Tips For Real Estate Agents – How to Keep Your Costs Low in the Real Estate Game

You probably didn’t become a real estate agent on a whim and you certainly didn’t pass your licensing exam without plenty of studying and preparation. You’ve heard that it could take 60 or more days before you begin to make any kind of money as an agent. Now you’re wondering how to keep your costs low as you build your real estate career.

Costs of being a real estate agent

Many people seem to think that as a realtor, you are paid big commissions and that, “agents make way too much money overall”. What the general public may not know is where an agent’s money goes on a monthly and annual basis related to supporting the agent’s business.

Real estate agents are not employees – they are independent contractors working under the license of a real estate broker. Some brokerages will cover a larger portion of the agent’s monthly expenses. Other brokerages expect their agents to handle nearly all of their individual expenses of operation.

The monthly / annual cost of being a real estate agent

Among the agent’s monthly and yearly operational costs (estimate, costs vary widely from state to state):

Licenses and permits – $100 – $500/year for initial sales license and renewal fees.
Realtor Association dues – +$120/year.
MLS fees – $25 – $100/month; there may also be a startup fee.
Commission splits – 30% – 85%/transaction; 50/50 splits are common.
Desk fees – $25 – $750/month for desk space and branding.

Some brokerages are marketing themselves to agents as “virtual” offices where the agent works from a home office rather than a store front. While this is good news for many agents, there still are monthly and annual expenses an agent must cover:

Computer, office equipment, supplies
Specialized industry software
Mobile phone with strong service package
Home internet services
Vehicle expenses including maintenance, gas, insurance
Marketing costs (online marketing can cost $1,000 or more a year)

Keeping costs low

Keeping costs low as you begin your real estate career takes ingenuity and careful planning. Here are some ways to keep costs down:

Choose a supportive brokerage -One national brokerage helps new agents establish themselves by absorbing a larger portion of an agent’s startup costs such as desk fees, marketing costs, cost of signage and business cards, no agent transaction fees, and more.
Blog/website – Develop a blog/website presence; it can be a cost-effective start to promoting your real estate services. Keep content current and fresh.
Social media – Market through Facebook, LinkedIn, Pinterest, and Twitter but don’t stress about creating content for each. Republish some of your blog content on sites like Facebook and LinkedIn. Pinterest can be used to attract clients to your business, blog site, Facebook, and LinkedIn accounts. Use Twitter for sending out price and real estate alerts and micro-blogging.
Avoid elaborate, high-cost image advertising – Ads placed in local magazines and TV are costly for a startup business.
Track your advertising- Regularly evaluate all advertising expenditures and their results. Keep working with what produces the most favorable results and shelve what doesn’t work.
Watch your budget – Be mindful of every expense and planned purchase. Take advantage of deductions that can apply for working from home and small business tax incentives.
Full time vs part time – It may be difficult to sustain yourself full-time at first. Many agents advise against building your real estate business on a-part time basis. It will be difficult to sufficiently build a client base if you are unavailable for meetings, client contact, viewing and showing houses on a timely basis.

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Myths About Commercial Real Estate Agent Fees and Commissions

In commercial real estate agency you will hear many stories about commissions and fees. Far too many agents listen to those stories and shape their pitch or presentations accordingly. The fact of the matter is that these stories are just ‘myths’ created by other agents to justify their shortcomings in fee negotiations. Top agents don’t negotiate on fees or commissions.

If you truly believe in your commercial real estate services, and you can provide the right message to the client, your fees and commissions will come to you. You do not need to cut fees and discount commissions to attract listings. You just need to tell the right story about where you are taking the client and their property.

Here are some facts for you in handling fees and commissions:

If the client asks for a discount, you have not sufficiently sold your relevance and skill as the agent that the client needs.

Requests for discounts should be declined. Show the client what will happen when you take on the listing. Make that story real and relevant. Tell the client why your processes are special and how they will more than offset any benefit they get from a discount.

Show the client exactly how you have helped other property owners and what the outcomes were in each case.

Let the client see why you are very different and far more relevant to the property marketing than the competitors that could be pitching for the same property.

Give the client some feel for current enquiry for property. Tell them about the prospects that you have on your books that you will introduce the property to immediately when the listing is signed and released to the market.

Commissions reward your hard and direct effort. Every exclusive listing should be the subject of a lot of direct marketing effort. Tell the client how that will work. Put yourself in the equation and get away from generic marketing.

Direct efforts on your part can spread the story about the property to the right people. Give the client a timeline as to how you will do that.

Marketing fees should be paid by the client when it comes to each exclusive listing. Get sufficient funds to promote the property comprehensively to the right target audience.

Ask for a reward or increase in your commission in your legal agents appointment if you sell the property sooner or at a better price. Set a short time frame of say 1 month so you can put in maximum effort to get the momentum from buyers for this ‘stretched target’. This extra commission should be based on a stretched target that the client wants and that you believe is achievable with some hard effort. Most clients are comfortable with paying for a better outcome. That being said, make sure you stay within the legal rules of commissions and agency appointment in your location.

So the message here is that you can justify a good commission and marketing fee. You just need to match your services accordingly and help the client understand what you are doing and why.

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Inactive and Active Real Estate Agents in Ontario Who Park Their License – Explained

Before getting into the explanation of an inactive agent and an active agent we will begin with a short summary of how the real estate Brokerage system works in Ontario. We will refrain from getting into too much detail and thus the following will be a very simplified version.

In Ontario we have a Brokerage governing board called R.E.C.O. or the Real Estate Council of Ontario. A Brokerage is registered with R.E.C.O., pays its fees and dues which include errors and omissions insurance and is then ready to trade in real estate in the Province of Ontario only. The Owner/Broker may work alone as a single entity or invite licensed real estate salespeople and Brokers to join his or her Brokerage Firm and trade in real estate on behalf of the Brokerage.

A real estate Brokerage in Ontario may apply to become a member of its local real estate board. If accepted, the Brokerage will pay the board fees and dues which may include fees and dues applicable to the Ontario Real Estate Association and the Canadian Real Estate Association. If this option is taken by the Brokerage, then all the registered realty agents with this Brokerage must also become members and pay their applicable fees and dues to the said board and associations. In very rare cases, the Brokerage will cover these fees and dues for selected agents. The difference between being a board member or not is, the board members will have the privilege of all the services available to them from the board and associations including the multiple listing service which has proved invaluable to the real estate full timer and professional.

So, what is an inactive real estate agent? Simply put, an inactive agent in Ontario is one who is licensed under R.E.C.O. and for whatever reason has decided that he or she will not be trading in real estate and has not been doing so for a specified amount of time. There are still many agents in Ontario who remain with their current Brokerage and if that Brokerage is a board member, then even though an agent is inactive, he or she may still be paying fees and dues. Fees and dues may also include their Brokerage monthly fees, desk fees, franchise fees and other expenses. Since this is obviously a big waste of money these inactive agents will seek other Brokerages that will allow them to park their license without the wasted expenses.

Here are some of the terms used when referring to a Brokerage that will accept inactive real estate agents in Ontario. “Park your license”, “warehouse my license”, “hang my license”, “hold your license”, “real estate license holding company or Brokerage”, just to name a few.

A real estate agent who decides to park their license will still have some fees to pay but the difference will save them hundreds if not thousands of dollars yearly. Some of the fees will be to R.E.C.O. like their license registration fees due every 2 years and the errors and omissions insurance will still apply. In Ontario, they must earn 24 credits in their continuing education requirements as well and these credits are due on renewal.

What about the real estate Brokerage that provides the license holding services? Here the agent must do their due diligence. Seek out a trusted and proven Brokerage Office who is not a member of any real estate board. Ask for the highest commission split available to you in the event you do sell a property or 2 or if you refer sales out to other Brokerages or agents you may know. Even though your license is on Park, and you are inactive, your license in good standing is still active. Make sure you do not pay any ridiculous desk fees, extra monthly fees, franchise fees etc. Having said that, there most likely will be a small membership fee applicable for their services. Shop around for the best deal but remember to keep the experienced Brokerage that park or holds licenses a priority to you.

Inactive then, refers to the actual agent who is not active in the day to day trading of realty properties. As long as the license is registered with the Real Estate Council of Ontario and remains in good standing, your real estate license is “active”. If you decide, as an agent, to become inactive, you now have a wonderful and money saving choice to transfer and join an Ontario Brokerage that you can park your license with. This Brokerage will hold your license and this will allow you the opportunity to keep your license active so it does not fall by the wayside and lapse or be terminated.

I shudder to think about if I had to go over the process and expense of getting my Realtor license all over again..yuk! If you now have this valuable asset and are thinking of becoming inactive for whatever reason, think hard about keeping your license active because you never know how valuable this asset will be for you in the future. Hang it, park it, warehouse it, hold it, keep it active! Good luck.

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Ontario Real Estate Agents Now Have an Option to Move and Park Their Real Estate License

Park your real estate license is now a term used by hundreds of agents registered with the Real Estate Council of Ontario. Those practitioners who seek out such a service are usually agents that need to have their license held by an active Brokerage and one that has been a recognized name in the Ontario real estate Brokerage industry for over many years. Brokerage holding or parking companies have been assisting real estate agents with a better option if they decide to park their license with a non member Brokerage, thereby saving on the board fees and dues. The main service a holding Brokerage provides is a place for agents to park their license for a small fee and this would allow the agent to carry on with whatever other plans they may have. For example, full-time agents switching to part-time, women going on maternity leave, a change of profession etc. etc. When searching for a Brokerage that will allow you to have your license parked, make sure you do your due diligence and seek advice from others you may know who have already parked their license. Locate and interview prospective Brokers and hopefully you will find a Brokerage that has been and continues to be a proud holding company for those real estate agents who are parking their license and taking a break from real estate sales in Ontario.

The main difference between a board member Brokerage and a non member one are basically the costs incurred. If the Brokerage is a Board member then each agent registered with that Brokerage must be a member too. This means that the agent will be expected to pay the Board a yearly membership fee for that privilege. The fees for such a membership could be as high as $1500.00 per year. This may or may not include other association fees and dues.

If an agent is not selling much real estate and therefore not earning a sufficient income, he or she may strongly consider parking their license with a Brokerage that is not a real estate Board member. A new agent just licensed may consider parking it too while they also consider their options. With a parked license, agents may still trade in real estate but would do so without the benefits of a real estate Board. In this case they may cooperate with a Board member and share the business or they can enter into an agreement with a Board member to cooperate with a non member.

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