The myth that you have to spend money to make money
An excerpt from Real Estate Systems That Work! — on the top-floor office, the bigger house, the newer car, and what all of it actually cost.
New agents are told, early and often, that spending is proof of commitment. Wendy spent a decade finding out what that advice costs. This is from the Myths and my Best Advice section of the book.
MYTH: “You have to spend money to make money!”
In order to really stay focused and “hungry” for business, spend, spend, and keep spending. Don’t worry, one sale will pay for all of that. That is what many brokers say. They want you to be in a constant state of scarcity, like you had no food. Buy advertisements, get a bus bench, fridge magnets, pay for every book, Real Estate conference, and expensive coaches… You have to have an expensive car and live in an expensive house, in the right neighborhood, to look successful!
This is the hype, NOT reality.
This is very much the model of my second Real Estate brokerage, Re/Max Real Estate in Edmonton. My partner and I fell for the hype – hard. We had a top-floor office with a view of the river valley, three desks, and we got 100% of our commissions - the catch? We had to pay $3,000/month just for those desks, whether we sold anything or not. Did it keep us ‘hungry’? Yes - it also kept us stressed and in constant debt, trying to keep up with car payments, house payments, 3 daughters in various activities, and paying our assistant and bookkeeper. We moved into a large 2-story home and sold our small ranch-style home to look like successful agents. We sold our older car and purchased a new vehicle we could not afford, again to impress clients, family, and friends that we were making money!
We were NOT. We fell for the hype hard, and it cost us - a lot! Remember, I told you in the beginning I learned a lot from my failures.
The chapter goes on to the part nobody put on a bus bench: what actually goes out in the first two years — fees, association dues, continuing education, marketing, gas — against a commission that arrives thirty to forty-five days after a contract, if it arrives at all. And the line that follows from it: you are self-employed now. No bi-weekly cheque, no healthcare, no matching retirement contribution.
Her advice on money starts with the least glamorous word in the business. Budget.
Real Estate Systems That Work! is out now.