Job Responsibilities
As a residential real estate broker in Manhattan, I work from
10am to anywhere from 6 to 9 in the evening, during weekdays.
During summer months, many brokers don't work Saturdays because
it's our lowest season, but Sundays are always necessary because
that is the day that most working professionals are free and
expect to see open houses. As a mid-twenties broker doing this
full time, I put in a lot more hours than 75% of the older
brokers--for about 90% of all brokers in Manhattan, this is a
second, third or fourth career, so they already have a strong
client network that they have culled from previous work
environments. Many of these brokers take Saturdays off, and in
some cases don't work on Sundays either, but leave the open
houses to their younger assistants/partners.
During the week, the morning and afternoon hours are spent
performing customer searches, contacting the customers via email
and phone to set up appointments, and then taking customers out
to properties. Lunchtime usually features broker open house
tours (lunch is often provided by mortgage brokers a few times a
week at these open houses) that allow you to beat the pavement
and see a cross-section of available properties so you can talk
with customers more intelligently about the market.
Every month and perhaps every few weeks, you need to schedule in
time devoted to marketing yourself. This involves creating
mailing campaigns to advertise your properties or your
expertise. Most brokers post and label thousands of mailings by
hand, a project that can take a whole day--and thankfully is
usually only done several times per quarter.
These are all tasks done at the basic level when you have no
deals in the works or any exclusives. Once you get an exclusive
agreement to sell someone's house or apartment, there are a
number of administrative tasks, including researching all the
answers customers may ask about the building, creating
advertisements for the web and print newspaper, and creating fact
sheets to provide at showings. There are also photographs and
virtual tours to schedule for the listing, and then you must see
that all of the information is properly posted on the web AND co-
broked out to all the other agencies in the city.
Down the line, when you have an offer placed on behalf of a
customer, the negotiations can take several rounds over a number
of days (and often sleepless nights), during which you try to
manage the other brokers' and your buyers'/sellers'
expectations. You coach your buyer about what to expect in
different scenarios, and when an agreement is reached you prepare
them for what will need to happend during the next three months
before the deal can close (in Manhattan this is the minimum time
frame for 90% of all purchases.)
Nursing a deal to a close can be very nuanced, with many tasks
and personalities to coordinate: two attorneys, usually two
brokers, a buyer and seller, the mortgage company, the managing
agency, and the building's board of directors, who will have to
approve the purchase of the apartment. Any number of things can
cause a deal to fall apart, so you must never assume it will be
smooth sailing just because you have reached an accepted offer on
the price.
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Job Requirements
Hiring in real estate is essentially based on two things: A) have
you passed the broker's licensing exam, and B) do you have a
comfortable rapport with a broker/principal of a real estate firm.
The state licensing course in NY takes about 2 weeks, and only
after you have passed the exam (covering a lot of real estate
law, finance and building code info that you likely will never
need to know again) can you begin with a firm. One distinction
to be aware of is that in each firm there is really only
one "broker"--that is the principal owner of the firm. Everyone
who is beginning in real estate has received a "salesperson's
license"--but they call themselves brokers according to the
industry vernacular. According to the state regulations, unless
you are a broker/principal, you are a salesperson...unless: after
two years of practice, and a requisite number of deals closed and
another 45 hour course, you can pass the "associate broker's"
exam: this gives you the title of associate broker. I estimate
only about 40% of salespeople ever decide to pursue this
designation, which has primarily nominal value. It is also a
requirement if you wish to become a broker/principal someday and
open your own firm.
Most brokerages do not require a resume, in fact: all that
matters to them, since you will be an independent contractor, is
whether you will bring a deal to them. In other words, if you
have a pulse and the ability to communicate in some language to a
buyer or seller, then you have potential to succeed.
Brokerages have very low risk in hiring salespeople
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Uppers
The best part of the job is the flexibility in how you can concentrate your
efforts. Some brokers with an analytical background tend to focus on marketing
through mailers and strategic ad campaigns.
Others spend no time on marketing, but just look for chances to take clients to
dinner or lunch and get referrals.
Some focus on new development projects and try to specialize in dollar values of
investments. Others specialize in the townhouse niche and learn everything about
that 5% of the market.
So the ability to tailor the job to your own interests and personality is very
attractive to many brokers.
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Downers
The obvious downside to unlimited earnings potential is the fact
that you can easily work very hard before you earn a commission.
What most people don't realize before getting into the business
is how difficult it is to get buyers to use you to purchase a
property. Any buyers who come to you to search for a home can
easily see a few properties with you, and then unintentionally
leave you out of the deal when they call on an ad they saw in the
paper, and end up bidding on a property that you didn't alert
them to.
Many months of searching with one customer can be nullified by a
single phone call they make to an exclusive broker, and most
buyers never mean to leave you out of the deal, but it happens
all the time.
So you have to constantly remind your buyers, "train" them, to
ask you first about any ad they are interested in. Even when you
do this, though, if you stop reminding them for fear of becoming
annoying, they often still make that call by themselves and
circumvent you. This feeling of being a "third wheel" is one
thing many brokers don't realize will hit them once they start
encountering these scenarios. Today buyers can easily shop for
themselves on the internet, so to add value you have to know more
than they do, which is easier said than done.
Another downer is the length of time it can take to get started.
Even if you have many friends who may buy or sell, real estate
can be feast-or-famine: most people wait an average of 5 years in
between moves, so you may have to find some customers before any
of your friends are ready to move. Finding new business,
customers who don't know you, means they have no initial loyalty
to you, and can thus be very demanding, difficult, and then after
all is said and done can go directly to another exclusive broker
and leave you out. Again, the lack of protection for
representing buyers is difficult.
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Lifestyle
Most people assume that being a broker is a great way to be able to go the beach
several days a week and sleep in on any given day. While this may be true, the
reality is that many people don't appreciate the terrific effort you must expend
on the front end to build a substantial business. You have to have a structured
work schedule that will keep you on track to reach your sales goals; if you
choose to exercise your freedom too often, you will lose credibility with clients
who have any number of other brokers to choose from.
But since a broker is not allowed to impose any requirements on salespeople
regarding hours worked, as an independent contractor you can create a schedule
that works for you. But be forewarned: real estate is not a part-time endeavor
for someone who wants to do it on the side. If this is going to be your sole
source of income, you must do it full time at the beginning, and be prepared for
many hours of unpaid work before you make your first sales.
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Compensation
Average commissions on a residential home are 6%, which does not
end up in your pocket. Typically there are two brokers involved,
on the buy side and sell side. So that is 3% to your firm, but
when you are new to real estate you rarely get more than a 50%
split against the firm. That means 1.5% of the sale price is
yours, pre-tax.
So on a $500K home, that's $7,500 for you. The good thing is
that you can deduct many of your expenses as an independent
contractor.
Again, real estate sales, residential at least, is always 100%
commission-based. Thus, your first year could earn you $10,000,
or in case of the top 1% of new brokers, you could earn $100-
150K. This is very rare, and more often it will be in the $30-
60K range.
Benefits are nill, as an independent contractor. You can deduct
your health insurance expenses from your federal taxes as of
2003. But brokerages don't provide any benefits.
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Advice to Jobseekers
On the topic of income, I would strongly advise starting a SEP
retirement fund, which lets you write off about 30 cents on the
dollar of everything you put into the SEP. This can save you a
ton of money on taxes.
Other key advice would be to try to start off by assisting a well-
established broker. This gives you the umbrella of security you
may need, by getting a steady stream of customers in exchange for
10 to 30% of your profits on those customers. You basically
shadow the broker on listing calls, cover their open houses for
them, and often do office paperwork for them. It's THE best way
to learn this entrepreneurial business and also insure some
customers thrown your way once in a while.
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