Our Washington Real Estate Practices Course is designed to take you through all the key aspects of real estate brokerage in our state
Our Washington Real Estate Practices Course is designed to take you through all the key aspects of real estate brokerage in our state. In this course, you'll learn about agency relationships, listing agreements, purchase and sale agreements, negotiations, marketing and financing property.
This course is packed with information for any real estate broker who wants to brush up on their skills and refresh their knowledge. Enroll today and be certain you're ready to serve your clients.
Upon completion of this section, you should be able to perform the following actions:
What skills will a broker need when you get started? Brokers need a variety of skills; sales, marketing, finance, and taxes are all examples. When you begin, those skills can be quite basic, like keeping an accounting of your costs, and also your revenue. That’s just money in and money out. It will grow more complex as your business grows.
For example, you’ll want to develop a budget to know how much do you want to spend on things like marketing your services. Once you determine the budget, you’ll need to decide what marketing to spend your money on. That’s email, flyers, direct mail, radio ads or online marketing.
So just like any business you'll need to know something about the different parts of how a business run. You'll need to know a little about finance, a little bit about taxation, a little bit about sales, and a little bit about marketing. And you're also going to need to know if you are going to hire anyone. If you hire anybody then you'll need to know something about HR, that's human resources.
Don’t panic, you don’t need to be a business guru when you start. You're probably not going to come right out of the gates and sell 50 houses in the first month, or you sell massive commercial buildings unless you have a ton of contacts and you've already got clients ready to go. If you're able to do that, maybe you’re looking for an investor, or you’d like to join us and teach real estate.
As an independent contractor, it's a lot of work because you run your own business. That said, it's a lot of fun. Why is a lot of fun,? It's fun because it's yours. You don't have somebody else telling you how to operate or when to work how to conduct your business or even how to spend your money. Let’s take a look at how you can get ready to run that business by developing a plan.
The broker starting out must realize they are operating a business. The skills required to start and maintain your business include knowledge of bookkeeping, business and tax regulations, budgeting, and planning. These are only a few of the skills needed. You will also need to develop a client base. Along with the client base you will want to determine where and how you are going to obtain listings.
The equipment necessary to operate as a broker and begin the new business will need to be identified. These included a smart phone, laptop, automobile, printer, and scanner, to name a few.
The new broker will need to select a brokerage affiliation. The real estate brokerages vary from office to office. Commissions splits, education, advertising, and other costs vary across the board.
Remember, brokers typically are independent contractors, which means they don't get a regular paycheck. When they do get paid, broker's need to plan for their taxes owed. As an independent contractors, brokers work on their own time. They only get paid when they produce.
Business skills mean nothing if you don't follow a plan. Know your own personal budget. Stay disciplined, stay on track, use checklists, and avoid distractions. You are your own boss; it's not an 8-hour day. Plan on spending 6 to 7 days a week from 10 to 12 hours a day when you're just getting started.
It's hard work. The best skill you can bring to the table is the willingness to go out and spend the time and effort to succeed.
Planning is important. If you were to go on a cross country drive, say 2,000 miles, would you leave without mapping out your route? Starting a business without planning is like taking a trip without a map. Planning will help shape your destination and provide the best road to get you there.
Being good at sales is really about repeating a planned-out strategy to acquire and sell clients. Successful individual brokers have learned to manage their own business. Most real estate licensees are not paid a salary and should treat their activities as a business. To excel in real estate, sales is only part of the bundle of skills required to succeed. The individual brokers who succeed have acquired some of the basic skills of management centred on their own individual companies. Brokers are their own managers and, if you look at how they produce, you will find them following a solid business model.
Starting a real estate career is exciting and a little bit overwhelming. What are the necessary skills to succeed in real estate? Asking yourself some fundamental questions about your particular skills and personal traits will help identify areas of your strengths and weaknesses. One of the first questions to answer is, are you a self-starter? The real estate field typically operates at off-hours and usually requires more than 8-hour days. If you want to go home and not worry about business or if and when you're going to be paid, you might not fit as a real estate licensee.
The following skills and traits will give you some insights:
The opportunity to be your own boss and set your own schedule really requires a solid business plan. Brokers starting out would be well advised to spend time planning their road to success, and, as a business, that starts with a business plan. Most business plans are a roadmap that you produce to include immediate action (short-term objectives) and future milestones (daily, weekly, monthly, 3-5 years). The financial projections, including initial startup costs, monthly expenses, budgeting, bookkeeping, and taxes (self-employment costs), need to be considered. Business plans need to include some basic strategies.
So you decided to get into real estate, and you have recognized the realities that you are going to be running your own little Independent business. What now? As with anything and any business, you need to have a plan. What that plan entails Is entirely up to you. However, there's some basic elements or structural planning items, that all businesses typically include. We're going to go through that skeleton plan to help you try to recognized what things you might want to think about as you embark on your business.
Probably the first consideration that you'll want to tackle, is what is going to be your target market? Okay, Don, what is a target market? A target market is the customer's or segments of customers that you are going to try to work with. In business speak, we would consider the market as everybody that is a potential customer for real estate services. Therefore, your target is that subset of customers that you think are potentially in the market for what you provide. The particularly helpful part about defining a target market is it focuses your messaging or your marketing. You don't have to speak to everybody, because you're only interested in the people that are specifically in the market for your services. Let's consider an example. If you plan on focusing on single family houses in a portion of the city that range in value from say half a million dollars to one million dollars, then not everyone is going to want your services. Only those people who can afford properties in that price range and want to live in that area are going to be of interest to you.
It's a fairly broad example as far as just defining a location and a price range, but usually serves pretty well for real estate brokers. Some businesses, as they get more advanced and have more resources, will segment their business in very very small fine grain detail. They'll be able to say that certain clients that are of a certain age have particular needs and therefore desires that they will then appeal to in their marketing. Similarly, they'll also know that certain income groups, within specific areas, have different interest. For example, the attitudes and interests of people of similar incomes in Seattle is likely different than that of Dallas, Texas. And, as a result, you would talk to them differently.
Generally, we could think about this marketing question as a set of questions. Who are we selling to? What are we selling them? How are we going to sell it to them? We talked a little bit about the who that's the target market that's who are you going to be selling to. What are you going to be selling them is the next big question. Are you going to be providing services for buyers looking to purchase single family homes, or are you going to be helping buyers purchase condos, or are you going to do both? Perhaps you're interested in property management. If so, there's different types of property management. You could specialize in renting out single-family properties or properties that are ten units or less, or 10 unite or more. You could also specialize in leasing industrial properties. You could also work on the office space market or renting out apartments in high-rise buildings. There's clearly a lot of options, whether you choose to work with buyers and sellers, or if you're looking to do property management. Making these choices is important when building out your plan. Are you committed to sticking with whatever you choose? No. It's your business. Should you decide to pivot and move into a different part of the business, it's your prerogative to do so. For the sake of our discussion, we will assume that you are trying to determine one area of expertise because that's the most common choice.
Once you’ve decided what you're going to sell, and who you're going to sell it to, you need to figure out how are we going to tell them that we’re selling it? This is why defining who will purchase your service is so important. If we know who we're selling to, we can think about where those people are, the types of things that they do, where we might meet them, and what motivates them to potentially choose a business to work with. The more specific that we are in the description of our customer, the more detailed we can get into how we are going to find, and then sell, our product or service. Given the length of the last item in our list, the question of how we are going to sell our services, we’ll go ahead and leave that remaining item for the next video. We hope you'll tune in.
Who does what? Are you going to employ assistants? What help do you get from your brokerage? Are you joining a team?
The keys to being organized include:
Where are your clients going to come from and how are you going to put yourself in a position to acquire them? The steady flow of clients is the lifeblood to anyone in the sales industry. Every day should include the pursuit of new clients. What marketing strategy are you going to employ and how much time and money will it cost? Companies will tell you to include any and all acquaintances as a part of your list of potential clients. Your overall plan needs to address those activities that will bring you the prospects in your defined market. There is a saying in sales, "you can never have enough prospects."
Break down your plan into segments or time measurements. Where are you going to be at the end of the month, quarter, 6 months, 1 year, 3 years, 5 years? Be reasonable and set up reevaluations. The more you include time frames and analysis, the more likely you are going to be to reach them. You are responsible for setting and reaching your goals as outlined in your business plan.
Important tips to follow as you begin writing a plan include the following:
This should give you a good understanding of the financial capacity and/or projections for your company. The more you treat your career like a business with a bundle of business skills, especially planning, the more professional and financially successful you will be.
Your sphere of influence includes all the people that know you and all the people that know that you are a real estate professional. Your sphere of influence can be your most powerful prospecting tool, since these folks already know you and really do want you to succeed. Here are some benefits:
Begin making a list of the people you know such as:
Successfully developing your sphere is built on the foundation of relationships. Hard selling to your sphere can turn them away.
As we mentioned earlier many home buyers and sellers are starting their research on the Internet. Having a web presence is essential. You may want to have your own website or be part of your brokerage's website.
For those who like to write, blogging about current real estate topics may also be a way to gain a presence on the web. There is an array of sites that will help you set up a blog template, obtain a URL, and take you through the steps of how to post and drive traffic to your site. It's free to set up a blog on Google's Blogger site, WordPress, Weebly, and Typepad, and they are very user-friendly. There is even a book available called Google Blogger for Dummies. Facebook and Twitter are also great ways to keep in touch with your sphere.
There are individuals within the real estate industry who can help you with your career. Some of these might include:
Many of these professionals can provide you with a wealth of information (information that you could possibly use in your newsletter or blog), and some may be able to share advertising costs with you.
To be able to get referrals, you need to be able to ask for them. This is a great real estate practice. Ask your friends and family for referrals of people that they think might be buying or selling in the near future.
Keep track of the sources that your solid leads and business are coming from. Some licensees are more comfortable with certain prospecting techniques than others. When you have determined what techniques work best for you, go back to your business plan and increase those activities and decrease some of the other activities that aren't working as well.
In order to get started in real estate, you'll need a few items. Unless you live in a dense city, you will need a car. All the things that are needed are the basic stuff that you would need for any office job. Things like a computer and a cell phone, and you will need to purchase business cards. If you're going to list properties for sale or to rent, you'll need to get lock boxes to place at the properties for other brokers to use when showing. Similarly, if you're going to be working in the residential sector, you'll need things like an a-board. An a-board is one of those open house signs that you see around neighborhoods that say “open house” and have an arrow on them saying which direction to head to find the home. You’re also going to need for sale signs to put in front of the homes. This is all assuming that you're working in the residential sales sector. You’ll need different items if you’re working in the commercial sector.
It's becoming less and less important that you have a bunch of equipment to be a broker. You can pretty much get it done with a computer and cell phone. In order to be successful, it's more important that you're able to utilize the software and tools that you can access with those devices. Things like managing your contacts, building your website, working with digital signature programs, and lastly, utilizing the multiple listing service, are going to be critical for your success.
The single most important software for real estate brokers in this day and age is the multiple listing service. The reason is is that it’s the master database for all homes and properties for sale. If you want to get a property up and out to the public, you need to put it on the multiple listing service. Even in commercial, there is a commercial listing service. Because the multiple listing service is so common, other web sites and services connect to it and when the listing goes live, it also goes live on those other websites and services. It's just a tremendous disadvantage if a property isn't widely listed for sale. Even in the appraisers definition of value requires that a property gets appropriate market exposure. What do I mean by market exposure? That means that enough people have seen the property and are aware of its status as available for sale. There's really no substitute for the wide exposure given by multiple listing service.
This section of the course used to be riddled with details about hardware that you might need. Now, virtually everybody has all the computing power they need in their phone. The multiple listing service has an app, and most of your clients will as well. It certainly changed the way clients learn about properties. The public nature to all listings removes one of the key reasons clients used to need a broker. You’ll end up providing value in other ways. Through your market knowledge, and by helping them with their contracts.
Real estate brokerages differ in many aspects. Some brokerages focus on residential property sales while others focus on commercial property. Residential sales could be high-end properties or first-time buyers. Commercial brokerages can focus on leasing, selling, or managing properties. The properties can be industrial, multifamily, or high-rise office buildings. You as a new licensee need to decide where you think your strengths lie. Remember, generating your first income needs to be considered as some of your choices require longer financial commitment. The location to your own residence may factor in on your decision. The sheer size of the brokerage may influence you one way or the other.
Choosing a brokerage affiliation can be a very difficult decision. There so many aspects to consider, and many of these can be a key to your success as a real estate professional. Let's look at a list of considerations and then explore each in greater detail:
People want to do business with firms in the community that are reputable. This is especially true in the real estate arena, where many people are either buying or selling their largest asset. A brokerage's reputation in the community can be the key to its continued success as a business, and the licensees who are affiliated with a reputable firm gain from being associated with this firm.
Real estate is a people business. The owner's or designated broker's reputation is closely tied to that of the reputation of the brokerage. There are a few ways in which you can get some information about the designated broker.
The best way is to ask the opinions of other people in the industry. These might include:
Another source of information can be the Washington State Department of Licensing, Real Estate Division. They can give you information on any complaints or disciplinary action for a particular broker.
Training is essential for all real estate agents, especially new agents. The real estate field is very volatile and constantly changing. It is crucial for you, as a licensee, to keep up with current legislation and changes so that you can effectively represent your clients. Some of the changes may come about from the federal, state, local or brokerage level. Other changes may occur because of market conditions or the availability of financing.
Each real estate transaction comprises a unique set of variables and unique parties in the transaction. Even long-time veterans in the real estate industry experience new circumstances very frequently.
Getting the assistance that you need, when you need it, is important for performing the job correctly and being successful as a real estate professional.
A managing broker or mentor is of extreme value to you when you need assistance and advice. Good, clear and concise communication with that person is essential.
Most real estate transactions have a licensee who represents the seller and another licensee who represents the buyer. These agents are known as co-op licensees, as they are cooperating with each other on the sale of a property. If difficulties arise between the co-op licensees, it's important to belong to a brokerage that will support you and assist in resolving any difficulties.
Support from your brokerage is also extremely valuable should you, as a licensee, be accused of any violations of federal, state or local real estate laws.
The brokerage's market share of listings may be a very important barometer of the success of its affiliates. The success of its affiliates may be a reflection on the management and staff.
Information on a brokerage's market share of listings usually can be found from data from your local MLS.
Your client’s perception of your brokerage is a direct reflection on how they will perceive you. A professional staff can play a key role in how the public views you and your firm. Ask questions about the availability of staff and the professionalism of the staff in the following areas:
When a brokerage has many licensees who have been with the firm for a length of time, this may be an indication that the licensees are very satisfied with the management, support, and staffing of the brokerage. There are usually reasons why brokerages have a high or low turnover rate. Ask about the average time of affiliation of the licensees who are with a brokerage.
Being a real estate professional means that you are in business for yourself. Most licensees are independent contractors. Costs and fees are an important part of budgeting for your business. Make sure that you fully understand all of the fees that a brokerage will charge and their commission structure. Let’s take a look at some of the typical commissions and fees.
Sometimes referred to as “traditional” brokerages, these firms will split a commission with their affiliated licensees. Let’s look at some examples:
Example 1:
ABC Realty has a 70/30 split for all licensees’ commissions. For every commission dollar that a licensee earns, the agent will receive 70%, and the brokerage will receive 30%.
Example 2:
XYZ Realty has a 50/50 split for all licensees’ commissions until the licensee earns a total of $50,000 commission within a calendar year. After the licensee has earned greater than $50,000 within that calendar year, they keep 100% of their commissions until the calendar year is complete. At the beginning of the next calendar year, the licensee returns to a 50/50 split.
Don Sr. has been in the real estate business for over 40 years, working as a broker, running real estate offices, and developing property. He's the founder of Realestateschool.org and it's principal instructor. Don Sr. has a teaching degree from the University of Washington and has been teaching real estate for over 35 years.
