While the number of real estate agents and brokers in Mississippi has declined by nearly a quarter since the recession began in 2007, many people are still interested in taking the training to become a licensed real estate agent.
John Phillips, vice president of professional developmenteducation director, Mississippi Association of Realtors (MAR), said over the years he has seen the average age of people who take the course required to get a real estate license get higher and higher.
At one time, it was mostly younger people who were taking the training.
“The room now is probably over half filled with what I would consider senior people,” Phillips said. “Some are in their 50s and 60s. The two things I’m seeing is that some of the folks have actually retired and they are seeing their income doesn’t reach, so they need to add a little to that. Some are victims of the economy. They have lost their jobs. And then there are some who are anticipating a job loss. Some see what is happening, and they want to position themselves in the event they do lose their job.”
Phillips, who has been in the real estate business for 41 years, teaches the sales person pre-license class that includes 60 classroom hours of approved education. The class is required before sitting for the license exam. MAR is one of a number of organizations in the state that provide the training. MAR charges $225 for the online course and $595 for the classroom instruction. The classroom version includes a $37 textbook and a $125 exam review, which online students would have to purchase separately, if wanted.
“There is online education available all over the place for people who don’t want to take the trouble to come into the classroom or want to study at three in the morning in their jammies,” Phillips said. “My recommendation is the classroom because you are going to get a lot more. If you want to learn something that will help you earn money or stay out of trouble, the classroom is the place for that. You get to ask questions and network with other students.”
A lot of the training is simple terminology such as the definitions of real property, personal property and eminent domain. Students are taught the difference between a general warranty deed, a special warranty deed, a bargain and sale deed, and quit claim deed. They also go over ethical considerations.
“The thing we have to keep in mind is that the consumers are normally doing the largest financial transaction they do in their life,” Phillips said. “We have to be careful we give them a good experience. They are literally putting their future in your hands. You can help them or do great harm.”
He advises students to spend at least 45 minutes with a prospective buyer or seller before ever taking them out to see property. “Talk to them to find out what their needs are,” Phillips said. “We cut to the chase way too quickly.”
About 50 percent of people who get a real estate license drop out in the first year.
“You find out pretty quickly whether this is a right career for you,” Phillips said. “You have to be a self starter. It isn’t exciting for everyone because it is not what they thought it was. What I like to tell them is that this is the easiest low-paying job you are going to ever have. If you are going to make some money, you have to work your rear end off. It is a tough, hard grind. But for those who find it is the right career, you have unlimited income potential. And you get to do good things for a lot of people. You change their lives for the better by helping them find a safe, secure place to live, a real estate investment to build up for retirement.”
Jim Clauson, who co-owns the Real Estate Training Institute with his wife, Leslie, said the cost of being in business is another reason why many newly trained real estate agents don’t make it. He said real estate agents who go with a large company might find advantages like superb training programs. But it can also be expensive.
A real estate agent has to practice under a licensed broker, and brokers take different percentages of sales commission. One that takes only 10 percent of the commission might also provide little help. On the other hand, some who takes 50 percent could be worth it if the broker spends a considerable amount of time helping the real estate agent succeed.
“A lot of people make bad choices with the broker they go with,” Clauson said. “Getting 90 percent is nothing if you are doing nothing. That is what happens. People fall into a little trap there.”
Another issue for profitability is the cost of being a real estate agent. Clauson said that includes the cost of training, $110 to the State of Mississippi to process the application, and $75 for the test. If an agent joins a local Board of Realtors providing MLS services, that costs $407 plus another $30 per month. Agents and brokers are required by state law to errors and omission insurance that costs about $165 per year.
Clauson said it breaks his heart to see people who worked hard to get the money to attend school and obtain a license get buried under the costs of doing business. A lot of franchise companies have franchise fees you have to pay every month, charge 25 cents per copy, a $200 per month desk fee, and sometimes are even required to buy expensive business cards and for sale signs from the company when something far less expensive could have been ordered online.
Clauson attributes the high failure rate for newly licensed sales agents to the many costs of doing business. “People can’t afford the fees,” he said. “It is not so much that they are sitting at home doing nothing. That is not the primary issue. All the fees get to be a lot.”
A new trend is for real estate agents or brokers to use free listing services like Zillow and Trulia instead of paying for a local Realtor association.
“Quite a few people are moving away from these associations,” Clauson said. “People are going out on their own and using all those free MLS sites. There are 12 big ones now. I think if they don’t do something with the local boards, people will stop using them. They just cost too much. You can save a lot of money and go with the free stuff. You can jump on that bandwagon.”
Clauson also has a real estate company with 20 real estate agents. Every year when it is time to renew with the local Realtor board, they vote on it. So far they have voted to stay with the board, but he thinks in the future that might change.
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