When thoughts of getting out of the business of real estate cross your mind, here are some key considerations before transitioning
If you are a real estate broker or sales associate thinking of transitioning out of real estate by selling your firm or, transferring responsibility for your accounts to other agents, there are some important considerations to make before deciding the fate of your business.
One important facet to examine is whether getting out of the business is truly necessary, or, perhaps your approach to doing business just needs some fine-tuning.
Let’s examine some typical scenarios, and delve into possible approaches.
1) You’ve built a consistent, successful business, and want to sell or transfer the business to another agent or family member
The best medicine for this scenario: Be prepared. We never know what life situation or challenge may be served up to us at any time. In order to “go out on top,” avoid letting some life-shattering event or circumstance force a transition. Before change is forced upon you, select someone who you know values and transacts business much in the same manner as you. Find someone who will care about your client’s needs and value the relationships you’ve built over the years. Enlist the aid of accountants and lawyers representing both parties, to discuss an orderly transition, and prepare the proper documentation — just as one would prepare a will. Make provisions in the agreement regarding whether/how much you will be expected to remain in touch with your current and former clients. Before stepping away, talk with clients, and inform them of the transition, so the value of your portfolio will remain.
2) You’re thinking about transitioning out of real estate because you’re burnt-out
My suggestion here: Count the cost! Make sure that you have your ducks lined up so your financial obligations can be met, as you work toward a different income stream. Plan ahead and start creating an exit strategy that will work for you. Consider how to build passive income through referrals you make to other agents.
3) After several years in real estate, transitioning out is a consideration, but you don’t have a retirement fund and medical plan in place to sustain your lifestyle or cover your cost-of-living, health care, etc.
The demands of the California economy have pushed many agents into this category. Lots of agents have pretty much spent their pending escrow checks before they are received, leaving no room for savings! Some people have another source of income to count on — for example, a spouse or significant other — but, for single agents going it alone, life can be a struggle while trying to grow a real estate business.
My suggestion: partner with a team, form a collaborative effort, and strategize how to grow your business beyond yourself. Stick to your strengths, and delegate to others who have different strengths that are necessary for completing a transaction. You may give up some commission, but you may increase your volume, with less stress and burn-out. The newer, recent real estate models foster this approach. A more agent-centric environment and the training offered in these models helps propel your success.
4) You’re living commission check-to-commission check, with no clear business plan
Get serious and develop a plan to generate a pipeline of continual business. Outline the activities that will help you reach your financial goals, then STICK TO YOUR PLAN! Your broker or an independent consultant can help you nail down specific actions that will lead to progress. Speak with your CPA for help with budgeting, and put aside a portion of your commission checks toward retirement.
5) You’re tired of juggling your real estate career with a second career to make ends meet
Evaluate how successful you have been at doing both careers. Balancing several pursuits makes it hard to focus on your personal financial needs, and still provide good customer service, build relationships and load your pipeline with repeat business. Agents with the energy and wherewithal to handle this effectively are a rare breed! A great team and/or office support is key.
6) You’re unsure if you still enjoy selling real estate
This is a crucial, fundamental issue. Doing well with a job or career path we don’t enjoy is very difficult. When the work becomes simply a means to an end, clients will sense you are just in it for the commission, and doubt whether you have their best interest at heart. The reward for providing great service and/or a great product is exponential growth in revenue. Do an over the top job and your revenue will grow.
7) You have another source of income, i.e., spouse, significant other, pension, rental income, investment dividends
Getting too comfortable in this scenario could be unwise. You might have the best of both worlds, which allows you to focus on service to your clients without the concern of how you’ll pay for the basics. However, the one thing in life that is consistent is change! Don’t get blindsided when change happens! Manage your life as though your business is your only source of income.
8) The stress of your real estate business has begun affecting your health
Consider all of your options. Health comes first! You’ll find it difficult to do ANY job well, without good health! You must first take care of YOU, before you can take care of others well.
9) You’ve got more going out than coming in, and are frustrated because your investment into your business has shown little results
The most difficult part of being an independent contractor/entrepreneur is DISCIPLINE! This means putting together a business plan and sticking to it. Take the time to map out your desired financial results, and determine what activities and client/customer service goals are needed to accomplish your financial goals. Then, find an engaging broker, accountability partner or coach who is going to hold you accountable for what you do or don’t do. Being “independent” doesn’t have to mean “go it alone.”
These are all scenarios you might face at some point, whether you have been a seasoned agent/broker in the industry for only a few years, or for many years. Do a self-examination, and take the time to think about these and many more issues that will arise.
Feel free to contact me, and set-up a time when we can discuss how to enlist my help with nailing-down your next move.
If you’ve battled through experiences like these, please Comment below, and share your results with us!