? Absolutely.
People that are desperate will unfortunately abandon their life long principles by rationalizing that it’s ok because no one is getting hurt. Only one tiny little problem with that logic:
How you do one thing is how you do everything.
There’s a reason they call it a slippery slope. Once you put a foot on it, you’re liable to slide right to the bottom.
In my years of practice, I’ve had plenty of agents try to persuade me to bend the rules to make a deal happen. I even had one broker tell me that it was my duty to get my client to pay more because it was my job to get them a house and my zealous representation was going to screw that up. Wow. Really?
I’ve been offered cash outside of the deal to lie or look the other way. I’ve been threatened. I’ve even been slandered by other brokerages for being “a pit bull” in negotiations. I sort of thought that was the idea. What do I know?
I may speak out about the dishonesty of certain practitioners of real estate, but I understand just enough about human nature to see how it happens. I still think the liars, cheaters and thieves should be banned from the business, but that’s not really up to me. Unfortunately, my conclusion after all of this is:
In order to make it full time and long term in real estate, you either need to be very very good or a gifted con artist with absolutely no conscience. Otherwise, you’ll probably just be mediocre and/or part time.
I suppose that’s a strong statement, but I’ll stand by it because it’s been proven throughout my countless dealings with this community.
I’d give anything if it could be different. I wish the ideals and hopefulness of those first days in a real estate agent’s career could carry every new agent through to a long and prosperous career; it just isn’t reality.
Someday I might get around to telling you how a good agent can survive long enough to become a great agent–we shall see.
Until then, take my advice and choose wisely if you choose at all. Maybe this will help you.
Here are a few simple rules to help you find that rare gem of a great agent:
- If you’re buying, see my post called “Do we really need a real estate agent?”
- For a listing agent, try driving your neighborhood and see who has the majority of the yard signs. That’s a good barometer.
- Do a search online for “homes for sale in (your neighborhood)” and scroll past the ads to see the first few sites that come up. Are they good sites? Are the homes appealing with lots of pictures and information?
- DO NOT base your choice solely on who gives you the highest listing price. In fact, don’t let the agents even discuss the listing price until you’ve decided which agent you’ll go with. That way it’s not a factor. (More on this here.)
- Call the agency posing as a buyer and ask about a house they have listed that’s similar to yours. Do they call back quickly? Are they enthused about the house? Can they show it to you quickly or do they put you off? Basically ask yourself, is this the person I want selling my home??
- During the interview ask the prospective agent if you can have a list of recent (6 months or less) former clients to talk to. Get at least 3. Call them and be super blunt. Ask what the agent did well/not so well. Ask about how long it took. Ask about the list vs sell price, etc. Basically ask what they liked and didn’t like and whether they would recommend this agent.
- Finally, before you sign on the dotted line, ask if the agent has a written cancellation guarantee. What if you’re not happy with their level of service? Can you cancel with no notice or penalty? I hope so because I know plenty of very good agents who offer that exact written guarantee.
- Final finally, pay attention to your gut. Intuition is often overlooked, but it shouldn’t be. We’ve been creatures of instinct millions of years longer than we’ve been creatures of intellect. Listen to the little voice. Liking the agent is only one reason to maybe hire them. Not liking them is the only reason you need to pass on them.
Hope that helps and I wish you the very best whether you’re buying, selling or just curious. Feel free to message me and I’ll gladly answer your questions or listen to your rants. Seriously, I love getting email.
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