The Real Deal New York

For brokers, why rent when you can sell?

October 16, 2007
By Melissa Dehncke-McGill

In the rough-and-tumble world of New York real estate, rental agents are at the bottom of the well-established pecking order. They are often looked down on by sales brokers, generally make less money and have more tiring jobs in a faster-paced segment of the market. So when is the right time for a rental agent to head on to the seemingly greener pastures of sales?

New agents often start out in rentals because the success rate is higher and it’s easier to make money right away, while a new sales agent may not see any income for three to six months. Later, as the agent gets experience and builds up a reputation in the business, that can change.

Often, the high-pressure atmosphere and long hours in the rental market will drive an agent to either move to sales or leave real estate altogether.

“Typically a rental agent will get burned out over the course of three years or so. They become bored and less challenged, this is when a transition to sales should come into play,” says Michael Moran, director of sales at Dwelling Quest.

Agents that decide to stay in the industry usually make this decision when they first start out, Moran added.

“They join the real estate industry for its long-term career potential,” he says. “They may not have a transition plan in mind, but they know this is the career for them, wherever it may take them.”

From the outset, though, a rental career can be a tough haul. Around 80 percent of agents don’t make it past their first year, according to industry estimates.

“A lot of people give up in the first few weeks. It’s a prime example of not managing their time and workload,” says Noah Sferra of Benjamin James, who started as a rental agent and now also does sales. “You have to say, ‘I am not working today after 6 p.m. I’m not making any money but I still need two days off.’ I see that all the time with the younger ones; they are working hard. If there is burnout, it is because they are not taking care of themselves.”

Adding to the pressure, the rental market started improving this past spring after a four-year lull following the dot-com bust, resulting in more competition among agents.

For those who are successful, however, starting in rentals can mean a quicker rise to the top than in sales.

“One can become a top rental agent in six to nine months,” says Greg Young of Citi Habitats. “In sales, it takes two or three years. Successful agents, as they grow in their careers, are going to move toward sales because it’s easier to make $200,000 selling 15 apartments than renting 70 of them.”

Starting out in rentals is also a good way to get acquainted with inventory in the marketplace without making the leap into sales. “To become familiar with your market and each building, it’s helpful to be a rental agent first,” Sferra says.

Sferra himself made the transition to sales a few degrees at a time, making his first sales deal less than a year after starting out as a rental broker. One year after that, now doing as many sales as rentals, he says his income has more than doubled.

He knew the time to make the transition had come when he noticed that on his company’s Web site, sales ads were getting nine to ten times more hits than rentals.

“There is more of a market in sales,” Sferra says.

Splitting time between rentals and sales can be a “fantastic marriage,” he adds, “because in sales there is so much downtime. While you are waiting for a commission or the deal to close there is plenty of time to do some rentals.” Rental deals can typically take three to four days (including three to four hours to get a lease), while the timeline for sales is more likely three to four months.

Thomas Kim of Dwelling Quest just started sales training after working in rentals for nearly a year.

“It’s hard to keep up that kind of pace for a long time,” he says. “Rentals is where you start out, and sales is a career.” Kim says rentals can feel like running a hundred-yard dash literally. “There have been situations where I’ve run to the management company office and gotten there 10 minutes late.”

Beatrice Ducrot of Stribling says a slower pace and a more in-depth relationship with clients is part of the attraction of being in sales.

But Ducrot, who did rentals almost exclusively for 10 years before moving into sales, says she has also cultivated long-term relationships with her rental clients.

Like her, many clients have made the transition from rentals to sales.

“I have rental clients who have stuck with me for the last 20 years because I tried very hard to help them the best I could and they enjoyed my service,” she says. “A lot have become sales clients, too.”

Ducrot acknowledges the perception that rental agents are lower on the totem pole than sales agents, but says it is inaccurate. In her opinion, rental agents work much harder than sales agents. She says it’s especially true because “the rental client wants to see you right now and has much less loyalty.”

“Most agents that specialize in sales feel they are above rentals,” agrees Moran. “This carries over to the rental agents, who are forced to believe that they are lower on the totem pole due to the lack of respect they get from the ‘more established’ sales agents.”

Still, Sferra acknowledges, “you definitely find that people walk away from rental deals saying worse things about their agents than in sales deals.”

Moran believes that in order to be a professional in the industry one must be able to offer complete knowledge of both sides of the market.

“If an agent can’t offer the full service, that agent is on the lower end of the totem pole, regardless of whether he or she specializes in sales or rentals,” he says.

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