What’s in your wallet? Hopefully, a little padding as you embark on your new real estate career. Pretty much every agent I know has wasted money — thousands, in some cases — during their first year in the business. You already have some fixed, nonnegotiable expenses: the cost of your license, joining your local REALTOR® board and MLS, and broker and continuing education fees. There’s also gas, computer, and phone expenses, as well as business cards, yard signs, and lockboxes, depending on your setup.
So is it really necessary to buy leads or pay for designer marketing at a time when you can least afford it? One of the most common money-burning mistakes new agents make is falling for some fancy online promise like buying leads in a particular ZIP code. Then they don’t respond fast enough or follow up systematically with those leads because they’re too busy still learning the business, and they never see a return on their investment. So here are four tips (plus a bonus one) to help you save more dollars while you’re starting out.
You Don’t Need to Buy Leads Yet
Contacting friends and family for referrals, setting up a Facebook business page, blogging, creating short videos with your computer’s webcam — these are all free. There’s a tremendous amount of free things in real estate. Execute all the free stuff first before you decide you need to pay for something shiny. Realistically, the majority of your business your first year will come from people you already know or who are once removed. Their numbers are already in your phone. At this point, you don’t need to buy leads yet. Double down on the folks you already know, and drum up some business the good, old-fashioned way: by purposefully talking to people. Do open houses. Not only are they free to host, but the folks who walk in the door don’t know you’re new to real estate. I know agents who say open houses were the most successful thing they did their first few years; they built their business on them.
Avoid Long-Term Business Investments — For Now
Similarly, buying leads or ZIP codes, investing in expensive online ads, or paying vendors for high-tech business solutions is a long-game strategy. It’s not a quick fix to get you a client and commission fast so you can make rent next month. They require you to hustle, respond super fast to leads, follow up 10 times, and be personable, real, and authentic. While you’re in the beginning stages of your career, you don’t need to spend money to rack up clients because you need the time to learn the business. I hear many more stories of regret than stories of success when it comes to buying leads. It’s not that it can’t ever produce great returns, but if you’re going to spend the money on it, treat it like an investment and spend time researching best practices before you buy.
Fancy Marketing Can Wait
I see agents, especially those with a marketing background, overthink this all the time. Fancy websites, specialized logos, and designer marketing materials are rarely necessary for new agents. You can rebrand yourself at any time. My recommendation for first-year agents is to keep your marketing simple. For the most part, people are going to hire you because of you, not your logo. Another way to look at this is that you are your logo: Your “brand” is your name and reputation. This has a lot to do with the first tip. You have a bunch of business waiting for you in your phone; your task is to go find it.
Practicing Scripts Can Save Money
You can pick up scripts from colleagues, networking events, and continuing education courses. Why is this important for budgeting? You will face clients with objections, FSBOs with strong opinions about selling on their own, an unrealistic buyer or seller who won’t budge on contingencies, a neighbor who called you because of your yard sign. If you aren’t confident in what to say and how to guide the conversation with them, you will lose their business. But not knowing what to say will cost you more than that.
Let’s do a little math on the cost of losing business. Let’s say the average sale price in your area is $300,000, and with a typical 3 percent commission, your average paycheck is $9,000. Maybe your price point is lower and you need to factor in broker splits, so conservatively, every client opportunity might be worth $5,000. And you lost a client because you didn’t know what to say.
Here is my recommendation for new agents: For your entire first year, spend an hour a day practicing what to say. You have to get better faster. Winging it can cost you dearly.
Oh, and One More Thing…
You know you have to pay income taxes, right? For every single commission check, put the appropriate amount aside for taxes. Be disciplined with this from day one.
What’s your best budgeting tip? Let us know in the comments below.