INDUSTRY’S YOUNG GUNS GET FIRED UP ABOUT SUCCESS
By Esther O. Perez
Real Estate Weekly
May 30, 2007
With age, comes experience and, if you work in New York City’s residential real estate market, the chance of a hefty pay day if, that is, you can survive the lean years.
As the market continues to adjust following a years-long climb that peaked late 2005, the influx of agents that flocked to the business in search of a pot of gold is beginning to thin out. And the first to make their exit are the industry’s most inexperienced and financially insecure practitioners.
“I just didn’t have the savings that a person really needs to weather the cash flow difficulties that are inherent with working on commission,” said Michael Mills, a former sales associate at the mighty Corcoran brokerage who switched to a career in public relations last fall.
Despite several $1 million+ sales, Mills said he didn’t have the stamina — nor the resources — to cope with the feast or famine nature of the business that exists until a broker can build up referrals and listings.
According to Esther Muller, co-founder and president of New York’s Real Estate Academy, Mills is not alone. “Often when young people are entering the real estate industry, they have an unrealistic attitude about the business. They think it’s easy and they can make quick money,” said Muller.
“I really think many of them need a trust fund or someone to support them for a minimum of a year because, unless they are very lucky financially, they have to be prepared not to have any compensation for six months to a year. It’s like starting your own business — you need to have a thick skin and a great sense of ethics.”
Most new young agents working under a mentor can expect a 35% commission share. Those working without a mentor usually split commission 50/50 and a seasoned broker can expect 60-70%.
The meager financial rewards aren’t the only down-side for newcomers, according to Muller. “They can often feel like slaves to the industry — it’s not a 9 to 5 job and it takes a lot of commitment,” she said.
But for those that have the drive to get ahead in an industry that’s been revolutionized in the past several years, the opportunity to cash in is a very real one as New York City continues to enjoy a robust market and luxury sales account for a large chunk of overall activity.
However, as Jody Sperling, a sales associate at Fox Residential Group, warned, “You have to have nerves of steel.”
Now 36, Sperling was the youngest broker at Fox when she joined the firm in 1999. She said, “That referral base doesn’t happen overnight and you might not be dealing with a lot of transactions in the beginning. But the longer you’re in the business, the more you have ridden the waves of the market, and that experience really counts.
“And education. You have to educate yourself about the market and market conditions. One of the scariest things [when I started out] was realizing that you are responsible for the advice you give to people on the most important investment they’ll likely ever make in their lives.”
Trina McKinney, 27, a broker at Barak Realty, agreed. “People don’t realize that [brokers] actually work 24/7, that we’re always on-call, and that big commission checks are totally wrong.”
In fact, according to the most recent figures from the National Association of Realtors, the typical income of the nation’s brokers is $49,300 while sales associates make $38,000.
Compare that with the typical salary of engineers ($70,300), financial services/sales ($62,000), auto sales ($47,670) and elementary school teacher ($40,300).
Yet McKinney has a fierce commitment to her craft, perhaps learned from
her company’s founder, Barak Dunayer, whose rags to riches tale has been widely documented.
“Quitting is not part of my vocabulary,” said the young sales associate. “I’ll be one of the top brokers in the city — just give me a couple of years.”
Stefani Pace, of Prudential Douglas Elliman, is another Braveheart of the industry. “The bigger you build your base, the bigger you can build your empire,” said Pace, noting how she works seven days a week and has virtually no social life.
Pace has taken those sacrifices in her stride, however, driven by the desire to one day become one of the city’s brokerage elite. “You reap what you sow and, to get ahead, you have to work very hard, especially in the beginning,” she added.
While stamina and determination are definitely advantageous, Pace believes the real key to success in the industry is job satisfaction. “You really have to love what you do,” she said.
But for those who opted out, like Michael Mills, there still might be a pot of gold at the end of the rainbow.
“I’m now involved in real estate public relations and that really lets me apply my experience in a field that is far more geared towards my interests and talents.
“Having a salary and health care doesn’t hurt either,” he said.