Gotta Spend Money to Make Money

Buyers and sellers are counseled to look for an experienced real estate agent to represent them in buying or selling houses and rightly so.

But let’s look behind-the-scenes at what makes an experienced agent. To be experienced, one must be successful. And an agent has to successfully represent at least a few buyers and/or sellers to gain experience.

I know agents who do such a small amount of business that they are reluctant to spend the money that it takes to be successful – mostly because they don’t have the money. It’s a relentless cycle. They may spend money to get a listing and then find that, once they get one, they don’t have any money left over to cover the marketing.

We spend money on advertising properties and gasoline in showing houses to buyers long before we ever make a penny on those properties or buyers. If the house doesn’t sell or the buyers don’t buy, that money is still spent. This doesn’t even begin to put a value on the time spent doing these things.

It amazes me how many new agents enter this business thinking they’ll make money quickly and easily. We advise new agents to have a six month cushion, because it can take that long or longer to get established.

Running out of money is probably the number one reason agents quit the business – they find out that the work is harder than they thought and can be very expensive to start up.

If any industry fits the old adage “You have to spend money to make money,” it’s real estate.


(C) 2006 Susan Pruden.

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