If you are a newly licensed agent, or if you have been in the business previously and are looking to restart your career, the alternatives to getting started (or re-started) boil down to three choices. Two of these choices have been around forever, but one of them is new and really different… maybe in a good way! Stay tuned to hear the details, as well as the advantages and disadvantages, of each of these three choices.
If you don’t want to read the entire blog, you can watch the video below!
I’m Mike Regan. I have been in real estate for 18 years. I was a top-producing agent (defined as selling at least $10M annually) for many years, then I became the founder and CEO of Relevate Real Estate, headquartered in the Raleigh area of North Carolina.
What If I Want to Do Real Estate, But I Do Not Want to Sell?
Ninety percent of this article assumes you like selling and you want to build your real estate sales business to maximize your take-home income. However, many people who get their license very understandably do not want to sell, and since that might be you, I’m going to take a moment to give you two ways to do real estate without selling.
- Choice A is to be a Licensed Assistant or Transaction Coordinator working for a busy agent or a team. This role is normally non-commissioned, you get paid for every hour you work, and it sometimes includes bonuses. People who are really good at these roles are in high demand! At Relevate Real Estate we have an expanded version of this role called Client Service Manager. We are always hiring great people for this role and if you are interested you can learn more by heading to this article.
- Choice B is to be a New Construction Onsite Agent. This role is really customer service, not so much sales because the buyers come to you. Normally this role is paid based on commission. If the neighborhood is hot you can do great but if the market is slow or your neighborhood is out of the way, the earning potential might not be great. Also, many builders usually require at least two years of real estate experience for on-site agents, so these jobs are not available to brand new licensees.
Okay, so those were two alternatives for real estate agents who are not excited about sales.
How Do I Maximize My Income as a Real Estate Agent?
We are going to shift gears now to the heart of this blog — agents who want to build their own businesses and grow their take-home income as much as possible. For these agents, there are three choices to get started. I will briefly introduce each of these three choices, then we’ll evaluate each according to six important business criteria.
Choice #1 – Buyers Agent
This involves working on a top agent’s team or with a brokerage that provides you with leads (names and contact information of people who are thinking of buying a home). The main advantage of this arrangement is that you immediately have potential clients to talk to. The disadvantage is that oftentimes these leads are not great so you will spend much of your time chasing or serving clients that never close, and you will not keep a lot of the commission. Furthermore, the clients usually belong to the team leader or the firm, so you can’t leave the company and keep these clients as the foundation of your own business.
Choice #2 – Individual Agent at a Traditional Brokerage
There are three types of traditional brokerages:
- There are big national brand name firms like Century 21, and Berkshire Hathaway and regional firms like Long & Foster or Howard Hannah. You will pay a large percentage of your commission to work for these large companies
- Most of these brand name firms are shrinking now and their agents are moving to low-cost, mostly virtual national brokerages like eXp, Fathom, and Real.
- Finally, there are smaller local versions of each of those, often referred to as “boutique brokerages”, and they are structured the same way as the bigger firms.
The main advantage of all these traditional brokerages is agents are treated in a very “hands-off” way. You will have complete flexibility to do business any way you want to. The main disadvantage is that you have to figure out how to grow and manage your business on your own; there is not much training or support beyond the basics of how to fill out the standard contract forms and stay out of legal trouble while serving clients.
Choice #3 – Business System Brokerage
A Business System Brokerage is a proven way to grow your real estate business, including continuing marketing and client service support. This approach is not offered by any of the traditional brokerages. The only firm I know of that offers this is our firm, Relevate Real Estate.
As we dig into the details of these three choices, I promise to be as unbiased and objective as possible because my only goal is to help you find the right fit for you. So, especially when it comes to the Relevate approach, I will be sure to give you all the disadvantages as well as the advantages.
Evaluating The Three Choices According to Six Business Factors
So, let’s dig into each of these three choices for agents who want to build their own businesses, in detail, based on six key factors:
1. Training for how to do real estate
2. Training for how to get clients
3. The cultural and team environment
4. Continuing marketing support
5. Continuing client service support
6. How fast and how big you can expect to grow your business and your take-home income
1. Training For How To Do Real Estate (How to Serve Your Clients)
Wherever you go, the first step is getting trained in how to actually do real estate, in other words, how to legally help all those clients you will be working with.
As a buyers agent, you will normally get really great training for how to help buyers because the leads you will be given are potential buyers. In most teams, all seller leads belong to the team leader. Although the training for working with buyers will be really good.
At the brand name traditional brokerages the real estate training will be mostly about how to fill out the agency and offer forms, and how to not get the brokerage in legal trouble. When it comes to the rest of client service, you will need to learn on your own or pay a mentor to help you. When you run into issues during a transaction hopefully, the broker-in-charge will help you, but be prepared to wait in line because there are usually over 100 agents per BIC in larger firms.
The low-cost traditional brokerages like eXp and Fathom are not designed to support or train newer agents. They are really better for agents who already have experience and want the lowest-cost place to hang their licenses.
The traditional “boutique brokerages” are usually very similar to the franchise and low-cost brokerages, but sometimes you can find a brokerage owned by a really great agent who will take you under their wing and teach you everything about real estate. That is amazing if you can find it, and is definitely the best real estate transaction training among the traditional brokerages.
At Relevate, the training for how to do real estate is good and thorough for both buyer and seller transactions. However, there is a reason Relevate can afford to invest so much more in newer agents, and that is because we only accept the highest-potential new agents and there are annual production standards: $2M the first year, $5M the second, and $10M+ after that. So, when agents produce like that, Relevate gets paid back for providing more in-depth training.
2. Training for How to Get Clients (AKA Lead Generation)
Next, you need training for how to actually get clients so you have clients to work with. Being able to get and convert buyer and seller leads is what makes, or breaks, every real estate agent. Every agent can learn the basics of how to fill out paperwork and serve clients … but if you can’t get clients to agree to use your services, you will not have any money. That is not good for your future in real estate. Because this topic is so important, we will dig into these details a little deeper.
If you decide to go the buyers agent route, you will get buyer leads; the names and contact information of real people who allegedly want to buy a home. That is great, and is half the battle. Next, you will need to know how to convert those leads into clients. The team leaders or brokerages who give you those leads invested a lot of money to get them for you. They either bought them from lead sellers like Zillow or Realtor.com, or advertised for them on the radio or social media.
As a result, as a buyers agent, you will get great training for how to convert buyer leads into clients. The first part of that is to call the lead immediately because often they will go with whoever calls them first. Then, you try to get the buyer to schedule a showing with you, so you can meet them in person and bond with them. The other key part of lead conversion is to stay in touch with all the lukewarm buyers who are not ready yet… because one day they will be.
If you can convert one in 30 purchased leads into a closing, that is really good. According to industry records, last year there were 50 million leads sold to agents, but there were only fve million closings and 75% of those used a referred agent. In other words, 40 leads were sold to agents for every one home that was sold. Which means the leads you receive were also given to an average of 40 other agents. So now you see why it is so important to call them quickly.
Now, SOMETIMES you can find a team leader or brokerage that actually has really high quality leads. Maybe they have a deal with a corporate relocation company like Graebel. Maybe they have more referred clients than they can handle. Or maybe an agent like my good friend Ellen Pitts has an amazing YouTube channel that brings in buyer leads. In those cases you might close a much higher percentage of leads, like one in five or even one in three. However, in those cases of really good leads, be prepared for the team leader to keep a higher percentage of the commission, like 70%, because what they are giving you is much more valuable than a normal buyer lead.
Traditional franchise brokerages either offer very little training in how to get clients or they offer surface-level training on a smorgasbord of many different approaches. This will include farming, calling FSBOs and expired leads, Search Engine Optimization, pay-per-click advertising, cold calling, direct mail, etc.
There is normally no data presented about which of the many methods is most efficient in terms of money and time in, versus take-home income out.
Whichever lead generation method you choose, be prepared that to be successful you will need to go deep into techniques and dialogues specific to that approach and invest a lot of time and trial and error, to become good enough to actually get enough leads to live on. Do not spread yourself too thin. Pick one or two methods at the most, and invest the time and effort to master them, or you will not get the results you need.
One final thought about lead generation at traditional brokerages. The big-name, national companies like Century 21 and RE/MAX talk a lot about brand name recognition, and it is true their names are highly recognizable. However, brand recognition does not equal brand preference. And since, for example, there is no consistency in how various RE/MAX agents deliver their service, there is no defined “RE/MAX” brand experience for consumers to prefer. As a consequence, most experienced agents will tell you that clients choose an agent, not a brand name. The conclusion is, do not count on brand names to help you get clients.
The Relevate Business System
This approach focuses on one type of lead generation: doing business by referral. The advantage is Relevate’s training goes very deep into every technique needed for success using this lead generation method. Relevate has its own custom CRM software system that organizes you and reminds you what to do next, and once you master this approach you can expect to close two out of every three leads.
The challenge at Relevate is that you need to be comfortable doing business with friends. You have to enjoy getting out and talking to and seeing people in person, and you need to build your own sphere of influence. Relevate will teach you how to do that, but like every other lead generation method, it takes time and work to become successful with it. Also, Relevate does not offer any training or support in any other lead generation methods. That does not mean you can not do them. You just will not get help from Relevate to do so.
3. What is the Cultural and Team Environment?
An important factor for most agents is the cultural environment of a brokerage.
As a buyers agent, you are on a team. A good team leader will foster healthy and motivating competition. Sometimes, however, it can feel like a little too much competition. For example, if the same lead is sent to multiple team members at the same time, and everyone is glued to their phones to make sure they claim it first. In addition, some team leaders give more and better leads to the agents who have the best history of converting those leads into commission checks. That is an understandable policy, but it can create hard feelings among the team.
In a traditional brokerage, management does their best to foster camaraderie among the agents and a sense of community, and many do a remarkably good job. But, that can be a difficult task for two reasons. First, in a traditional brokerage, each agent uses a different database management system, not connected in any way to other agents’ databases. Therefore, there can be a lot of overlap between client bases. As a result, in some cases, two or three agents from the same office end up competing for the same client. This competition makes agents less likely to share ideas and information with each other, and can even result in hard feelings and some unhealthy types of competition.
In the Relevate Business System model, everyone uses the same connected database management system, and any overlaps are flagged the second an agent adds a new person to their sphere of influence, far in advance of any referrals and resulting transactions. Because overlaps are discovered immediately, before any potential commission is involved, they are almost always resolved amicably, like “Hey, you take this person, I will take the next”. As a result, the possibility of competition for the same clients is avoided, and agents feel good about sharing ideas and helping each other.
The cultural challenge at Relevate is that many of the most productive agents are just not around the office very much. The Relevate marketing and client service support free them up to do other things besides work all the time, and they are out doing those other things. For the sake of our newer agents, we wish more top producers were around more often.
4. Ongoing Marketing Support
The next criteria by which we are evaluating different places to start your real estate business is marketing support. This is not about teaching you how to market to prospective clients, this is helping you actually do it consistently and with high quality.
If you start as a buyers agent, some team leaders will invest in a service to call and confirm the leads to make sure they are real and high quality, before they get to you, which can save you a ton of time. And maybe even more importantly, some team leaders will also help you keep in touch with those “someday maybe” buyers by doing quarterly or even monthly emails or mailings. Be grateful for those team leaders because that will definitely help you sell more homes.
As an individual agent at a traditional brokerage, in general, it is up to you to think of, plan, and execute your marketing ideas. Some managers may offer you some free hours of help from the office assistant, which is great. Unfortunately, most agents are either too busy with client work to focus on marketing or do not have enough money coming in to afford marketing, so it just does not happen consistently and the business suffers.
In the Relevate Business System model, the marketing department plans marketing campaigns each year in advance for each upcoming year. They are designed, printed, and ready to go for the agents, who can then choose to participate or not. The cost is low because they are done for all agents at the same time. The agents are fine with that because their spheres of influence do not overlap. So agents get consistent marketing for a low price without any work required on their part. That obviously brings them more clients.
The two disadvantages are, first, although monthly campaigns are voluntary participation based, agents do pay for all the campaigns in which they participate. Second, if an agent wants to do their own unique campaign the marketing department can help them with it, but that campaign will cost the agent relatively more than the pre-planned monthly campaigns because the fixed costs will not be shared by all the other agents, because that agent is the only one doing that one unique campaign.
5. Ongoing Client Service Support
The fifth factor in deciding how to start your real estate business is the Client Service Support provided by the firm or brokerage This factor is important because it allows you to focus more on gaining new clients instead of being too busy delivering the service yourself.
If you decide to start as a buyers agent, your team leader will probably provide a trained transaction coordinator to handle “contract to close” tasks, to free you up to spend more time converting leads, showing homes, and writing contracts. Depending on how much of the commission the team leader keeps, you may have to pay for this, or the team leader may pay for the transaction coordinators. Either way, this is a win for everyone. The big value in a team is created when leads are converted. That is the hard part that takes the most skill. If you are good at that, it is in everybody’s interest, especially yours, to spend as much time on that as possible.
Some traditional brokerages also have trained transaction coordinators on staff ready to help you and again depending on your deal with the brokerage either you or they will pay for it. The advantage is that you can spend more time doing the activity that creates the most value for you and your brokerage, lead generation, and conversion. It is totally worth it if, while the transaction coordinator is doing the contract to close tasks, you are out there getting more clients. This is just smart business, you will not grow past a certain point without this kind of help.
However, at a traditional brokerage, when you get even busier, you will need to hire, train, and manage your own transaction coordinators. When you get even busier you will need to become a team leader yourself and hire buyers agents and invest in providing leads for them, because you will not be able to handle all the client work yourself. This works for some agents but the disadvantage is that an agent who was great at lead generation has now become a manager and a lead buyer. Because of the time and expense and the need to pay buyers agents 50%+ of the total commission to keep them, you end up working 60+ hours per week and not actually taking home a lot of money.
Relevate provides an advanced version of a transaction coordinator called a Client Service Manager, or CSM. These are fully licensed agents who are trained to take everything off the plates of busy agents other than lead generation, lead conversion, and contract negotiation. However, the agent does not get to “hand off” the client to the CSM, they both continue to work with the client together, very similar to a doctor and a nurse, each doing their role, as a well-oiled team. As a result, the agent can focus on getting more clients and also have a balanced life. The client feels they got two agents for the price of one, which is never a bad thing.
The challenge of this part of the Relevate model is that, although you can use as much or as little CSM support as you wish, you do have to pay for this help. Also, you have to learn to be a good teammate with the CSM and learn to trust someone other than yourself to help take good care of your clients. Relevate provides plenty of training for agents to achieve this, but that is still a challenge for most agents while they are learning.
6. How Fast and How Big Can I Grow My Income as a New Agent?
Okay, so we have looked at each potential way to start up your real estate business. Let’s look at how fast and how big you can grow your business and income in each situation.
Being a buyers agent is the fastest way to start working with actual buyers and so is also theoretically the fastest way to start earning income, assuming you are good at converting those buyer leads. So that is the advantage. The disadvantages are, first, the clients do not belong to you (in most cases), so you are not building a client base to take with you when you want to go out on your own. Second, you will not learn to work with sellers, and listings are kind of important in real estate. Third, at least two-thirds of those who start as buyers agents seem to get addicted to the leads being given to them, and to the hustle of chasing them. These agents can not escape because they are not willing to step out as an individual agent and learn how to generate their own leads, for themselves. So they get stuck only earning 50% of the commission, or less, for the rest of their careers. Even worse, since they can only delegate contract-to-close, they work tons of hours.
At a traditional brokerage, you can grow as fast as you get great at one (or maybe two) lead generation and conversion methods. Once you do get going though, you will soon hit a ceiling of how much you can do all by yourself, and that is when you will need to learn to be a manager so you can effectively hire, train, and lead a team of transaction coordinators and buyers agents. The advantage of this is that you will close a lot of volume and other agents will admire your success. However, as we discussed earlier, the disadvantage is that this team structure requires a lot of working hours from the team leader, and the expenses are very high. Some team leaders even lose money if the revenue from the team does not cover all the costs of generating leads.
If you are investigating working with a traditional brokerage, I suggest asking them this question: “Let’s say I want to be a top-producing agent selling $10 million or more annually, but I do not want to 60+ hours a week or become a team manager. Do you have any way to support me or help me so that neither of those things will happen to me when I get to $10 million?”
I would love to hear what they say because I don’t think traditional brokerage offers a good answer to that.
When it comes to how fast and how big you can grow in Relevate model, the biggest advantage and biggest challenge are actually the same. Relevate only accepts agents who have the ability and determination to grow their businesses to $10M+ in regular annual volume. If you have both the ability and the determination, we have the system that can help you get there from zero within two years. Now, not everyone gets there in two years, so our standards are $2M in the first year, $5M in the second year, and $10M in the third year. Now, again, we do have some that get to the $5M mark and not quite to $10M in the third year, and as long as they are working as hard and as smart as they can, we will continue to support them toward the $10M annual goal.
Okay, so right now, as you think about what I just explained, you are either excited and pumped and want to be in that situation with those growth expectations! Or you are thinking … can I really do that? Or more likely, do I even want to do that?
Now, if part of your thinking is “Hey Mike, I don’t want to have to work tons of hours for the rest of my life just to sell homes and make money. If that is what it takes, I don’t want it.”
Well, that is why we have the marketing and client service support. To free you up so you can have a great business and a great life. Think about it, most business owners, when their business gets successful, work less, not more. That is how it should be in real estate too. And that’s what the Relevate Business System is set up to do. But in the beginning, you do need to be willing to work hard at working smart. We will teach you if you want to learn.
7. Buyers Agent, Traditional Brokerage, or Relevate Business System?
As a new agent or an agent looking to restart your real estate business, you can either be a buyers agent, join a traditional brokerage, or join the Relevate Business System.
Your choice comes down to what you want to accomplish in your real estate business, and how you want to do it. How much money do you want to earn and how important is that to you? How important is work-life balance for you and your family? How important is it to do things your way, as opposed to learning a proven system?
The fastest way to get started and get a paycheck is by being a buyers agent. But you will not learn how to generate leads or work with sellers, and you will not be building your own business. Making the leap from being a buyers agent to having your own real estate sales business can be tough, but it is definitely doable for a hardworking, smart person like you.
Joining a big, established brand name traditional brokerage is still by far the most popular choice. You will have complete freedom to invent your own business systems for finding and serving clients. That can start out exciting… but can get frustrating if you do not get traction. When you do get traction you can find yourself in a situation where you are working more than you want to, or having to become a manager and build a team.
The working-by-referral focus, production standards, and teamwork approach of the Relevate system can be exciting if that is exactly what you want. If it is not the right fit for you, it would definitely be best to jump into being a buyers agent or joining a traditional brokerage.
If you are an agent in the Triangle Area of North Carolina area and you’d like to visit with us to learn more about Relevate Real Estate, click HERE to set up a time to talk with us.