How to Make Money as a Realtor

Everybody knows there’s a huge potential to make lots of money in real estate. But if you’re working with a brokerage, the pressure to close a sale can be killer. And if you’re the individual running the brokerage, you take home a larger sum of money with each sale, but the nonstop work of acquiring properties, finding referrals and closing sales is enough to make even a seasoned professional’s head spin.

It’s important to educate yourself about the basics of how to make money in this potentially volatile, exciting field.

Read on to learn some basic tips on how maximize the amount of money you make in real estate.

Remember: You Work on Commission

Some brokerages work differently, it’s true. But if you’re like most realtors, you only get paid when you sell a house. Never lose sight of that. Your goal is always to close a sale.

Most jurisdictions require that, as a realtor, you learn the basics of real estate law and ethics.

They won’t teach you how to close a sale or make a property look most enticing. It’s up to you (and your brokerage) to teach you that, so grab a book (or find an experienced broker to tutor you) and start educating yourself.

Don’t Be Afraid: Network!

Early on, when you’re just breaking into the business, it can be very difficult to make the connections you need to make a sale.

That’s why networking is so vital.

It’s easy to conceive of your relationships with other realtors as strictly competitive, especially if you’re working in the same area.

And to be fair, an element of that does exist.

But don’t forget about referrals.

Houses aren’t identical commodities. If someone knows they can’t close a sale with a potential customer, and they know you have a property that’s more in line with the customer’s needs, they may very well send the customer your way — so long as you’ve forged a positive relationship with them, and are willing to pay a portion of the resultant commission.

Likewise, if you can’t meet a client’s needs, reach out to someone else in the area and offer to hook them up in exchange for a portion of the commission.

The going rate may depend on your area, but many brokers charge up to 30 percent for a referral.

Reach Out to FSBOs

People who try to sell their home themselves are typically trying to avoid having to pay a brokerage like yours to do the legwork for them.

But the fact is that the legwork is exhausting, and is often best left to the professionals.

If you’re aware that a for-sale-by-owner house has been on the market for a while, you may want to reach out to the owner and see if they’re interested in switching things up and going through your brokerage.

Make it clear what you have to offer and why it’s to their benefit.

If you succeed in convincing them, you’ll make a percentage of the money they get from the sale – how much, exactly, is something for the two of you to negotiate.

Consider Becoming a Broker or Branching Out

While laws vary from place to place (and the precise names used to refer to each profession may vary), many jurisdictions draw a distinction between real estate agents (who work for a brokerage) and real estate brokers (who are able to run their own brokerage, and have greater independence in general).

If you’re serious about making it in the field, and have the time and money to spend on the additional education required, you should think seriously about taking steps to become a real estate broker as soon as you can.

By starting your own real estate brokerage, you’ll be able to work independently and make decisions about what properties you acquire, and how much money goes into your pocket. There’s more potential for risk here, and you’ll have to learn how to make wise investment decisions, but the rewards can be great.

Investigate the laws in your area, but be aware that if your brokerage is holding on to properties you can’t sell, it may be better to try to rent them out instead.

And if you’re having a really hard time finding clients, in a lot of jurisdictions you can take your talents — and your real estate license — and work as a property manager instead or on the side.

Conclusion

There’s a stereotype that real estate brokers make a ton of money.

While many of them do, many of them don’t.

It takes time to find your sea legs as a broker, and it’s all about building connections, refining the art of closing deals and figuring out exactly what each customer needs.

You may not make a lot of money for your first year (or your first several!) in the industry.

And if you’re operating your own brokerage, you’ll swiftly find that finding properties to sell (or acquire) can be far more taxing and expensive than you’d estimated. If you’re actually acquiring the properties, you run the distinct chance of actually losing money.

But be patient.

Stick with your work, network, research and continue to educate yourself.

You’re getting better, and success will come over time. Good luck!

Building The Rental Marketplace of the Future: Why We Acquired RadPad

There has been a notable shift in the rental market in the last few years. The Millennial generation has come of age and is trending heavily towards renting rather than purchasing their homes, and this has opened up a new set of needs for the marketplace to allow landlords and tenants to more easily communicate and do business with each other. Renters took their search online years ago with sites like Zillow and Trulia, but are now demanding more than just the ability to look at listing sites for possible places to live.

More than any generation before them, Millennials are transacting on their mobile devices, not just looking for information, which is why we believe that the future of the rental business, especially for the independent landlords who make up more than 50% of the market in the US, is not a software (like Yardi or Realpage) or a lead gen media site (like Zillow/Trulia) but a transactional marketplace; effectively a 12-month long Airbnb.

This is why we acquired RadPad.

A new generation of renters needs new ways to pay rent, find a home, build their credit, get insurance, and interact with their neighbors. While LandlordStation was building a position as one of the largest service providers in the country for independent landlords and property managers, RadPad was busy innovating for renters. With a cutting-edge technology platform, RadPad had begun to change the way that renters approached this market, and adding that technology to our existing base of landlords, as well as some of our insurance and utility products, was the best way to push both platforms even farther.

So what is a “rental marketplace”?

One of the biggest shortcomings that we see in the old way of doing things, is that the time period from vacancy to first rent payment is a series of awkward introductions, cold leads, and mistrust. Renters and landlords find each other semi-anonymously online with no real knowledge of the other’s history. The landlord demands that the renter go through a background check and bases their decision off a credit score (which is not necessarily built as an indicator of a good tenant). This system worked when people signed one or two leases in their entire lives prior to buying a home. But for a generation that is renting well into their 30s, it’s like the car buying process x 10.

Radpad’s solution to this is simple and elegant: allow renters to build their profiles within a confined rental marketplace, and thus build trust within a verified community. Renters can verify all aspects of their rental lives from ID, social security number, credit score and income to Facebook, Linkedin, and contact information, and they can share those verifications with landlords with a single click from their iOs or Android app. They can log in socially so they can see if they have friends who are in the community, or if they share a friend with their potential landlord. They can message within the apps, so they can avoid giving out their mobile number to every listing they come across. And they can build their credit history by opting to have their rent payments reported to the credit bureaus in the same way that mortgage payments are.

On the landlord side there are similar benefits. In markets with a critical mass of tenants like Los Angeles, Chicago, and Dallas, landlords can fill vacancies faster, with warmer leads, and verified tenants. They can shorten the process of rental applications and background checks because they are effectively built into the renter’s shareable profile. Their listings on RadPad look and feel better than on other sites because they are free of ads, promoted real estate brokers, and pay-to-play pitches, all of which leads to a clean interface that drives higher engagement and better lead generation for the landlord.

The best part about the marketplace model is that there is no barrier to entry for either party. The system is completely transactional and based on success. Our goal is to be the platform that is the default transaction processor for the rental market, from listings, leads, and background checks, to rent payments, insurance and utilities. Each individual rental unit produces more than 75 individual transactions annually, and RadPad + LandlordStation has the ability to process them all.

With its most innovative feature, RadPad also allows the tenant to pay their rent online with a credit or debit card even if their landlord does not accept online rent payments. The payment is made through the RadPad app, and if the property does not to accept payments online, RadPad simply sends a check through the mail with a guaranteed on-time delivery to the tenant.

Combining RadPad’s technology and listings traffic with LandlordStation’s product expertise and more than 80,000 existing landlord accounts will pave the way to a single transactional marketplace allowing for a seamless experience for renters, landlords, and the various vendors that serve this market; making things easier, quicker, and cheaper for all parties involved.

We look forward to the many challenges ahead in building the rental marketplace of the future.