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Yes, but some timeshares…
The instructor is kind, and begins his lesson with a basic introduction to the types of property that exist in real estate, and how the scope of real estate is much larger than just the agents. No surprises there. He proudly shares how his kind of real estate is farms, ranches, and vacation homes, and suggests that we each specialize in a certain area of real estate, be it investment properties with multiple units, larger apartment buildings, small condos, the bread and butter of real estate, a 3b2er (3 bedrooms, 2 baths), Manufactured homes, Mobile Homes (AVOID THEM LIKE THE PLAGUE he warns…no commission to be made) and explains that mobile homes are not assets which appreciate…which is generally true, like he said, a mobile home is more similar to a car than a home, it tends to go down in value, unless you got it for a rock bottom price. And of course agents aren’t going to be too interested in 6% of $20,000, which tends to be the average price of a mobile home here.
He continues listing off the types of properties which one can specialize in, Co-ops (like a neighborhood which has a private park or road with an HOA fee), Town homes (which are always condos, but condos aren’t always town homes as they often have units above them), land parcels, and Timeshares. He asks the class what is unique about timeshares, and without thinking I respond out loud “They aren’t assets”. He gives an uneasy laugh, and I get some chuckles and nods, along with some glares from those in the class who proceed to identify themselves as owners of timeshares. He then proceeds to outline some of the positive qualities of time share properties, which seems odd to me, though I later find out that the agency providing this class which he works for is in fact owned by one of the largest timeshare companies on Earth. So they have a vested interest in not completely lampooning the glorious wastes of money that guarantee you spend at least one week of the year in an overpriced resort.
Really though, anyone who says a timeshare can have any use either owns one and secretly regrets it, or has a vested interest in selling the things. Avoid these like the plague.
After some timeshare discussion (apparently this brokerage has a branch devoted to selling the things as real estate), and the instructor failing to provide me with a satisfactory definition of what exactly a twin-home is, we move on.
He then begins to explain how the Broker and Real Estate agent interact. A real estate agent really is just an extension of the broker he or she works under. Simply put, the brokerage under one principal broker, manages all the transactions of his or her agents. Every transaction is completed in the broker’s name. The commissions go to the broker. Even the clients which the agent finds, technically belong to the broker. This means that if you find yourself working for a useless and expensive broker, that you legally cannot bring the clients you found (even if they’re family or close friends) with you if you switch brokers.
Brokers like new agents, because of this. An agent that has just completed school and gotten his or her license is often eager to begin work, and will come to a brokerage bringing all their family, friends, and neighbors in as clients for the broker. The young agent then works insane hours to try and sell each of these people a home. After hundreds of hours, a few commissions come in and the broker gets the lion’s share, giving the poor young agent as low as 15% of the commission. The school I’m at offers the most promising new agents a whopping 45% cut. Most local brokers also charge their agents for advertising, office space, utilities, and other monthly fees. The broker in turn does little more than take upon a weak legal liability for the agent’s actions, offers a small 10 square foot cubicle, and perhaps a phone. Some brokers give floor time, or small amounts of advertising, though this seems to result in very little actual clientèle. In real estate, the burden is upon the agent to find clients.
As the instructor is explaining the commission cut, I raise my hand and ask how one would go about choosing a broker with the cheapest cut. This question is frowned upon, as the school has an interest in most of us going to work for them. I was sad that my question was discouraged, as I wouldn’t mind finding a broker that offers 100% commissions to the agent, and some client rights in return for a small transaction fee. I’m not planning on being an agent, but would love to be able to occasionally list or by my own investment properties through the MLS.
After my question, the woman next to me asks if I have a broker yet. I groan inside, thinking the broker recruitment has already begun. I explain that I’m not interested in one, but am trying to learn as much as I can about the ins and outs of real estate for a book I am writing. We begin to chat a bit, as the first class concludes, and she explains that she is going to work with a broker friend of hers who sold her a house in Utah several years ago. We both share how we miss big cities (Los Angeles - New York) and complain about the ridiculous cost of living on both coasts. I get a snack and sit down for the next class.
read comments (2)
March 3rd, 2007 at 4:44 pm
[…] it’s all about. Working as a real estate agent. Lesson 2 is taught by the same instructor as Lesson 1. Class starts with a discussion of the MLS (Multiple Listings Service). The MLS is used by Real […]
July 12th, 2007 at 12:56 pm
I enjoyed your post here. I’m interested in going to a real estate school to knock that out. Mainly as a second income pt time. I don’t really need the money, but I think it would help advance my knowledge so I could eventually begin RE investing. Did your school cost anything?