Realtors Attend School of Hard Knocks
NEW YORK (
) -- Six months ago, brokers like Miguel Arias of
in Newark, N.J., had a hard time keeping his sales team interested in working. Now, as the November deadline for the $8,000 tax credit for first-time homebuyers looms, many branches are abuzz.
Although
Freddie Mac
( FRE) says
there are still areas where prices are as low as they were in the 1930s, says Arias, a salesperson since 1995 and a broker since 2007. He is working diligently to attract new agents through cold calls.
New agents must be willing to work and learn at the same time, Arias says. They need to learn new regulations and changes in lending practices, which make it harder to find qualified buyers. He says proficiency in short sales and foreclosures is a must in this new environment.
At Exit Realty Faith, there are no desk fees; there's a 70/30 commission split, and you get 10% of the house's cut for recruiting new agents. That makes this franchise unique.
It's relatively easy to become an agent: After 72 hours of class time, you need to pass a school test and a state test within one year. It's a challenge, however, to stay an agent, as the fees and related costs can be a burden, especially in a down market.
Expect that pressure to prompt you to become a dual-career agent or leave the field entirely: Your family may want you to get a "real job," since the
pay is rarely stable
in the beginning.
To maintain an active status, there is a mandatory state licensing fee ($100). Membership dues aren't obligatory, but it's virtually impossible to practice real estate without them. Nina Kaeser, executive vice president of the United Association of Realtors in New Jersey, explains:
- For 2009, agents pay a prorated $340 to the United Association of Realtors. Of that yearly fee, parent company National Association of Realtors gets $115 ($80 for dues and $35 for a national advertising campaign) and the New Jersey Association of Realtors gets $100 ($75 for dues and $25 for the state advertising campaign). The UAR keeps the rest.
The Garden State Multiple Listing Services fee is $62.50 twice a year. That service allows you to show and view other realtors' listings.
Franchise fees can be paid in one lump sum, say, $100 a year or as a percentage of the commission on sales and rentals, depending on your broker.
Promotional materials may also cost you if the broker doesn't pick them up. For business cards ($75), land posters and advertisements, throw in another couple hundred.
A keybox fee is $72.50 twice a year. That's for access to the key that goes inside a lockbox. A lockbox costs $84.53, but is sold only to brokers, who may pass that cost on to their agents. Lockboxes are used to secure properties and allow other agents access without you actually having to be there.
You may be asked to purchase an Errors and Omissions insurance policy. That's professional liability insurance to protect you against suits. Depending on the coverage, it could run $300 to $500 a year.
Agents should upgrade their auto insurance coverage to increase their liability, since they will use their car to transport customers. That will also increase costs for repairs and gas.
If this is your main gig, health insurance could cost about $300 to $500 a month.
In addition, plan to spend $300 on a good GPS. You'll need a cell phone and want a home computer with Internet service. Not to mention industry conferences and functions, about $500 a pop for hotel and registration.
So how do you get into or stay in the business without having to pay all those fees? You could keep your day job and become a referral agent. Joining a referral agency costs $75 to $100 a year, and allows agents to keep their license active and make a few bucks to boot.
Calvin Wingo started as a Coldwell Banker
in 1987. You basically call in the client to a referral network, who then places that client with the appropriate broker's office. Once Wingo built his clientele, he became a full-time sales associate in 2003 with Coldwell Banker in New Jersey. He advises newbies to try this route as they develop a network.
also has a referral arm. Other referral services are run by individual brokers.
Edison Salazar, a broker at Century 21 Realty McCoy, started Edison Salazar Associates about three years ago to create a new profit stream. He says he's always looking for new referral agents.
Referral agents aren't realtors, though, because they don't pay the requisite fees. And while you do need a license, you cannot show or sell houses. It does, however, allow you to have an active license for a fraction of the cost. Because once a license expires, there's another set of fees, classes and tests to get it reinstated. Most people usually walk away at that point.
--Written by Cherella Cox, a dual-career agent with Exit Realty Faith, in Newark , N.J.
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