Fellow Monkeys,
Has anyone here made the transition from RE finance related roles to real estate agent? I'm in the process of getting my sales person license and would appreciate if anyone has any insight. I have a solid role now in IS and I am on track to eventually join an owner/developer. However, not staring at excel for 12+ hours a day is starting to look really good. I also realize my compensation structure/work hours would completely change. Appreciate any thoughts....
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Commercial or residential? More context would help. Very familiar with both.
*Residential homes. Sorry about that.
While CRE brokerage somewhat resembles the world of finance, residential brokerage is a completely different world. There are very few barriers to entry and a large portion of the industry (at least half IMO) are people who really aren't qualified. The high producers often operate more like traditional businesses than their lower producing counterparts and the earning potential is significant for the agents who are capable. High earners will be one of two things: 1) Luxury agents who specialize on high-end properties and make big checks on each sale or 2) volume agents who sell an extremely high volume of low-to-average priced property. Clientele and day to day operations are obviously very different between the two.
One major advantage is a much shorter sales cycle in residential than commercial. If (heavy emphasis on IF) you are good and work hard, you can be earning decent money in a few months and very good money within a year. In major markets the big hitters will pull in a million plus in annual gross commission. In secondary and tertiary markets the big guys will doing 500k-1 mil. Unless you are formally working for another agent you will almost certainly be commission only from day one.
Another major difference is your schedule. Residential agents have to work 7 days a week to meet the needs of their clientele. They control their own time and don't have a "boss" but follow any big producer around for a day (especially a weekend) and their phone will be ringing constantly and they will be answering constantly because if they don't answer quickly the customer almost always calls another agent. Commercial brokers work a pretty standard business schedule M-F 8-6:00 ish with weekends off.
Residential agents get a bad rep online but the big producers are usually high earners and respected by their clients and their communities even if the industry as a whole lacks a high standard of professionalism and competency. It is definitely an option for someone with people skills that enjoys the work but a word of caution: You can go sell houses with absolutely no problem at any point in your career if you want to. However, if you choose to enter that world now it is very likely you will have a much more difficult time getting back into the finance world. Residential brokerage has little to no value to a future employer in CRE or finance and in your case specifically it would look rather odd to go from finance to residential brokerage and then attempt to go back to CRE/finance. It could be done but would certainly represent a significant hurdle. I would keep this in mind as you consider your options.
Happy to answer any additional questions you might have if you provide specifics.
Seems like a bad move unless you've thought of some unique edge other agents can't easily copy. If you're good at IS, you'll be away from Excel soon enough and with a much higher earning potential.
Some more context on my specific situation.....I work for three very successful multifamily brokers. I wouldn't ever compete against these guys. So commercial brokerage is probably not in my future.
Outside of startup companies attempting to disrupt, there really is no unique "edge" beyond the individual. Sure, some brokers/firms have unique processes that give them an advantage over their competitors but the returns are extremely marginal. The mid range agents will always push some unique advantage that they claim separates them from their competitors but it is largely BS most of the time and the good agents don't have to (though they do always prepare and present well on pitches) because they naturally build rapport and instill confidence in their clients. They do all the little things right but they have exceptionally rare communication skills on top of the "automatable" tasks that really anyone can do with enough work.
The difference is very simple.
High producers all work 24/7
Respond immediately to calls/emails/texts from clients and co-brokers
When they communicate they are effective and well received 100 percent of the time
They are the type of people that are instantly liked by every single person they come in contact with. This skill coupled with relentless drive and committed follow up are really what separate the heavy hitters from the rest. It sounds very simple but it is a very unique individual that can do this consistently. This is why these brokers make so much more than the other 95 percent of agents.
I actually worked as a residential broker in college. Happy to chat about it. Don't have time to write an in depth write up at the moment but feel free to PM me. I can connect you with others and you can ask questions that may be specific to those still in the business.
Short pro and con:
Pro: you can make a killing, I personally worked for people who made $500k on a bad year and they were good but not ultra luxury top level. I have met other agents who can make 7 figures a year. You trade off freedom however much you want. Want a ton of money? Your life exists in your cell phone. Goodbye personal time. You're happy at a certain cadence? Take days/ weeks off, work remotely, whatever you want.
Con: You need to be extroverted. Could be a pro if you naturally are. Your job is to meet people, the rest of the job is easy. If you're the type to throw parties and pick up conversations with strangers at a bar, you're ahead of the curve. Your income is variable. Some people can literally go from $800k+ to $80k and work the same amount. Scary stuff. Know how to save and invest for those bad years. Even if you're the top notch broker crushing it in Beverly Hills, you're still cleaning up houses last minute and setting up signs on street corners.
It's not for everyone. It can be rewarding, it can be hell. Depends on your personality.
Also, I personally think most of the job can be automated but I'm an AI fanboy so take that with a grain of salt
Outside of experience and market knowledge, the differentiating ability is skillful communication...the ability to be both an ethical and productive salesperson. The ability to make deals happen where others can't and without being sleazy and keeping the clients' best interest at the forefront. These brokers represent a very small portion of the industry and I think they will always have a valued place regardless of technology. Average to low level agents will have a very hard time providing value when most of their former job is completely automated. Hopefully this process will bring a higher standard to the industry as a whole and will be good for consumers and professionals alike.
The commercial side has plenty of room to improve as well and I think we will likely see shifts there further down the pipeline. It will look different but I think the same principals will hold true. The good firms/brokers will showcase their value above technology. The mid to average levels and below will likely lose market share or be replaced by technology.
Residential real estate is great if you want to lose sales because a light bulb doesn’t make someone feel emotionally valued , etc. insert the dumbest thing you can come up with. You will compete with everyone because there’s virtually no barrier to entry.
Can you make a ton? Definitely, if you can lead generate every day.
It’ll be like any of these other jobs. Pick the trade off you want to deal with.
Source: getting out of residential real estate
There is truth to this but similar trivial issues exist on the commercial side as well they are just packaged differently. Deals are more professional, less emotional, and are numbers-driven but its still the same game. Example: I've seen a retail lease for 500,000 annual rent abandoned because a burger shop wanted to sell pre-packaged dessert items near the register. LL would not approve this language even with restrictions to 5% of overall sales. Tenant was already pissed as they felt rent was too high (it was) so they walked. Contrary to a light bulb, this was after 9 months of negotiations as opposed to 1-3 week typical feasibility period in residential. Similar to light bulb, nobody got paid and the process restarts at square one. As you said, there are trade offs between both.
Commercial and residential are vastly different from each other but brokerage is brokerage. Brokers get paid to 1) source 2) facilitate. That is basically it. Sometimes deals die. Deals die at a much lower rate for big producers because they are willing and capable facilitators regardless of how trivial the road blocks may be.
If you are transitioning out of residential I may be able to offer some insight. Feel free to PM.
That’s a pretty valid lease getting messed up. I’m working on transitioning into finance, I appreciate the offer and will stay in touch. Probably depends if I get into the mba programs I’m looking at.
When I was really seriously considering becoming a real estate agent this is one of the things that really put me off from the job. You can do everything right and all of it is for nothing if the wife doesn't like the positioning of a window in the bedroom or if she prefers a different color paint
Residential brokers make no sense to me and it seems like a terrible path. Most do not add any value and they will be done away with once old "rules" are gone and dominant platforms emerge.
Can you or anyone else elaborate on this?
Thank you to everyone that responded. There are some really insightful answers here (especially JVRE ). I agree with many of you; a large portion of realtors are....not great. I've met a few with my wife during open houses and it's unreal that owners would let certain people sell their home. It does seem like upper-level realtors do well, but live on their phone and are always working. Again, I appreciate all of the responses.
Happy to help, SB for the shout.
Very frequently the agent at an open house is not the agent that holds the listing agreement. Often they are newer to the business and using the open house as way to meet potential clients. Busy, high-producing agents usually only sit open houses if it is higher-end property. Check the name on the yard or building sign or on the online listing, not the flyer or open house sign. Just because they aren't the listing agent of course doesn't mean they are bad or unethical but as a consumer it is useful to understand the dynamic.
Bonus content because I have 20 min to kill before a meeting: Not sure if you were touring to purchase or just for fun but I'd recommend having your own agent before you begin touring. 2 tips on finding one if you don't have one or for other users interested:
1) Get a referral from a friend or colleague you trust just be cautious of some guy's wife's sister that is really nice but new to the business (Sorry, Ashley but congrats on your new MLS access and good luck on the bachelor). Sometimes newer agents can be good because they have fewer clients, more time, and are eager to perform but a lack of experience can be problematic if a deal is uniquely challenging. This is a pretty common occurrence because obviously every property and client have unique issues. The sale process is easy but the unforeseen issues that nobody predicts are really where a good broker can make all the difference. If your agent is newer just be mindful and keep an eye out. You may lose a slight edge on negotiations but that isn't always a huge factor, especially in mid-range markets. Personally, as a buyer I prefer someone who has been around a while that comes with heavy transactional experience and a wide-reaching network. Both are extremely valuable in dealing with unexpected challenges.
2) If you don't have a good referral, call 3 or 4 reputable firms and ask for the branch manager. Tell them about your goals (price range, location, property type) and ask for the best agent they have for that situation who has at least 5 years of experience (this weeds out any new agents that the manager may have a "favorite rookie bias" towards and also ensures the manager isn't just sending you to the next agent on floor duty). Different agents specialize and work in different areas, the best agent for each client may not always be the highest producer but it should always be someone with at least several years of experience or in rare cases a talented newer agent working under the supervision of an experienced agent. Meet with at least 3 agents each from different firms and then pick the one you are most comfortable with.
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