One of the biggest – and most common – mistakes that Larry Weltman sees realtors making when they get into the real estate business is thinking it’s an easy way to score big commissions. The fact is, when realtors or entrepreneurs enter the real estate market with this frame of mind, it makes it that much more difficult for them to succeed over the long term.
An accountant by training, more than ten years ago Larry Weltman combined his expertise in accounting and finance with a keen interest and commitment to client service with AccessEasyFunds in Ontario, Canada. AccessEasyFunds provides real estate professionals advances on the commissions they earn as a way to help cover cash flow needs in between commission payments.
As a Client Service Representative at the company, Larry Weltman has a goal of providing realtors with as much information as possible on how advances on real estate commissions work and how they can be built into a successful real estate business plan. More broadly, having worked in the real estate industry for more than a decade, Weltman uses his years of experience with realtors to impart knowledge on the financial realities of working in the real estate market and how young real estate professional can succeed financially.
Ontario’s real estate market has been red hot for a prolonged period of time. What are the downsides to that when it comes to young real estate agents hoping to capitalize on the potential?
Larry Weltman: It is very difficult to break into a hot market. Established realtors tend to get the listing which move fast, and their incomes tend to increase in these markets. Also their clients on the buy side have been conditioned to bring unconditional offers and large deposits to win multiple bids.
How prepared do you think most realtors are when they get into this market? Besides overestimating the chances of getting rich, what are the biggest mistakes you think new real estate professionals make?
Larry Weltman: Putting all their eggs into one basket – going for one big deal. This seldom works. Ground work should be done to develop and establish oneself within target markets. I highly recommend that a new agent try join an established team, so that they can learn the complicated process, get mentorship, and at same time develop a network within that team and a community establishment.
Make sure you have fiscal resources to last in the business!
Conversely, what are the positive aspects of today’s market that smart entrepreneurs can leverage, and how do you recommend they do that most effectively?
Larry Weltman: Whilst this industry is highly competitive, there is still a substantial market. One needs to work hard and find a niche within a large established market.
Why is a business plan so important to a startup in the real estate business, and what are the most important components entrepreneurs should consider as they develop theirs?
Larry Weltman: A business plan sets out what are your objectives and how you are going about to achieve them; and at the same time how you are going to fund this plan. Make sure you have realistic goals and the markets you are targeting are penetrable. How will you get into this market – what do you need to do etc.
How much of an impact does cash flow have, and how do you recommend realtors handle cash flow issues that can cause even the most seasoned realtors to stumble? Is there a rule of thumb on reserves and liquidity and are there other financial standards that someone without experience like yours should learn?
Larry Weltman: Getting a commission is a great win; however there is a long time often between firming a deal and closing a deal. This often creates a cash flow crunch, even for a seasoned established successful realtor. Whilst you are waiting for your commissions, there are many costs that you will incur as well as ongoing marketing efforts. You definitely do not want to postpone your marketing efforts. Many successful realtors use commission advances as a cash flow source to fund this gap.
When you think about businesses that are setting the standards for success in Ontario’s real estate market, what would you consider the three most important qualities that characterize them?
Larry Weltman: For realtors:
- Integrity with clients
- Ability to have funds to stay in the business
- Becoming an established resource within a community
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