A Beginner’s Guide To Real Estate
If you’re new to real estate, you’re probably getting advice from every direction on how to be a successful real estate agent.
This page is designed to give you practical advice, not recycled scripts or motivational fluff, on what you need to know when you’re starting out.
These are the real-world insights I wish every beginner had access to when they first started.
Level 1 – Discovering Your Real Estate Agent Personality Type
How your personality affects the way you work, connect, and sell.
Level 2 – Capturing The Real Estate Mindset You Need To Succeed
How to handle rejection, stay disciplined, and stop relying on motivation to keep going.
Level 3 – Knowing The Truth About What Your Real Estate Clients Want
Why most clients don’t trust agents, and how to build real value by focusing on what they care about.
Level 4 – Knowing The Truth About The Real Estate Profession
What this career is really like behind the scenes, how to choose the right brokerage, and what separates real professionals from surface-level salespeople.
Level 5 – Understanding The Different Methods Of Real Estate Prospecting
Which prospecting methods work, why most agents avoid them, and how to choose the one that fits your personality and builds real consistency.
Level 6 – Discovering The Real Estate Business Model For You
How to position yourself, define your value, and build a business model around the clients you serve best.
Level 7 – Avoiding Common Mistakes As A Real Estate Agent
Avoid the habits that kill momentum, burn cash, and keep agents stuck.
Level 8 – Managing New-Found Money As A Successful Real Estate Agent
How to handle your commission income wisely, avoid common financial traps, and reinvest in your business without letting your ego run the budget.
Level 9 – Scaling A Real Estate Business That Stands The Test Of Time
When to scale, how to delegate tasks, and what it takes to build a team that lets you grow without burning out.
Level 1 – Discovering Your Real Estate Agent Personality Type
What is your real estate agent personality type?
Imagine you lived in a small town and it was announced that a beautiful flea market was going to be built right downtown. It would be the only one in the history of the town and would be marketed as a tourist attraction. Everyone in town gets excited and rushes to sign up for available spaces.
The demand was so great that the town officials decide that the spaces would be given out through a lottery system, and only 100 people would win the 100 available spots. Whoever got one was free to sell whatever they wanted.
By a stroke of luck, you draw one of the lucky numbers and secure a space. You’ve never opened a flea market booth before, you don’t know what skillsets you need to succeed, and you’re not even sure if you’re going to last 3 months.
Building a thriving real estate business shares many of the same challenges. Before you build anything, you have to first understand what tools you have in your toolbox.
The first thing you need to do is figure out your personality type. Your personality will dictate how you approach the many roadblocks ahead of you. More importantly, real estate is a people business, and you will need to enhance your EQ (emotional intelligence) when dealing with clients. It’s vital that you understand how people think and react.
There are lots of personality systems, and some of the popular ones out there are DISC Personality, Myers-Briggs, and Enneagram. Whichever system you explore, there will be a test that will determine which one you are. No personality is better than the other, so instead of worrying about what your weaknesses are, learn how to play to your strengths.
Once you take a test, the results will generally reveal the following information about yourself:
1. When it comes to energy, you either save your energy for yourself or you like to share your energy with the world. This has a huge impact on how you feel about dealing with people on a daily basis.
2. You either gather information in zoomed-in mode or zoomed-out mode. In other words, people who rely on sensing will look for things that are practical and detail-oriented while people who are intuitive are more broad thinking and like to see the big picture as a whole. This will affect how you learn the business and apply systems as a whole.
3. You either make decisions prioritized by how you think or by how you feel. Thinkers default to logic, principles, and truths. Feelers cherish personal values, harmony, and the well-being of others. This can affect the triggers that cause you to make decisions in your business.
4. You either prefer plans and predictability or you crave spontaneity and adventure. This affects your risk tolerance and how comfortable you are trying new things to grow your business.
5. You either prefer taking the lead or you prefer responding to what’s happening. Assertive individuals are direct, decisive and prefer control while responsive individuals are open, adaptive, and cooperative. This affects how you handle processes and deal with conflicts or challenges when they arise.
6. You will have core things that motivate you and fears that will cripple you in business. It is vital for you to understand what makes you run and what makes you freeze. This affects your overall personal motivation levels in the face of grinding it out every day.
Knowing how you operate will show you which aspects of your business you will naturally excel at building, and which ones you will eventually need to delegate to someone else.
You will also learn how to identify personality types, which is crucial when you are working with clients. There are optimal ways to speak to someone so that they understand you and trust you, and these insights come from understanding all the personality types and how they interact with each other in common scenarios.
By the way, I’ve written a detailed article on real estate personality types if you really want to deep dive and learn how to leverage your own personality.
In addition to understanding your personality, you will also require specific skills and systems in order to succeed at real estate. They are:
Communication
Negotiation
Prospecting
Lead Follow Up
Market Knowledge
Time Management
Marketing
Branding
Some of these may come naturally to you already, while others are skills you’ve never tried or might be weak at. However, at some point you will need to use each of these skills at a high level in order to have a thriving real estate business.
Ignoring any of these creates a weak link in the chain, and can crucially hinder your progress. In short, there is a lot of work that needs to be done before you make it big.
As we move through this guide, you’ll get a better picture of the high level things you need to master.
Level 2 – Capturing The Real Estate Mindset You Need To Succeed
The perfect real estate mindset revealed
Why is real estate difficult for so many agents?
A lot of you are coming from traditional job settings, where there is structure behind the time you spend working, your responsibilities, and the tasks you do on a daily basis. In essence, most job duties can be captured in a written manual and easily shared with any new employee for a particular role. Processes can easily be replicated, and the business moves forward with a certain level of continuity.
In real estate, there are no fences around your time or your responsibilities, and you will be battling with your own mind every single day. When things go haywire, there is no manual to provide you a simple solution, and you will spend a lot of time solving problems that come out of the blue.
This is why understanding how to prepare and maintain the right mindset is the most important thing you can do in business.
Note that I used the word ‘maintain’ because your mindset isn’t something that you set and forget. Your inner voice won’t be very friendly when times are tough, so learning how to ignore it and forge ahead is going to be your super power.
So lets begin with what you need to know:
1. You are going to get rejected more than you ever have before
It’s going to destroy your enthusiasm and you’re going to question your self worth many times over, but there’s no time for that.
Come on, focus! *snaps fingers*
If you want to succeed in sales, you really have only TWO options:
a) Learn how not to care about being rejected (this takes practice)
b) Learn to love being rejected (pro version)
If you can’t do either one of the two, you will not succeed in real estate.
For an interesting case study, there was an individual who was deathly afraid of rejection and wanted to challenge himself to get better. So he embarked on a 100 day journey, where every day he would deliberately put himself into strange scenarios so that we could rejected. It’s a great watch, and you can find it here on Youtube:
Jia Jiang’s 100 Days Of Rejection Therapy
2. You will have to do boring things over and over again
Some people get dopamine when they start something. Some people get dopamine only when they finish something. Despite whichever one you are, you’re still going to be tested. So here are the TWO things you’re going to need to learn how to do:
1. Do a mundane/painful task once
2. Repeat that task consistently over days, weeks, and months (and years)
Your success depends on this habit.
It’s a habit worth developing and strengthening because if you can master it in real estate, you can transfer it over to other areas of your life and do things like lose that belly you’ve been carrying since college, or learn how to paint realistic paintings of your parrot. No judgement.
3. You can’t depend on motivation
It’s going to be a grind and you’re going to starve for motivation constantly.
What’s important to remember is: Motivation can get you started, but discipline will get you finished.
Here’s where you can find motivation as a real estate agent:
– training sessions at your brokerage
– conversations with inspirational people
– reading a good book on business or self development
– closing a sale
– real estate conferences
– talking with your personal coach or mentor
Note that all of this is external, and means you have to search for it and you are dependent on it’s availability.
Okay so now, here’s where you can find discipline:
– within yourself
That’s it. *womp womp*
The encouraging thing is that you don’t have to go anywhere to find it. You simply close your eyes, summon up your raw animal power, and make sure you don’t decimate a city block when you unleash it.
It’s worth repeating:
Motivation can get you started, but only discipline will get you finished!
4. You can’t be that top agent you admire
You can certainly find ways to earn the same amount of money as another agent, but you’re going to have to learn how to do it your own way.
As you spend more time in this industry, you’re going to meet successful agents who will tell you their story of success, and each time you’re going to have this sudden urge to change everything you’re doing and copy them.
Don’t do that, because:
a) Everyone is unique with different budgets, time frames, skill sets, & experience – it’s impossible to replicate someone’s real estate journey through the business
b) You will only see people’s current picture and not all the mistakes they made (and success stories seem to conveniently omit these details)
c) Shiny object syndrome is devastating in real estate and will have you running in circles
Here comes the imposter syndrome.
So what’s the solution?
Come up with a solid plan for your business based on what you’re capable of doing and don’t get derailed. This is why real estate mentorship is so important. An experienced person can show you the road to take, how to stay on track, and watch your blind spots for you.
5. You can’t wing this – you absolutely need systems in place
Remember, this is not a job with one set of tasks. This is your real estate business and it is made up of many moving parts. As a sole practitioner, the busier you get, the less efficient you will become.
You will need to adopt systems in place to do some heavy lifting for you. You can achieve this by clearly understanding the different components of your business (think about the journey from first acquiring a client all the way until closing, and after!).
Then, you can use standard operating procedures and checklists to keep your processes consistent and error free. You can use technology to organize and enhance your workflow. And you can leverage your brokerage and it’s resources to help you scale your business efficiently.
That sounds a lot of thinking and preparation. Yes, it is. But spending the time and resources to set up everything right from the beginning is going to save you a whole lot of heartache and money later.
Level 3 – Knowing The Truth About What Your Real Estate Clients Want
What do your real estate clients actually want?
Here’s a sobering reality about this industry.
If given the option, nearly every consumer would prefer to not work with a real estate agent when buying or selling a property.
In fact, I think most real estate agents would prefer to not have to deal with other real estate agents either. *ba-dum-tss*
But lets get back to the clients, and deconstruct why.
- They feel agents don’t deserve what they get paid.
- They don’t want to give up control or rely on somebody else.
- They feel they can do it themselves.
- They don’t like or trust salespeople.
- They think you care more about yourself than about them.
This can be incredibly discouraging, yet promising at the same time because if you build your business around your clients’ obvious pain points, you can immediately stand out from the crowd.
How do we take this information and make it useful?
Be More Valuable
Take a moment to think about what you typically do for a client. If you’re just a combination of a chauffeur, tour guide, and paper signer, you have NO VALUE to a consumer because they can do all of this without you.
Unfortunately, the vast majority of real estate agents never get past this stage. The main culprit is that agents tend to think of the transaction instead of the relationship.
So how do we move past this stage and work on adding more value to our services?
You need to:
- study the market and stay up-to-date on recent solds, trends, and larger economic conditions
- have a network of experienced professionals (ex. lawyer, home inspector, lender, home stagers, appraisers, contractors, photographers, etc.) that you can either access for knowledge, or provide to your clients as potential service providers
- get good at negotiating (this is how you’re going to get famous and get flowers at your doorstep)
- talk a lot less and get better at asking the right questions (selling is not telling – selling is asking questions)
- find ways to deliver what you promise (or more), and you’ll be surprised at how even top agents in the business often over promise to win the business and then under deliver during the process.
Empower Your Clients
So on that previous note, don’t ever make your clients feel like you have disappeared or you’re gatekeeping information from them. This is the quickest way to lose their trust, and winning it back is nearly impossible.
You need to:
- manage expectations from the beginning by laying out the process and the commitments expected from both sides
- always return their calls/emails/texts as quickly as possible, even if you have bad news
- show buyers ALL properties that fit their criteria (regardless of the commission being paid to you)
- schedule weekly feedback calls with your sellers so they know you’re on top of things
- provide them relevant information so that they’re always making informed decisions
The good news is that if you focus on your clients’ needs and deliver them an outstanding experience, you win future business and potential referrals.
How simple is this formula?
Give clients what THEY want = Happy clients
Give clients what YOU want = You back to begging for your cubicle job
Several years ago, one of my agents had a property listed and the seller called her the day after a terrible storm to report that the For Sale sign (and every other one in the area) had knocked over from the wind.
Despite the listing being a 2.5 hour drive away, she immediately got into her car and drove out to not only put up her sign, but also one that was for a competing listing across the street. She just felt it was the right thing to do.
The seller was stunned by her actions. He didn’t expect her to deal with something so insignificant so quickly, especially given the agent had to fight rush hour Toronto traffic to get to the property.
Turns out, the client was an influential person at their church and retold this story on the following Sunday, earning this agent over a dozen deals over the next 2 years.
The lesson is simple, clients are starving to have people who work in their best interest and care about them.
The sales industry as a whole, including the real estate industry, tends to attract people who are only interested in the sale, not the people. This may seem like a wide-sweeping generalization, and I certainly don’t have any number to prove it to you. But ask around and see how consumers generally feel about salespeople, and you’ll likely come to same conclusion.
And if you’re only focused on the sale, then the only merit you have is what you do to facilitate the transaction to completion.
Your goal is to actually figure out what value you bring to your clients. This is no easy task, and something you must develop over time. The good news for you is, you have very little competition. Most real estate agents have no idea what their value is.
Level 4 – Knowing The Truth About The Real Estate Profession
Okay, there really isn’t a wizard behind the curtain. But there are things that you need to know about the sandbox you’ll be playing in.
Lets start with some truths about the real estate profession:
This is not your own reality show
Sometimes I wish they left our industry alone and never produced those real estate shows on TV. They are fake, purely for entertainment and are a misleading portrayal of a typical real estate agent’s day.
As a consequence of these shows, many agents have been brainwashed to believe that they need to drive an expensive car and wear perfectly-tailored designer clothes to impress clients. I beg you, don’t let this be you. This is the fastest way to digging yourself a money pit. Believe it not, many agents that you see on social media living the ‘so-called life’ are financially irresponsible and swimming in debt. Most are busting their asses just to pay for their inflated lifestyles.
Furthermore, your day will not consist of you driving around town, fielding endless calls from clients begging you to list their properties.
No, there won’t be lavish agent open houses with champagne and goose liver pâté. And nobody is going to applaud when you walk through the doors of your local coffee house.
Real estate is a tough career. It comes down to relentless lead generation and you chasing people (never the other way around). The only reality show it’s going to resemble is Survivor, but without the coconuts.
There is no brokerage that is the best
In fact, there are all kinds of different brokerage business models offering a wide range of services, support, and commission structures.
The truth is, every brokerage has a roster filled with top producing agents and agents who have done zero deals. In this game, you get to choose which one you’ll be no matter what company you join.
So how do you know which brokerage is best for you?
- You have to know EXACTLY what you need from a brokerage.
Some agents need a lot of training and support. Other agents just need a reliable place to drop off their paperwork and get paid on time. For other agents, it’s important to have office space because they can’t get any work done from home.
It’s important to know exactly what you’re looking for so when you interview brokerages, you can ask the right questions and determine if it’s the right fit for you. - Don’t believe everything you hear on the interview with the recruiter/manager.
Brokerages gain more profit by increasing their head count. They make money from you a number of ways:
– monthly fee
– desk/office fee
– transaction fee
– commission split
– franchise fee (if applicable)
That’s why when you meet with them, it’s going to feel like a sales presentation and they’re going to tell you everything they think you want to hear. Their objective is to convince you to join their roster. Also, brokerages like to brag about how many agents they have – it inflates their egos.
Make sure to not get pressured into signing on the spot – take your time and do your due diligence. This could mean asking to attend sales/training sessions first as a guest, or calling random agents on their roster to get feedback on the company.
It might be very expensive to move later if you change your mind, so take time to think this through.
There is a big difference between a real estate salesperson and a realtor.
Aside from the obvious distinction that your association allows you to use the REALTOR® trademark, I put agents into two categories (and these are my personal definitions):
- Real Estate Salespeople
These are agents who focus strictly on the transaction side of the business. They are great at finding clients, negotiating deals, and getting paid. They are often on most leaderboards and collect the biggest awards at the end of the year. - Realtor
These are agents who not only do deals, but they also take a more elevated view to the profession by getting involved in the community, volunteering for real estate boards, participate in advocacy and seek to understand legislation. These are agents who want to make money but also care about the industry as a whole.
One isn’t better than the other, and I couldn’t really argue that one would make you happier over the other. Just know that there is more to real estate than just sales, and in my experience people who focus strictly on sales tend to burn out quicker than those who embrace the profession in it’s entirety.
This is a rewarding profession but it will challenge you every single day
I work with agents who make $50,000 a year.
I work with agents who make $500,000 a year.
I work with agents who make $1,000,000+ a year.
It doesn’t get easier when you make more money. The Notorious BIG was right… Mo’ Money, Mo’ Problems.
Every day you’re going to be dealing with highly emotional people who have a lot of money on the line, and you’re always going to be in the middle. It’s a tough spot to be in.
Here’s something I’ve learned over the years: A seller will always feel like they didn’t get a high enough price, and a buyer will feel like they paid too much.
As you grow and scale your business, you’ll be juggling more sets of buyers/sellers simultaneously who all have a singular purpose of winning a negotiation. Dealing with the human side of the business is going to be challenging enough, and that’s separate from the actual logistics of running your business and all the moving parts that will require your attention.
It takes tremendous resilience and patience to run a thriving real estate business, and on most days will require every ounce of your energy.
Stock that wine fridge, my friend.
Level 5 – Understanding The Different Methods Of Real Estate Prospecting
How do you master prospecting in real estate?
I’m going to try to keep this as simple as possible, because lots of agents overcomplicate this and end up killing their business.
There are only a handful of reliable methods of prospecting. You have to pick one of these, and they’re all going to suck. Don’t hold your breath waiting for an easier one to appear, and definitely don’t go try discovering something new.
A big mistake new agents make is spending the first 6-12 months of their business evading the reality of prospecting. The moment an agent finally stops evading, and instead embraces prospecting is the the moment their business takes a 180 degree turn and heads for greatness.
For the agents who quit the business, it’s simply because they never had that moment.
So what are the most reliable methods of prospecting? By reliable, we are talking about proven, tangible results.
- Phone prospecting (remember to respect Do Not Call list legislation)
- Door knocking
- Farming (in addition to using a combination of 1+2)
Here are activities people will argue that qualify as prospecting, but really they are forms of lead generation.
- Social media posts
- Paid ads such as Facebook or Google ads
- Website
- Networking or events
- Newspaper ads
If you want to predictably make good money in real estate, choose to get good at any activity from 1 to 3.
Phone prospecting and door knocking are the most proactive forms of prospecting, and will require no upfront money to start. Your brokerage will also likely have training resources to get you started and you can find a variety of objection handling guides online to help you understand the framework.
Farming is the best way to build a viable real estate business that will lead to consistent listings in a given area. I have a farming guide which can help you become an expert.
Regardless of which prospecting or lead generation method you choose, you’re going to need a strong real estate mindset to succeed.
In real estate, if you haven’t had any uncomfortable conversations or faced a number of rejections that day, you haven’t prospected enough. As with any other sales career, your success is often correlated to how much pain and failure you can endure.
In fact, the highest paid people in the world are the ones that can tolerate the most amount of pain and discomfort. This applies whether you’re talking about athletes, business leaders, or influential people.
As a realtor, you don’t make money sitting at your kitchen table every night. You make money sitting at other kitchen tables.
** Word Of Caution*
Just because a trainer is telling you their wild success story and insisting you to do it their way, don’t jump so quickly. Take time to evaluate whether or not you currently have the time, expertise, skill sets, and resources to replicate what they did.
Remember that someone who is successful at one thing is telling you their experience. It’s simply their path to their goal. Naturally, they’re convinced their way is the only way.
That’s why some people can be excellent at phone prospecting yet horrible at social media marketing. Others are fantastic at pushing deals but terrible at conflict resolution.
We’re all different people, and we won’t all share the same path to success. It’s up to you to pick up clues and decide what can be useful for you on your journey.
It may take some trial and error to determine which foundation of prospecting you’re going to build your business on, and the best way to start is to look at your personality traits.
** 2nd Word Of Caution **
You might be tempted to join a team or a brokerage that will give you leads. There is nothing wrong with that, and in fact as a new agent it will give you an excellent opportunity to get real experience working with prospects in the field.
Just know that the moment you decide to go solo and build your own business, you’re going to be starting from scratch since likely you weren’t taught how to prospect and lead generate on your own.
This can be a humbling experience if you’re an agent that can reasonably close deals, but have no pipeline of new clients. I’ve seen MANY successful buyer agents leave teams and struggle big time on their own, and it can be very deflating and costly unless it’s done with careful preparation.
Having a solid pipeline of incoming leads is the backbone of having a real estate business. Your priority is to master a method of prospecting and then do it every day (even if you don’t feel like it). Only agents who know how to prospect will have any longevity in this business.
Level 6 – Discovering The Real Estate Business Model For You
Why is a real estate business model important?
I deliberately used the word ‘model’ because your business needs to have a foundation and structure beyond just praying for deals. How you build this model will depend on how you package up your value to the world.
A common issue I see is most real estate agents struggle to identify what makes them a better choice over their competition.
Think of this scenario:
You’re sitting in your brokerage computer room having a coffee with some agents and your office manager comes to the back and makes an announcement.
A homeowner from across the street popped by the reception to say that they want to list their home for sale, and since your brokerage is the closest real estate office, they want to talk to an agent.
Your manager wants to be fair to everyone, so all 10 agents in the office each get 5 minutes with the seller to prove they’re worthy of being hired.
Now, without any preparation, what would you say to convince that seller to hire you as their listing agent?
The reality is that the public sees us as a commodity, not unlike buying a can of beans from your grocery store. If you’re grocery shopping and one brand of beans is sold out, you just pick a different brand because, well… beans are beans.
And in the absence of any perceived value, the consumer will aways choose the cheapest option.
What do we do with this information, and how do we build a business model around it?
1. Become good at one thing in real estate and make it your flag
There are so many things in real estate that you could develop expertise in. Here are some examples:
- pre-construction condos
- estate sales
- gas stations
- waterfront properties
- franchises
- relocation
- foreclosures
- specific geographic areas
- first time home buyers
- office leases
- luxury homes
- (the list goes on)
Becoming a specialist does a number of really good things for your business.
- It gives you confidence in your service when you’re working with clients.
- It gives your clients confidence in you because they are benefiting from your experience during a transaction.
- It allows you to understand important metrics in your business like average commission amounts and timelines for deals.
- Using these metrics, you can reasonably predict future performance based on how you adjust your business.
- It gives you perceived value when you’re marketing yourself to the public.
This doesn’t mean that you should be turning down clients that don’t fit into this box. If you’re a struggling real estate agent, I would never refuse business if I could provide them great service and earn some commission at the same time.
Rather, it’s crucial to carve out an identity for yourself in a vast sea of agents who all have access to the same MLS systems, access to the same properties on the market, and templated documents required to complete a deal.
Most importantly, becoming an expert in something means that you can serve your clients better. And that’s really the bottom line.
2. Put numbers into action and scale
One of the reasons most real estate agents don’t regularly create business plans is because they can’t conceptualize their numbers well enough.
This comes down to lack of systems that can provide predictability and structure to a business, and the consequence of this is many real estate agents will charge commissions based on what they think they deserve as opposed to what value they’re trading for money.
Imagine starting a new band and seeking gigs.
The important thing to start off with is deciding who your audience is. Are you playing weddings, bars, or corporate events? Based on who your target audience is, you would tailor your performances accordingly to meet their needs.
In real estate it’s no different, and understanding your target market will enable you to figure out how to deliver value to your clients. By identifying your niche and focusing on effective marketing, you will ensure you’re not just charging an arbitrary commission. Instead, you know the tangible outcomes you can deliver and you’re able to charge justifiable fees.
Once you understand the unique value you bring to your marketplace, you have a foundation to build a business model around it. This will allow you to approach real estate as a business with expanded parts instead of seeing it as a linear activity of just closing deals.
It’s important to have this structure if you want to scale and grow. If you’re chasing sales like a squirrel chasing acorns, it’s nearly impossible to apply any type of multiplying factor to your business.
In other words, you can double or triple the output of a system in your business if your model makes sense. However, I bet you won’t be able to double your buyer appointments over an extended period of time without burning out.
Remember, winging it in sales can only get you so far. You can make money chasing deals, but you’ll have very little leverage over your future. Always think about your real estate business as a multi-system entity that serves a purpose or a target group – something that has other moving parts that exist independently of your sweat equity.
Now that you’ve set up a solid foundation for your real estate business, it’s time to proceed to the next topic.
Level 7 – Avoiding Common Mistakes As A Real Estate Agent
What are common mistakes to avoid as a real estate agent?
The purpose of this post is to help you avoid stepping into piles of steaming shit along the way. Believe me, the road is long and you’ll be side-stepping so much you’ll likely have to come up with a theme song. However, with the right support system and mentors to help you along the way, things won’t stink so bad.
Mistakes not only cost you time and money, they will cripple your motivation level and momentum. The reality is that there are a lot of blind spots you won’t see as you build your real estate business, so asking questions and implementing solid systems is crucial to getting hit with major setbacks.
Here are some important takeaways:
- What you make in real estate is not as impactful as how stupidly you spend your money. Your ego is going to beg you buy expensive and shiny things to feel rewarded, and this is the fastest way to live a constant life of stress, no matter how much money you make. It’s entirely possible to make a million dollars a year and be in more debt than when you started the business, so you have to control your spending.
- The easiest way to put yourself into a 1% category is not to be like the 99 other agents that don’t create a business plan every year. Don’t operate your business without a plan! Yes, it’s tedious and you can probably memorize your numbers. But there is a reason why the most successful people in the world insist that writing down goals and processes is a major factor in actually achieving them. Thoughts in your head are only dreams until you commit them on paper and turn them into plans.
- Don’t underestimate the importance of starting a CRM early and maintaining it. This is your book of business, and the only thing that gives your business any real value. Your database will be an incredible source of future business for you – provided you build it, maintain it, and leverage it. And in the future, if you ever decide to leave the business, you can always sell your book of business to someone else.
- Don’t pay for coaching programs unless you’re willing to do the work. They will not make prospecting any easier and rejection any less painful. You STILL have to do the work. Many agents have this illusion that if they sign up for a course and take some training, their business will magically change. The fact remains that nobody is going to save you from your lack of self-discipline. Ironically, the best way to overcome laziness is to practice not being lazy.
- Don’t over think, over do. In other words, always lean towards taking action immediately. You need to get out of your own way.
- Practice your craft every day. Professional athletes spend more time practicing than actually playing the game, and if you aren’t improving your skills and waiting until you meet a client before you perform, you’re actually practicing on your clients. That’s a great way to keep your bank account in overdraft and feel shitty about yourself because you’re not closing any deals. Practice off the field so you can win on the field.
- DO NOT SPEND YOUR COMMISSION THAT IS FOR TAXES. This might be worth tattooing on your arm.
- Always spend the majority of your day doing things that build your business (like prospecting), not things that maintain your business (like paperwork). A lot of agents spend their day in the office searching for listings on MLS, abusing the photocopier, talking shop with their colleagues, and shuffling files around. You’ll go home in the evening feeling like you worked all day, except you made zero dollars. Prioritize business activities that grow your pipeline of business. In other words, PROSPECT.
- Don’t wait for someone or something to initiate learning for you. Many agents wait for weekly training sessions at their brokerage to learn what’s happening in the marketplace. This is the quickest way to be the most uninformed agent in your office. You need to always be educating yourself. The market and the real estate landscape is always changing, and you need to be running alongside to make sure you don’t miss anything.
- You can not “fake it until you make it” in real estate. There is a lot of money on the line for everybody involved, so it’s crucial to know your stuff and have experienced people in your corner for when you don’t. Don’t make stuff up to make yourself sound smart, because mistakes can be very expensive.
- Read your board rules, your regulatory body rules, municipal by-laws, landlord and tenant rules, anti-spam legislation, do-not-call list legislation… the list goes on. Yes it’s boring, but you’ll save potentially thousands of dollars in fines by knowing it all. You can not claim ignorance of the rules and policies that govern you when you’re in court or at an arbitration hearing. It is your responsibility to understand your business.
- Sit down and read every agreement and document that you will be using when working with buyers, sellers, and renters. Even if they are templated, you need to understand the implications of the clauses in these documents because you’re expected to be able to explain them to your clients.
- Don’t try to aspire to be like ‘successful’ agents you see. Many of them are not what they seem – some are downright miserable. Always focus on being the best version of yourself and good things will happen for you.
- Most importantly, don’t ignore this question: Why should a consumer pick me over another agent? Obsess about this question until you can answer it with conviction and convey it to a client.
Wow, that’s a lot of stuff to remember, but I just saved you thousands of future dollars. You’re welcome!
Level 8 – Managing New-Found Money As A Successful Real Estate Agent
You’ve made new-found money as a real estate agent!
It looks like you’ve been plugging away at your business and some big commission payments have rolled into your bank account. You’ve never seen so many digits before. Congratulations!
Many agents make the most crucial mistake in their business at this point and that’s thinking: I’ve finally made it! (somebody call a press conference!)
Wrong.
You may have closed a few deals, but you certainly haven’t built a complete business yet. Sales does not equate to business mastery, and commission does not equal profits.
Whatever you do, risk the urge to start shopping for that Mercedes and stay clear of the Louis Vuitton store.
Being smart with your money from the beginning will help you develop a proper money mindset and build a real estate business that has longevity.
Lets break down what you should be doing with your money.
- Open an additional bank account with your bank. Every time you get paid a commission, immediately transfer a percentage to this separate bank account for tax purposes and do not touch it. Depending on where you live and how much you earn, this could be anywhere from 30% – 40% and will be used to pay for your income tax, business tax, self-employment tax, and any other tax you have an obligation to pay. Whatever happens, DO NOT spend this money.
- Open one more bank account that you will use for savings, and transfer 20% from every commission you earn into this account – this is you paying yourself first before you spend any money. This can be a savings account or a pre-authorized contribution into an investment that earns you interest. On dry months where you’re not closing any deals, you’ll get a tremendous amount of satisfaction knowing that you’re not totally broke because you have savings to your name.
- You’re now left with approximately 40% – 50% left in your checking account, and THIS is the money that you are allowed to spend. Remember, this amount is what you will use to pay your expenses, allow you to enjoy life, and reinvest back into your business.
By looking at the amount you have left to spend, you’ll notice that you won’t have much left if you have to pay your rent/mortgage, bills, food, entertainment, and set aside some to grow your business.
What are good ways to spend money and reinvest back into your business?
- Hire a coach or mentor to guide you one-on-one
- Farm and become an area expert
- Take paid courses to upgrade your knowledge and skills
- Pay for effective methods of advertising to get more clients
- Add more services to your marketing plan for listings
What you don’t want to do is to get into real estate just so that you can carry a debt of extra expenses like a new car or a bunch of fancy vacations. This is an incredibly difficult hole to dig yourself out of, and you’ll spend many end-of-months stressing over paying your regular bills.
In entrepreneurship, controlling your unnecessary spending in the biggest key to surviving. What a lot of people don’t tell you is that many seemingly successful salespeople are barely scraping by and are often fighting massive amounts of debt. Don’t be one of them.
Your ego is going to be your biggest monthly expense if you don’t keep it in check. Even if you have a good year and earn more money than you ever have before, maintain your standard of living and continue to strengthen the systems in your business. Avoid vanity purchases.
If you’re going to spend money, make sure it’s on important things that can improve your business. Don’t be cheap when it comes to paying for tools and resources, systems, or mentorship that can directly improve your sales.
Level 9 – Scaling A Real Estate Business That Stands The Test Of Time
How to scale your real estate business for the future
By now, you’re hopefully running a well-oiled machine and your business is providing you predictable results. You finally have things figured out.
How do you know when it’s the right time to scale your business to the next level? For most real estate agents selling residential real estate, it should look like this:
- You’re marketing only to homeowners
- At any given time, you’re carrying at least 2-3+ listings on the market
- You’re juggling open houses every weekend
- There are constant buyer calls on your listings and you’re out most evenings showing homes
- You have no time and feel burned out even though you’re making good money
If this describes your business, congratulations because you’re in a great place. You’re making money and you have more business than you can handle at the moment.
The next natural step in your progression is to bring on another agent who can help you with your open houses and buyer appointments. As you know, juggling even several buyers at once can become very intensive and time consuming. This is why you’re going to assign buyers to an agent on your team. You will continue to focus on generating seller appointments to acquire more listings because it’s easier to carry 10 listings than it is to carry 10 buyers.
Undoubtedly there will be a lot of administrative work that goes on with the marketing of each listing and the documentation required for each closing. As we’ve discussed in a previous post, you want to always spend your time on activities that generate new business, not maintain existing business.
To address this, you can hire an assistant to handle the administration aspect. Many agents opt to use a VA (virtual assistant). This is someone who isn’t physically in your office, but who has the experience and can remotely help you keep your business organized and running efficiently. Generally, VA’s are cheaper than hiring an assistant to work beside you in your business. There are VA’s out there who specialize in helping real estate agents and require very little training to immediately make an impact on keeping your business running organized and efficient.
The key task for you at this stage in your career is to examine your business and determine how you can delegate different activities to other people so that you can strictly focus on finding more listings. In other words, you’re going to the bring in the business and your team is going to take care of it. But the business still lives and dies by your prospecting and marketing efforts.
To do this, you need to have an intimate understanding of the client’s journey from start to finish, and have checklists and standard operating procedures documented so that your hired work can have a clear set of objectives. One important part of creating and running a team is how you train your team members and hold them accountable. You’ll also need to have a mechanism to find agents who are the right fit for your team, and once again, understanding personality types is a good way to profile a candidate. If you’re following the DISC personality system, you will want to hire a buyer agent who is a predominant “I” personality with strong “D” characteristics.
As you continue to grow your business, you can expand your team by hiring more buyer agents and listing specialists. Running a real estate team can be the most rewarding chapter in your real estate story. Make sure you hire a coach or mentor who has experience in building teams to help you navigate the unique challenges of this aspect of the real estate business.
Congratulations, you are a top agent!
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