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We’ve all been there on our real estate path. Today we discuss the difference between calling ourselves a professional and actually being a professional.
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RTRE 63 – Being a Pro vs. Saying You’re a Pro[music] [Chris] Welcome to re:Think Real Estate, your educational and hopefully entertaining source for all things real estate, business, news and tech. [Christian]: I am Christian Harris in Seattle, Washington. [Nathan]: Hi, I am Nathan White in Columbus, Ohio. [Chris]: And I am Chris Lazarus in Atlanta, Georgia. Thanks for tuning in. [music] [Chris]: Hey everybody welcome back to re:Think Real Estate. Chris Lazarus here. Here with Christian Harris and Nathan White. Nate you’ve got a bone to pick with some people. What’s going on dude? [Nathan]: I mean call it a bone or not. But so I was just recently on a trip with some buddies of mine. And I was ranting. Or we were individually ranting I should say, about our industries that we respectively work in. And of course I got some puzzled looks and different things and, you know, about my rants. And ironically enough, one of the guys on the trip called me the day after we got back.
And he says “I have new respect for what you were talking about.” I said “What do you mean?” He says “Listen, you know, my…my aunt, you know, she…she passed away and…and one of my family members is selling her house. And the agent that my aunt hired said ”Listen I don’t really want you telling anybody that somebody passed away in the home. Yada yada yada.”” The agent responded with “Trust me this is what I do for a living.” My friend then said “Please ask me how many houses has she sold.” I said “Well Larry how many houses as she sold?” He said zero.
And he said “I totally get it.” He said this individual, you know, is making it appear I guess if you would, that they’re an expert in our industry and, you know, what we do, but they’ve not sold a home. They have a license. Right. They’re a realtor. Right. But they’ve done zero business. So again there…there is there’s some delineation here between who’s an agent who is a licensee. Right.
And I get it. Just wound up. I mean I get it, you know, but I don’t I also don’t get it. I was taught “Fake it til you make it.” When I started. And I don’t…I don’t think that’s the way to go. I think there’s a lot of other paths to go through education and training and certain things, that I believe, you know, yourself and Christian both provide. But what would you two tell an agent in this situation? Right.[Chris]: Oh I wouldn’t say…I would tell the agent “Look don’t tell people this is what you do for a living until you actually make a living off of it.” [Nathan]: Christian? [Christian]: I mean my whole thing…because I was kind of taught same thing. Kind of “Fake it til you make it. Yo here’s some scripts to make it sound like, you know, what you’re talking about that you don’t.” What I tell my new agents is like, you know, “Don’t…don’t come out and say “Hey I’m brand new. I don’t know what I’m doing.” But positioning in such a way where you’re saying “Hey, you know, I’m working closely with my designated broker. If I don’t have the answer I can get it. You’re getting two for the price of one. It’s not just new agent flailing out there trying to pretend like they know what they’re doing.””
So, you know, essentially don’t lie but also don’t come straight out say “Hey I don’t know what I’m doing and I have no confidence. You know, I’m probably gonna [censored] up and [censored] over your listing, you know, I’m a seller.” But at the same time don’t…you merely like you yeah you have all experienced in the world when you don’t. because it’s not hard to find out information about how experienced or how long an agent’s been licensed.[Chris]: Doesn’t even require an open records request. You can just look it on Zillow. [Christian]: Yeah I mean and…and…and that’s it. And it may not be the case with every real estate firm. But for us, you know, we closely work with our new agents to make sure they’re providing the best experience. They know what they’re doing. They’re not, you know, floundering, you know. And I know business brokerages are supposed to do that. [Chris]:Floundering. Like flopping around flopping around [laughter]. [Christian]: Yeah flopping around the land. [Nathan]: Like a fish out of water is what it looks like. [Chris]: Yeah. [Christian]: It’s hard…it’s hard for a new agent to mask that when, you know, you don’t really know how the process works, and you don’t really know the direction you’re supposed to be going and what you’re supposed to be saying to your client, you know. [Nathan]: Wouldn’t this be an interesting industry change if you had to have some intern or externship with so many transactions under your belt before you were to able to go out and represent a buyer or seller? [Chris]: That makes sense. That’s what we do for new agents. They have to have six transactions under their belt before the training wheels come off. At a minimum. And for the first six transactions they’re heavily mentored through them. So they’re…they’re not alone. They have people like their first deals they’ve got a mentor that’s going out. And…and working with them. Teaching them how to do the consults for the buyers. And for the listing consult. So that by the time that agent gets ready to go out and be on their own, they generally have a great idea of what they’re doing. [Christian]: Yeah well that’s a great way to do it. I mean I love how you formalize that. Obviously that takes, you know, a brokerage’s, you know, certain amount of experienced agents and size. And, you know… [Chris]: Yeah I’ll let you know when we get at that level too. [laughter] [Christian]: It is a structure. Because you could say technically the industry requires it. but, you know, when the laws basically says, you know, “Additional designated broker oversight for the first two years” like that’s really loose. And it’s not, you know, it’s not really…there’s not really a standard for that. Even though technically new agents are supposed to be more heavily monitored. There’s no…there’s nothing in place a, you know, firm to firm, insuring that happens. [Chris]: Yeah I mean there…I was talking to somebody the other day he was telling me about a person who’s making a switch from another firm. And this person was also a recruiter. And he was like “Yeah this person brought about a hundred and forty people over to the brokerage. And about a hundred and twenty of them left.” And I’m like “What?!” Like I don’t even want to turn that number. Like I’ll bring ten and one will leave. Like I’m not gonna turn a hundred and forty people to get twenty.
It’s just ridiculous the lack of oversight that some of these brokerages put into actual retention and training and development. It’s literally taking the pickle, throwing it at the wall and seeing which one sticks.[Christian]: Sure. Well I mean and it’s well-known, and I’ve been saying this for years. You know, like most firms, you know, most of the industry is just focus on numbers. Like all we want is people in the seats. Licensed agents, you know. We’re not really concerned about retention and training and empowering because there’s gonna be, you know, a dozen new agents with, you know, dollar signs in their eyes waiting to take their spots. You know, when…when they fail. [Nathan]: It will be like “Oh let’s look at our checklist. You have a license. Check. You have a pulse. Check. Oh yeah good. You can…you can join us.” And uh, you know, I often get the question “Hey what…what led to your success as an agent?” I don’t want to call myself successful but I do well. And I know what I’m doing now. And I think a huge part of it and I will I will tap the shoulder if you would of the team lead, Tim Reel [phonetics], that I had at Keller Williams when I started, is…is that I…part of it…
Let me rephrase this. I viewed it as an internship. Right. I knew I was gonna pay a steep cut on my team splits. And KW split. But I also knew I was gonna get an education. And I wasn’t standing alone. I wasn’t by myself. And I was constantly getting feedback or more importantly I was getting mentorship. I think that’s what a lot of people want.
And…and that helped me. And then when I did want to go out and do my own thing and kind of stand on my own feet as a solo agent, I had the capability to do that. So, you know, that’s always been my win at KW. Don’t…you’re not a technology company. You’re a training company. KW gave me some great bones. You gave me a great foundation.
So any agent that is potentially listening to this, that’s struggling or is thinking about coming an agent, I would tell “You…you want to do well? Go be on a team. Go…go learn.” I don’t…I don’t, you know, that’s just me.[Christian]: And I say you’re pretty fortunate because, you know, I’ve heard, you know, I’ve heard many things as far as, you know, people kind of getting on team. I mean KW is kind of what they’re known for. You know. But it’s a…it could be very hit and miss. Because, you know… [Nathan]: Yes. [Christian]: I mean you could be, you know, you can be fortunate where the team lead is actually interested in mentoring and training, in empowering their team members. But I’ve also seen people that, you know, get on teams and all this is a call center. And they were promised “Hey we’re gonna train you. We’re gonna teach you this stuff.” And they’re not learning anything except for making sales calls and scripts.
You know, it could be very…very hit and miss, as far as the team structure goes and the attitude of the leadership.[Nathan]: Same as I tell a potential client. Interview realtors. I tell a potential realtor and if you have a lot of teams. [Christian]: Yeah. [Chris]: Interview teams. Interview brokers. Interview office staff. Interview whoever you can. I mean… [Nathan]: Interview your clients. You don’t necessarily want all your clients that come to you. [Chris]: No stay away from my clients. You’re another agent. I don’t want you talking to them. [laughter] [Christian]: Yeah I am gonna interview your clients. [Chris]: So…but this is…this brings us back to like a great point. Right. Because you’ve got three types of agents. You’ve got the full time agents. Right. These are the people that are in here all the time. These are the people that this is how we make a living. Then you have the part-time agents which I don’t have an issue with part-time agents. Part-time agents they’re putting in the hours. They may not be in at 40, 60, 80 hours a week. But they’re in it 10, 20, 30 hours a week. And that’s enough so that they generally understand what’s happening in the industry. And they’re able to build and maintain a client base and, you know, do a few deals every year.
Then you’ve got the problem. The last type of agent it’s the sometime agent. The agent that hangs their license. They’re just a licensee. They’re not in it full-time. They’ve got another job and they’ll sell a house whenever their family member comes to them and says “Hey, you know, you’re a real estate agent right?” “Yeah. Yeah I am.” And they’re really not. And they…they don’t fully understand what’s going on. And when they take a deal that’s when things go sideways.
So I think the clarification is what kind of agent do you want to be? If you’re…if you’re coming into the industry are you going to be a sometime agent? Or are you gonna be a part-time agent? Because if you’re…if you’re just dipping your toe in the water and this is new for you, you have to be a part-time agent. If you’re anything less than that you’re never gonna learn enough to be successful.
You know what? You know what? We can just steal from the Game of Thrones on that. Because, you know what we say, to us sometimes agent…not today.[Christian]: Not today. [Nathan]: Not today. [Christian]: What I was gonna say so…so that’s as we jumped into this, you guys are like “Hey let’ talk about this thing.” “I don’t know what you’re talking about.” So…so we talked about licensee versus an agent that’s [crosstalk]. That’s what you mean? [Nathan]: Yes. [Christian]: I got you. I think… [Nathan]: I think I’ve told the story once. I insulted a woman. She’s…we were having a conversation. [Christian]: You insulted someone? No way. [Nathan]: Yes. And she said something like “Oh you’re real estate agent?” And I said “Yeah.” And she said “Me too.” And I was like “Great. How many houses did you sell last year?” And she’s like “Four.” And I was like “You’re not an agent.” She got all upset. I was like…what…like…I don’t know. [Christian]: You have a way with words Nathan. [Nathan]: Like I mean it is what it is. I mean I…yeah that’s right. But there needs to be so many changes in our industry. And, you know, again we can talk about the barrier and entry. Yeah. Yeah. I do want to talk about two things on this episode, I guess. If we want to just get going and keep going. [Chris]: Well let’s keep going. [Christian]: But before we get away can I say something? [Nathan]: Go. Get away. [Christian]: Get away. So to your point Chris about the licensee versus an agent and the three types of agents, and it’s interesting. It seems like there’s so many new agents that get into it just to be a licensee. It’s basically like “Hey I can make, you know, a lot of money just, you know, accidentally selling a house now and then, to…to a friends.” So they’re not invested in learning or building a career. They’re kind of testing the waters. And memorably they fail and realize, you know, usually it’s too late. “Hey this actually cost me a lot of money and I’m not really willing to put in the time. And real estate doesn’t work”. You know. [Chris]: It’s…it’s like people come in here and, you know, you can go and get a real estate license and you can go and sell your own home and you can buy your next home and you can earn a commission. Great. Yeah it offsets your down payment. [Christian]: Sure. [Chris]: But you factor in that you do that once every ten years and it’s…it’s really not worth your time. [Christian]: Right. Well I like your distinction between basically, you know, the part-time, who is still again with the time they have, they’re investing and learning. Versus the “I’m just sitting here with my license doing other stuff until something comes my way. And then I flattened my way through it.” And because I think it’s a big difference. I think a lot of people in the industry inflate the two.
Like I was having a conversation the other day with, you know, some agents from another indie brokerage here in town. And I love that brokerage but they’re very…very high standards on who they’ll accept. Like if three times a week there or you’re gone. You know, you have certain production what are you gone.[Chris]: Good. [Christian]: I think that’s great but that means… [Chris]: I wish more brokers did that. [Christian]: But that means that they don’t do part-time agents. And, you know, this particular agent I was talking to, was basically cuckooing part-time agents. I was like listen “The people that can do it full-time like you you’re basically taking it elitist stance, because people have kids or they have other jobs or, you know, it’s just not the priority in life to spend 80 hours a week trying to make real estate work.” And I think there’s room for that because just because you’re part time doesn’t necessarily mean you’re inept. Or, you know, don’t know how to do real estate. It just made you’re focusing on other things. You know. [Chris]: Wait really? Because I thought whatever my preconceived notions were, we’re correct. [Christian]: But I’m saying I think there’s a difference. Because part time agents can invest in their training and knowledge and experience just as much as a full time. But that’s a lot different than someone who just is seating on the sidelines waiting for real estate to come to them. [Chris]: As long as they’re putting in the hours. And…and it’s actually interesting that you bring that up. Because there was a study done by a university talking about entrepreneurship and going and creating your own self-employed income. And the success rates. And somebody who does it part-time at first, believe it or not has a thirty percent greater chance of success rate, long term. Than somebody who just dives in off the deep end full-time.
So you can have somebody who’s coming in part-time 20 hours a week and as long as they’re working those 20 hours there’s a greater chance of success that that person is going to be a long-term successful real estate agent. Then somebody who comes in off the bat, full time and has one way to go.[Christian]: What…it’s interesting. Is that because they’re runways longer because they have a supplemental income. Or something as opposed to… [Chris]: Yeah. The caveat with this is that those people are actually putting in the work. Right. They’re working 20, 30 hours a week. [Christian]: Sure. Right. They’re not sitting around at their home office watching Netflix and occasionally making a call or something. [Chris]: Yeah. [Nathan]: Well I mean aren’t there plenty of full-time agents who work a lot of part-time hours? [Christian]: That’s true. That’s a good distinction. They usually don’t make it either. [laughter] [Nathan]: I mean I know plenty of full-time agent, who I mean it’s like “[censored] if you’re full-time than you suck.” [laughter] I mean it’s because you look at their sales history. Like great you sold six houses last year. But you’re full-time. And then there’s the part-time agent who sells twenty five a year. Right. So… [Christian]: Again that comes down to your hustle and your focus. Because I’ve seen full-time agent that, you know, that are there full-time, but they’re mentally…they’re all over the place. [Nathan]: Yeah right. So I, you know, I don’t like to get into this, you know, “O you’re full-time, part-time.” Again sales cure is all, where I come from. And if you have a history you have a history. That’s what I…that’s what I like to look at is, you know, it’s what matters. If somebody says “Well I’m a full-time agent.” Well great you’d be a full-time agent with [censored] sales. Right. I mean that’s easy. And so I’d rather say Hey you’re an agent with a great history.” That…to me is important. That’s where we can delineate the that whole thing.
Is…let’s not get into full-time, part-time. Yeah, the sometime, I don’t want to get around. But let’s just get into “Hey what did you…” I tell them “What did you sell?” Ask them what did they sell last year. What they do. Which may be and, you know, part of this I wanted to ask in this kind of segues into the other side of this, is does area specialization in a normal market, like where I’m at, in Columbus, does that matter anymore due to the amount of data that is available? My argument would be “No it doesn’t matter.”[Chris]: I would argue you, against that. [Nathan]: I figured you would. Yeah Christian too. [Chris]: Yeah. [Nathan]: But that’s just me. So… [Chris]: And I think it comes down to the level of service that somebody wants to bring. If…if you have like three agents going up against one neighborhood, and one agent knows everything about the neighborhood, all the history. Everything that has taken place there. Everything that’s going in. All the development that…that’s happening. Then that agent can sell not only the house but also the story.
And if you could sell the story, you know, that…that’s the best way to market right now. Whereas if you have two other agents that don’t know that info, then they’re just…they’re either competing on price or they’re competing on marketing ability.[Nathan]: All right go back in there. There’s an agent you left out of this. What about the agent that has the capability to use their commission as leverage on a deal? That’s not in the area. [Christian]: I mean I think it… [Chris]: Where would he use that laverage? [Nathan]: Towards closing costs. Say…saying…because in our market you can do that. Right. Say…say I specialize in Dublin. Right. Ohio. But I want to go to…I got a client who want…your potential client who’s interested in buying in New Albany, that yeah I’ve done deals over there. But I’m competing against a New Albany realtor. And…and I can offer…say Christian’s my buyer. I can incentivize him to use me because I can say “Hey you’re gonna buy $500,000 home. You know what I’ll do? I’ll take three thousand dollars on my commission and credit that to you towards closing cost and pre-paids and closing cost.”
Now in a competitive market I’m gonna choose the agent that’s got leeway to give me something. Or that could bridge appraisal, help with closing cost or something like that. Over somebody who says “Oh I specialize in an area.” That’s just me and my train of thought.[Christian]: I mean the specializing in an area, I…I’d say the value really depends on which side you’re on. Like…like when I’m on the listing side I think it like I specialize in West Seattle. But I do other areas of Seattle in the suburbs. Like I remember specifically like I helped a military friend of mine sell this place and well the suburbs here.
Now I didn’t…I’ve never sold a house in that area. And so one of the questions I had to ask is like “Hey tell me about your neighborhood.” Like “There’s a main…there’s a main road going through here. Our house is on this side of it. A lot different than this side.” Because I can look at the numbers all day long but as the stats don’t tell me, you know, why people move to this area. Or what the demographics are. Or who the ideal buyer is gonna be.
You know, so you’ve got to do a lot more digging and you actually know the area for that. And on the buyer side I don’t think that’s as important. I mean it can be. You can leverage it. but, you know, you’re not really…I think it’s more important on the seller side. Because you’re gonna use that information, that knowledge of the neighborhood to target that ideal buyer.[Chris]: And I think… [Christian]: What to focus on. [Chris]: Yeah and Nate to your point, I think you’re you’re kind of comparing apples to oranges right now. Because you’re…you’re talking about two completely different value propositions. That the agents can base on. And, you know, all of them work. Right. There’s a million different value propositions on how you can build your business. Whether you specialize in historic or new construction or this one area or whatever it might be. Or you…you leverage some of your commission income to incentivize, you know, the client base.
You know, you can pay. It’s one way or another. If you want to take some of your commission and do that on the back end through a rebate, you know, who am I to judge? All of them work. They’re all different business models. And I don’t call one discount versus one traditional. They’re just different business models. It just depends on what’s right for the individual agent. And what’s right for the individual agent has to line up with the broker that they’re with. Because not all brokers will allow their agents to do a commission rebate. Or to donate some towards closing costs. Whatever that might be.
But it has to…like they all work. Like one agent may have a value proposition. And their proposition may be “I know everything about this area. Use me because I’m gonna make sure you’re fully informed.” And then another agent may say “Well we’re not as familiar with the area but we’ll make sure that you have this financial instead of…” And then it’s just up to the buyer. Right. The buyer may want money or they we may want their choice to be 100%. So it can go either way.[Christian]: And I’d say I mean you can’t you can kind of think about in terms of like your commission is one of the terms of the contract. And so it’s something that you could leverage just like you can any other terms, you know. That’s something that you directly have control over versus, you know, the buyer. But, you know, options. [Nathan]: Right. Just curious. I mean you see it often. I mean…and I’ve done it. but, you know, we’ll waive appraisal. And, you know, I will use my commission as a bridge in case that commits…that appraisal comes in short. And I’ve had plenty of times. It never has. We’ve been fine. I’ve had times where it comes in short and hey that’s fine too. Again it’s…it’s as much for the seller when I represent a buyer to offer, you know, to say “Hey I’m willing to use my commission as a bridge in case it doesn’t.” Because then they know they’ll, you know, they’ll get that money. So… [Chris]: I think that that’s something to be careful about. So you’re… you’re very well versed in that Nate. But for your average agent, like if they’re going into putting their livelihood on the line, like they got…they’re gambling on themselves. [Nathan]: Yeah they are. [Chris]: And…and that’s what you’re doing. And you’re good. And I would probably gamble on myself if I had to take the bet. [Nathan]: I like it. [Chris]: But I think that there’s a lot of agents that for general advice…Don’t do that well. [Nathan]: Yes. You also…you got to remember I am fair. I keep 100% of my commission. Truly 100%. Right. So, you know, I don’t have a split. So you got to think on a normal agents, say they’re on a 60/40 split, you know, they’re already taking a hit. Right. So they’re potentially gonna take a bigger hit? Like, you know, they do have to be cautious. I…I have a little…I have a lot more leeway. Let’s be honest. But… [Christian]: Sure. Not all the firms are going to support that. You know, so… [Nathan]: No they’re not. [Chris]: And you know as general…for our audience, as general advice I’m gonna say don’t do that. Mainly because I don’t know, you know, if I’m talking about the average agent, right. [Nathan]: Right. [Chris]: They’re not gonna be at that level to where, you know, I would feel comfortable just saying “Hey go out and put your commission on the line.” Because guess what? They do that. They say “I’ll bridge the gap on an appraisal.” And the appraisal was four percent off instead of three. [Christian]: Well yeah… [Chris]: Now what’s gonna happen? [Christian]: I mean you should always have…always have a cap, you know, as far as how far you’ll go. You know, I mean I think in general, the principle I like. Because you’re basically partnering with your clients, with skin the game. As opposed to you like “Hey, you know, here’s all the terms. If it doesn’t work out, well I’m fine. But you’re gonna get [censored].” [Nathan]: Well and my part in it is where I bridge part of the gap. My client will bridge part of the gap. But my commission will supersede their bridge. So but again what we’re doing and like you said is, you know, kind of like in Top Gun. Right. You know, when you went fully inverted over the other plane and they’re like this, you know. So that’s the maneuver I pull. And I just haven’t taken the picture yet. So…[laughter] [Chris]: International relations. [Nathan]: That’s right. So anyway those are my two concerns or thoughts…would, over the last week. [Christian]: It’s a creative way to do what you have to do, in a competitive market. [Nathan]: Yes. [Chris]: Just make sure you run it by your broker. [Christian]: Always. [Chris]: And have your lawyers look at your language in your contract. [Nathan]: Yeah you actually have to disclose that too, here. So… [Chris]: Yeah you do in Georgia also if you’re doing that with the commission. The buyer has to pay tax on that too. [Nathan]: Really? [Chris]: Yeah. Otherwise you have to claim it. [Nathan]: Yeah that’s true. [Chris]: Yeah. All right. Well I mean I think that was pretty good. So just recapping. If you’re…if you’re brand new in the industry, you know, you you’re one of three people, you’re a full-timer, a part-timer or some timer. Don’t be a some timer. Because if you’re a some timer, you’re never gonna learn everything you need to know in order to be successful at this job.
And then, you know, figure out how you want to build your business. Right. You can…you could do a bit model like Nathan and use your commissioners leverage as long as you do it right. Or you can be the expert in your field. Know everything about everyone. And everything that’s going on in your neighborhood. And make sure that you’re the source of information. Either way the business models work. Pick what’s right for you. This has been another episode of re:Think Real Estate. Thanks for tuning in. We’ll see you next Monday.[Nathan]: Peace. [music] [Chris]: Thanks for tuning in this week’s episode of the re:Think Real Estate Podcast. We would love to hear your feedback so please leave us a review on iTunes. Our music is curtesy of Dan Koch K-O-C-H, whose music can be explored and licensed for use at dankoch.net. Thank you Dan. Please like, share and follow. You can find us on Facebook at Facebook.com/rethinkpodcast. Thank you so much for tuning in everyone and have a great week. [music]