If you are starting a career in Real Estate you can’t afford to make missteps. Learn what mistakes to avoid when starting in real estate.
A recent report stated 87% of new real estate agents fail in the first 5 years. If you are holding a new real estate license and are eager to start your own real estate career this statistic can be discouraging. You may be wondering what are the mistakes to avoid when starting in real estate.
Your choice of career was first based on the want to help people and second to make money. However, businesses can not run on altruism. You need to make money in order to pay your own rent/mortgage, car/gas, insurance, food, and support your family or yourself.
New real estate agents are often surprised by the amount of time and effort required to sell a house and turn a profit.
Common pitfalls can be avoided with wise mentors, a secure business plan, realistic goals, a budget, and weekly accountability to yourself and others. Avoiding these missteps means the difference between a successful career or failing to take advantage of a hot real estate market.
Business Plan-Plan to Succeed!
School prepared you to sell houses, it did not prepare you to start a business. Admitting your own lack of knowledge about business, in general, including bookkeeping, marketing, and taxes is the first step to avoiding career-ending decisions.
A business plan is first realistic. A simple google search provides many business plan templates. Locate a seasoned real estate agent and detail your plan with an open mind. If you are eager to be your own business and make your own money than a well designed and implemented plan is your first step.
A SWOT analysis is an overview of your business. This allows you to gather insight into creating goals for your real estate work. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. During the start-up phase of your business (1-2 years) you can sit down once a week and analyze your own self in each category.
S-Strengths– What are your internal strengths? What are your external strengths?
W-Weaknesses- What are your blindspots? What are external weaknesses (often these weaknesses are out of your control)
O Opportunities- What internal and external opportunities have you experienced? Are your opportunities realistic?
T-Threats-What are your internal and external threats?
This weekly reflection allows time as a new agent to assess their business plan and make necessary adjustments.
Marketing-Pay to Be Popular?
93% of real estate agents have a website according to NAR. Marketing yourself and setting yourself apart by building your own brand can be visible on your own website.
A free website with scheduling features can be created with wix.com or squarespace.com. Ensure your business plan matches your website. 43% of agents fail to update their websites.
Scheduling time each week to keep your information current will allow for cheap marketing and attract new buyers.
Budgeting Problems and Underestimating Costs.
New real estate agents fail to consider the initial financial investment required for a business to grow. Upfront expenses include:
- Office rent
- Reliable car
- Cell phone
- Internet service
- Website fees
- MLS subscriptions
- License and organizational dues
Creating a business budget is vital to starting a business. First, consider if your real estate business is part-time or full time.
Estimates of a new real estate start-up expenses average around $8000. Failing to create a plan detailing the use of your money can result in lost revenue.
Budgeting software is created for small business owners. Much of this software is free or low cost. Following the wisdom of those who have come before you will help in creating a realistic and sustainable budget. The following sites direct you to reasonably priced budgeting tools.
Communication-Hello is Anyone There? No? Good-Bye.
Cell phones, email, text, and Whatsapp almost demand consistent communication with clients. In the past a 24-hour wait was reasonable, however, a quick response from you will help you ‘snag’ clients and ensure that a relationship of trust is built from the moment you begin interaction.
Avoiding the peril of the lack of follow-through with communication requires awareness of your own boundaries and time.
For example, if you are out of the office at 5:00 pm, set your email with an auto-reply stating you are happy to meet them and include a link to your blog or helpful site about buying a property to pique interest until you can either return a call or email.
Expectations are Premeditated Resentments When Starting in Real Estate
How does 13% of real estate agents succeed? They adjust their expectations based on reality. When starting in real estate, they set their expectations reasonably taking into account the market, their own budget, other sources of income.
Researching your current market with a seasoned expert will help you understand how to set reasonable goals and possibly lower your expectations. For example, if you want to work in commercial real estate but live in a rural area you may find the demand is low for business office leases or purchases.
However, if you live in a suburb of a larger city commercial real estate may be a wise decision if you discover the market for business is growing and the area is growing or expected to grow in the next 5-10 years.
Overall, you are your own business and create your future. Having a mindset of a beginner and being eager to learn from your mistakes and others will benefit you and your pocketbook. Creating a good foundation will help you avoid mistakes when you start in real estate.
Looking to take your real estate business to the next level? Contact us today for more information on how we can help.