Spring Real Estate 2003

Publication Date: Wednesday, March 12, 2003

Changing careers
Is real estate the smart choice?

by Andrea Moore

Leslie Pappas recently switched careers from marketing to real estate, a move that many people contemplate when the economy slows.

But is this the right move for her and is it the right time to enter real estate?

Pappas is a new Realtor with Coldwell Banker in Palo Alto and although she studied for her real estate license three years ago, she didn't change careers until September of last year.

Leslie Pappas worked in marketing and had her own wholesale clothing business before becoming a Coldwell Banker real estate agent.

"I figured this was going to be my last career and I wanted it to be fun, something that would be throwing me back into the water," Pappas said.

The Palo Alto office has hired six new agents this year to make a total of 95. Another 8 to 10 percent increase is expected next year, Pappas said. "There are 100,000 houses we should have but we don't have," she said. "Too many people want to live here."

The rate of expansion is accelerating, according to Pappas: "There are 150,000 new people coming into this state a year for the next 10 to 15 years."

All those factors contribute to this market maintaining its pace and weigh against the idea that the bubble will burst, especially when the economy turns around, she said.

Bob Gerlach is vice president and manager of Alain Pinel Realty in Palo Alto.

"The opportunity here to make money is astounding. I don't think there isn't enough opportunity in the market for everyone," Pappas said.

The unemployment rate is also a factor in the rising interest in real estate: "There is a huge amount of unemployment, so people are out looking for work and Coldwell Banker is poised to take advantage of that," Pappas said.

But real estate is not the kind of career one does for immediate necessity. It is expensive to acquire the licensing for real estate and it requires time to build a business. "Some people say it takes two years to get established," Pappas said.
Pappas feels that her 21-year career in marketing and owning her own wholesale clothing business prepared her for the change, but for those who are new to the work force, it would be a difficult transition. "I would think that somebody coming straight out of a corporate environment or an office environment into this would be really shocked," Pappas said.

Although her work experience gave her some preparation for real estate, "I had no idea it would be this hard," said Pappas. "I was shocked that you have to scramble to get your own business," Pappas said, "you're out there on your own with really no one to talk to about it."

Even though there is no steady income, people are drawn to the independence and opportunity to make money, she said. "I think financially, it can be whatever you want it to be," Pappas said, adding that in real estate, one can choose to work as much or as little as desired and that amount of freedom is a draw as well.

She points to a common misconception, that a person comes into real estate and the homes are waiting to be sold. That isn't so. Real estate agents must create their own base of homes and contacts in order to get a listing and a sale, she said.

While many real estate companies offer training for employees, including Coldwell Banker, "there is no substitute for being out in the field," Pappas said. "It's actually sitting down and writing your own contract, sitting down and trying to remember how to write it a second time, doing the first listing presentation, gathering as much as can be learned from that, and trying it again. . .

"In real estate it is quite hard to get business," Pappas said. Realtors have to find people who trust and like them and often fail because they force a situation, she said. "I think in order to do this well, generally one has to have a certain level of maturity and seasoning to be able to get along with people and handle these extremely emotional moments," she said, adding "I've been lucky, I've already had a sale and a listing."

Open houses are the best avenue for a new Realtor, because the people who come through the door are qualified and they want to buy a house, Pappas said.
New Realtors should also be aware of the legalities and contract work involved in buying and selling real estate. "I had no idea how much, as a Realtor, I need to know legal stuff, and how much paperwork was involved," Pappas said.

For Pappas, the rewards of a career in real estate outweigh the obstacles to getting started: "I'm very happy with it and I do think this is a career I will continue for the rest of my life. It feels good to me; there's nothing like real estate in the Bay Area."

Robert Gerlach, vice president and manager of Alain Pinel Realty in Palo Alto, agrees that real estate is a stable and growing industry.

"I don't know that there is ever a great time or a bad time to get into real estate," he said. Gerlach agrees with Pappas that the bottom won't fall out for real estate.

"We are always recruiting," he said.

"You hear about the bubble bursting; real estate will always have highs and lows but if you believe in real estate as long-term, I still think real estate is the best investment," said Gerlach.

Scott Kucirek, co-founder and vice president of market expansion for zipRealty.com, refutes the idea that the bubble has burst as well: "We've been hearing that for three years." Basic supply and demand shows that there are a lot more buyers than sellers, he said.

Both Alain Pinel and zipRealty local offices have hired 15 to 20 new agents recently, higher than normal. "All of the offices have had many new people. At one point I was handling a call a day," said Gerlach.

Likewise, zipRealty has four areas of operation in the Bay Area and is planning to hire 15 to 20 new agents for each of the offices. Over the last year zipRealty has stepped up its hiring to meet customer demands, Kucirek said.

Most of his new agents are from a high-tech background. "I think it was due to the fact that the Silicon Valley thing has collapsed," Gerlach said.

And they're not new to the workforce. Real estate is a career that requires time and money to build and most people out of college don't have the money to cultivate a client base, Gerlach said.

The new agents who have a high-tech history have taken pay cuts in order to make a career in real estate. "It's very humbling for those that have a large income," he said.

Not everyone agrees that it is a good time to come into real estate, though.

"No, it is not a good time to come into real estate," said Bob Williams of Peninsula Homes Realty, Palo Alto. "When the economy slows down the number of people who decide to enter into real estate increases," he said.
For realty companies in the Bay Area, there are "too many Realtors and not enough homes," Williams said. People do not realize how complicated it is to get started in the business, he said. There are licensing fees and it is expensive to set-up a business, according to Williams.

"It is a tough time to enter real estate, values are down, old-timers and even some new-timers are getting out," agreed Paul Eckert of Eckert Properties, Los Altos.

But it is a good time to learn the ropes if you have the financial staying power to last six months or more, Eckert said.

People who come from a high-tech background whose jobs have evaporated because of the economy would be poised to do well in real estate, he said, adding "The best people in our business are people with credible prior careers."
Those just out of college would have a harder time, though, because buyers would have a hard time trusting a younger person. Buyers want someone who is older and more experienced, he said.

Eckert's advice for people just entering the market is to join a big company and become a voyeur of agents that are highly successful. By watching experienced Realtors work, one can pick up the strategies and work ethic required in this career, he said.

ZipRealty offers compensation for new agents because they realize the challenge of obtaining and maintaining a client base in the first three months. To bolster this, zipRealty provides agents with approximately 80 to 100 leads of possible clients, Kucirek said.

In spite of the obstacles of starting a new career, it is a good time to enter the market, Kucirek said. ZipRealty's numbers were already blowing off the charts for the month of January, he said.

Andrea Moore can be reached at amoore@paweekly.com