The Art of the Deal

By Dru Frykberg and Rachel Vilsack
December 2011

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Succeeding in the real estate industry requires more than meeting with clients and showing properties. Today’s professionals also must be experts at researching markets, designing and maintaining websites, and using social media.

Real estate careers — those jobs that attract high-energy people who thrive in a competitive market where earnings are often based on commission — are more varied than one might expect, offering opportunities beyond helping clients buy or sell homes.

“Real estate is a very diverse field,” said Tom Musil, an assistant professor at St. Thomas University in St. Paul who teaches real estate classes. Number crunchers become appraisers, people who like physical or outdoor work become property assessors, and marketing types find work in sales and leasing.

Musil’s students frequently pursue commercial real estate careers where they oversee fewer emotionally charged transactions and often avoid working nights and weekends. “We’re not training people to work for real estate companies selling homes,” he said.

 “The biggest difference is we communicate with CEOs and CFOs of companies,” said Nathan Arnold, a CBRE Group Inc. commercial real estate broker who specializes in industrial real estate. “Obviously those folks aren’t working on weekends. We don’t work on weekends or late at night when residential agents are.”

Still, Arnold, who helps clients find warehouses, manufacturing plants, and distribution centers, said successful commercial real estate brokers work 10- to 12-hour days.

While Arnold’s clients almost always base decisions on financial information, the home buyers Bud Kleppe represents make choices based on feelings.

“You have to be able to work around people’s emotions especially if the negotiations get ugly,” said Kleppe, a real estate broker for Saint Paul Home Realty. “You don’t want to be a person who gets stressed out easily.”

Whether it’s residential or commercial real estate, sales agents and brokers draw on their customer service and communication skills (see Table 1). 

“We work really hard on customer service and doing a lot of behind the scenes leg work to really ensure the smoothest possible experience,” said Jennifer Johnson, a real estate agent with The Johnson Real Estate Group at Keller Williams. “The best part is when you can feel genuine appreciation from clients.”

Starting Out

People skills and a dedication to learning about the industry will help new entrants to the field.

The educational background for real estate agents can be varied, from certification programs to college degrees. In Minnesota, real estate agents and brokers must complete specific courses and pass examinations to be licensed. Real estate professionals, however, aren’t required to have a college degree.

Real estate sales professionals start as agents before becoming brokers. Brokers are licensed to manage their own real estate businesses, while sales agents must work with a broker. In Minnesota brokers must first work two years as a real estate salesperson, complete a 30-hour broker course, and pass a broker’s examination.

Musil said college graduates with real estate degrees are a unique commodity because of their background in both business and real estate.

St. Cloud State University and the University of St. Thomas offer undergraduate programs in real estate, and St. Thomas also offers a master’s degree. In addition, several community colleges in the state offer certificate and associate degrees in the field.

“It’s helpful to a certain extent but definitely not required,” Arnold said of a real estate degree. “Maybe it gives people a little leg up getting started. A great majority of the learning is on the job.”

Arnold, who earned a bachelor’s degree in real estate from St. Cloud State University, landed a college internship with CBRE Group Inc. that led to a full-time job and, so far, a 14-year career.

The educational path of Matt Johnson, a real estate agent for The Johnson Real Estate Group at Keller Williams, was different. He has a bachelor’s degree in environmental horticulture with an emphasis in turf management.

“This, of course, has nothing to do with my business now,” he said, “but it helps with curb appeal and landscaping questions from clients.” 

For Johnson, learning is key.

“Getting a license is just like finishing first grade, and there’s a lot more to running a successful practice than holding open houses on Sunday,” Johnson said. “You have to pay your dues and learn at every opportunity.” Many real estate associations sponsor courses in all aspects of the field, including mortgage financing, property management, and real estate law.

Musil said the industry has become more complex in the last 30 years, and real estate professionals — including lawyers, developers, managers, and architects — pursue a master’s degree to build their expertise in real estate law, finance, and analysis to meet the increasing demands.

Sales-focused jobs are not the only real estate careers. Real estate appraisers and assessors estimate property to determine its fair value and write appraisals and tax reports for public record. In Minnesota nearly 1,200 people work in this field, with an average wage of $27.74 per hour. Attention to detail, critical thinking, and mathematics are key skills needed in this profession.

Property, real estate, and community association managers oversee operations, maintenance, and administrative functions for commercial, industria,l or residential properties, including homeowner and condominium associations, rented or leased housing units, buildings, and land. More than 2,900 Minnesotans are employed in this field, with an average wage of $29.49 per hour.

Embracing Technology

Today’s real estate professionals are doing more than meeting with clients and showing properties, the typical tasks associated with this career (see Table 2 and Table 3). They are researching markets, designing and maintaining websites, and using social media. Real estate professionals typically interact with their clients electronically via smartphones.

Stefanie Meyer, a commercial real estate broker specializing in retail properties, provides clients more research and details than ever before, especially in light of the recession. “This last shakeup has made people look more seriously at details of every site.”

Meyer, a senior vice president and principal for Mid-America Real Estate-Minnesota, finds properties and manages leases for clients such as T.J. Maxx, The Gap, Marshalls, and OfficeMax.

Kleppe, whose agency specializes in residential properties in downtown St. Paul, uses his self-taught technology skills in Web design, photography, and social media to better compete against larger real estate companies with bigger advertising budgets. He also attracts clients through his blogs, where he showcases his knowledge of the neighborhood and reports on community developments.

It’s hard to imagine technology’s future role in real estate, especially since no one would have envisioned the usefulness of Facebook and Twitter just five years ago, he said.

One hot trend is real estate signs with QR (quick response) codes.

“The National Association of Realtors recently released a mobile app that uses the GPS antenna that’s found in nearly all smartphones to show you the homes for sale that are near you,” he said. “No longer will you wonder how much that house is for sale that you’re staring at on Sunday night.”

This connection to technology makes the job easier, too.

“The nice part is with smartphones, iPads, and electronic signatures, we really don’t miss a beat, whether we’re on the road or if one of our clients is traveling,” Jennifer Johnson said.

Moving Forward

The real estate industry has been hit hard by the Great Recession and its lingering effects.

Musil said there’s pent-up demand that will result in more transactions and hiring once the economy rebounds.

So far, Arnold said he’s seen little hiring or pent-up demand in the commercial real estate market.

This year the industry seems to be slowly climbing out of its slump, however. Arnold said more clients want to talk about relocating and pursuing higher quality properties — a noticeable change from the previous three years when clients were too frustrated to consider moving.

“Our business definitely ebbs and flows with the general economy,” Arnold said. “Our business is a lot more fun when the economy is doing well.”

“People coming into this field need to be realistic about their opportunities,” Kleppe said, referring to the 80-20 rule, which he said is more like the 90-10 rule in real estate, where 90 percent of the money is made by 10 percent of the agents. “To succeed, you’ll need a rock-solid business plan, lots of coaching, and a good mentor.”

In Minnesota the average wage for a real estate sales agent is $22.23 per hour.

“I think we’re losing a lot of good agents who are not making enough to support their families,” Kleppe said. “If the market stays just like it is now for the next five years, the industry will lose more agents. Not to say there wasn’t a surplus of agents during the boom, but the pendulum is swinging just as hard in the other direction now.”

Despite the recent economic decline, data show sales will be buoyed over the long run by the continued desire of people to own their own homes and the investment potential of real estate.

This demand will transfer to employment for real estate sales agents, which is projected to grow by 18 percent between 2009 and 2019 in Minnesota, as demand grows from younger adults who will be forming households in greater numbers. That’s 1,950 new real estate sales agents needed across Minnesota. Employment is sensitive to external factors like changes in the economy, interest rates, and the volume of sales.

The job outlook for real estate brokers, real estate appraisers and assessors, and property managers is also projected to grow at above-average rates between 2009 and 2019 in Minnesota. While demand for real estate brokers and appraisers is tied to economic conditions, the need for assessors is less impacted by economic and real estate market fluctuations. Property managers with experience in health care or managing housing for older people will find particularly good opportunities. 

People with post-secondary coursework in business and finance will find more opportunities, as will those who incorporate new technology into the services they offer. As more clients have easy access to property searches and other real estate information online, agents who offer value-added services and have extensive social and business connections in their communities will have the best chance for success.

Spotlight: A Family Business

For real estate sales agents Matt and Jennifer Johnson, real estate is a family affair. 

Both husband and wife grew up in Wisconsin’s Door County and have connections to the construction industry. Matt’s father is a custom home builder, and Jennifer worked in the new home warranty department for a regional builder. In 2003 they took the plunge into real estate.

“We began reading a lot on real estate investing and both decided to take the licensing course together,” Jennifer said. “I went full time into real estate and took every class I could get, but what you learn in the classroom is nothing compared to what you need to know in real world practice in a very competitive industry.”

Together, Matt and Jennifer formed The Johnson Real Estate Group (www.tjreg.com) at Keller Williams with an office in Woodbury. Working in the same office has its rewards and challenges.

In addition to seeing your spouse daily, Jennifer also cites the unique understanding a husband-wife team has in the real estate business. “A non-real estate spouse would have a hard time grasping why if an offer comes in five minutes before you were leaving for the day, you might not make it home for a few hours,” she said. “They say the divorce rates for Realtors are quite high, but not every Realtor is lucky enough to work with their spouse.”

For Matt taking work conversations home is the challenging part of working as a husband-wife team. “Sometimes you want to enjoy that anniversary dinner without asking how the Smith appraisal went or changing a diaper while describing the layout of the home for the new listing,” he said.

“We have a great assistant, Nina, who keeps our marketing and lead generation systems moving,” Jennifer said. “This is a great help to keep the pipeline of future business full. A lot of people get so busy with the day-to-day that they forget to plan for how they are going to pay the bill next month, or six months from now.”

Working with your spouse may not be a career choice for everyone. According to their assistant Nina Kacrowski, the Johnsons are a success. “I am always impressed by the way Matt and Jen are able to work together,” she said. “They really know each other’s strengths and weaknesses and don’t try to compete with one another. Because of that, they make a great husband-wife team.”

“Being self-employed, we don’t receive any traditional benefits, other than unlimited potential and an excellent atmosphere to work in,” Jennifer said, referring to Keller Williams, which was ranked as one of the top places to work in Minnesota in 2011.[1]

“We are, however, 100 percent commission-based, so we only get paid based on a successful closing. There is no sick time, paid time off, or maternity leave,” she said. “To be able to survive and even thrive in this business, you have to be very disciplined and forecast for the cyclical and seasonal ebbs and flows.”

So far, Matt and Jennifer Johnson have found success in the real estate business.

 “You spend so much time with clients in the process of selling or buying a home, and it’s hard to just say goodbye after the closing,” Jennifer said.  “Most of our closest friends are past clients.”

[1]Phelps, David. “Large Companies: Cargill, Kwik Trip join Keller Williams at top.” Star Tribune, June 23, 2011, www.startribune.com/jobs/topworkplaces/123547984.html .

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