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You’ll Want To Know These 5 Things To Succeed In Real Estate

Original Post Written by Abhi Golhar on Forbes.com

Thousands of new real estate agents open up their businesses every year, and they have high expectations for income from helping people to buy and sell homes.

It’s that high-income expectation without a lot of hard work that gets some of them into trouble. Yes, you can make good money in real estate, but the median income of a real estate agent has held pretty steady over the past few years at around $44,000.

Out of that $44,000 are subtracted their costs to get and maintain their license, errors and omissions insurance coverage, and marketing and advertising to build their business. A very high failure rate plagues the industry in the first two years of agent business. That first year or two is when the agent finds out that the business they expected from family and friends isn’t as much as they need. So, here are some considerations for making the decision to take the leap to real estate as a career.

1. It’s difficult to do part-time.

Yes, there are part-time agents and you can do deals when you’re not at work. However, if your work schedule is like most of your customers’, it’s going to be difficult to hook up with them and provide the service they need. They’ll want your weekends, so get ready to work seven days a week.

2. You are an independent contractor.

Though you’ll have to work with a broker who sponsors your license, you are in business for yourself. This means that you’ll need to keep up with laws and taxes to make sure you don’t end up crossways with the IRS.

You can choose a broker who is willing to provide you with training and some leads through office duty, but if you don’t hustle up your own leads, you’re not going to make it.

3. Full-time is an income roller coaster.

That $44,000 figure isn’t for the first year agent. So, even if you make it through that first year, that number is not evenly spread out at $3,600 per month. The income can come and it probably will, but it will be more like half in a three-month busy season and the rest sporadically over the remainder of the year.

4. Your broker doesn’t care a lot about your success.

Sure, your broker wishes you well and wants you to succeed. However, the costs to a broker in adding you as a new agent are low. They already have the office and overhead, and giving you a cubicle in the corner is cheap, so they’ll take a chance on you.

If you make it to “top producer” status, you’ll be able to negotiate with your broker for a better commission cut and other goodies. Until then, however, you’re on your own — and you better produce, or that cubicle is set to belong to someone else.

5. If you’re into service and like the work, you’ll succeed.

If you’re into houses, showing them, the sales and transaction process and helping people to buy and sell, you’re probably going to succeed and make a lot of money over time. Just get into the business with a realistic attitude and income expectation.

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8 Hidden Costs When Buying a Home

by Rebecca Bradshaw

You’ve saved for a down payment and calculated how much mortgage you can afford, but are you prepared for hidden costs that can occur when buying a home?

  1. To determine the property’s true worth, you will be expected to pay for a home appraisal. The appraisal not only assures that you aren’t overpaying, but can also be used as a negotiating tool when making an offer to the seller. An appraisal can cost as much as $500.
  2. A home inspection will determine if there are any problems with your new house. Professional inspectors will look for flaws in the home’s foundation and roof, as well as check for potential costly issues in its electrical, heating, and water systems. An inspection can range from $200 to $500, but is well worth the expense.
  3. You may need to pay for additional inspections, such as a land survey to determine property lines, or for termite, sewer, chimney, or other ancillary inspections. While not overly expensive on their own (a few hundred dollars each), they can be costly when combined.
  4. If an inspection turns up issues that the seller won’t cover, or if you purchase a house that isn’t in perfect condition, you may find yourself spending money on repairs and cosmetic changes before you move in. Figure in the cost of painting, upgrades to appliances, and other expenses when planning your budget.
  5. Purchasing a home warranty is optional, but is an out of pocket expense you might want to undertake right away. Running as high as $500, a good home warranty can offset the cost of pricy repairs, ultimately saving you thousands of dollars. In some cases, you may be able to negotiate with the seller to pay for the warranty at closing.
  6. Closing costs generally run between 2% – 5% of the total purchase price, and although the seller may pay for all or part of them, you may still be responsible for a portion. Be prepared to pay private mortgage insurance if your down payment is less than 20%, as well as for property taxes, and fees for title searches and other filing costs.
  7. Don’t forget moving costs. Professional movers can be expensive, depending on the time and distance of the move. Consider, too, if you’ll need to purchase new furniture or appliances, or, if you’re downsizing, whether you’ll need to rent a storage unit.
  8. You may find that you are required to have additional insurance, or that the water heater that passed the home inspection stops working right after you move in. Unexpected expenses can occur when buying a home, so plan to put aside an emergency fund.


Sources: US News/Money, Life Hacker, Real Estate Solutions, Campbell & Keller Team       


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How Much Mortgage Can Your Lifestyle Afford?

By Rebecca Bradshaw

There’s no getting around it, buying a home is expensive. Saving money for a down payment and then living within your means takes plenty of advance planning, strict budgeting, and might even require making a few sacrifices. But what if you have a lifestyle that you love—hobbies, sports, and other interests, that you aren’t necessarily willing to give up in order to own a home? Just how much mortgage can your lifestyle afford? The good news is that with some adjustments, you should be able to become a homeowner while continuing to do the things you love, and all without going broke.

Start by budgeting wisely.

In general, financial experts recommend that your mortgage payments (which include principal, interest, insurance, and taxes) should not come to more than around 28% of your gross monthly income. Be realistic about how much house you will actually be able to afford while still enjoying doing all the things you love and plan your home search accordingly.

Keep in mind, too, that the more money you put down on your new home, the lower your monthly mortgage payments will be. A twenty percent down payment is traditional, though there may be alternative funding programs available that require you to put down much less. Do your homework, talk to your financial institution, and look for the best option that will help you continue to live within your means while still holding on to your lifestyle.

Be willing to compromise.

If traveling is your passion, but you’re afraid that homeownership will cut into future vacations to exotic locations, consider purchasing a house that won’t take such a huge bite out of your monthly budget. Be flexible when it comes to travel opportunities as well.

You can save a lot by visiting locales that are off the beaten path, or by traveling during the off-season. Search travel websites for deals on cruises, hotels, tours, and other savings. The same types of compromises can be applied to your other interests and hobbies as well.

Get creative with your lifestyle budget.

If you’re a theater buff, but visiting Broadway just won’t work in your home buying budget, then check out local websites for community productions of award-winning plays. Sign up for updates from websites such as Living Social for discounts on everything from skydiving to upscale spa weekends. Or, if shopping is your passion, bargain hunt for clothing or home décor on sites or save up for a once a year sample sale splurge, and consider shopping at consignment stores. Don’t overlook the simple luxuries; if you’re a gourmet food lover or wine connoisseur, try indulging in a good merlot with a home cooked meal rather than going out to an expensive restaurant.  Offers on everything from free or discounted tickets to concerts or sporting events, manicures, gym memberships, wine tastings, and golf getaways can all be found online with just a little time and effort.

Sources: Nerd Wallet, stephanieoconnell.com, learnvest.com

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