The Certainty Tax
I am extremely lucky.
When I look back, I can see many places where fortune shined on me and provided me with a lucky break or a chance encounter that I was able to take advantage of.
But of all of the nuggets of luck, probably the most fortunate break was what I didn’t get when I graduated –– a job offer.
Wait, what? That’s lucky?!?
Yep, incredibly lucky.
The Salary I Never Got
I’m extremely fortunate –– I’ve never been an employee, and thus, I have never had a salary.
Upon graduation in 1991, my dream of the cushy job with a big corporation and a fast track to the C-Suite was quickly replaced with a harsh reality that no company would hire someone with my mediocre GPA and total lack of experience.
The crash of 1987 had basically deprived new graduates of job opportunities (or at least ones with my GPA.) If was going to make it, I was going to need to do it myself.
In retrospect, a world with no jobs indirectly taught me the most valuable of all lessons –– the riskiest move you can make is not being in control of your own destiny.
Guarantees Are Risky
When you hear the word ‘guarantee,’ most people hear something positive.
- Money-back guarantee!
- 100% satisfaction guaranteed!
- Next day delivery guaranteed!
In reality, the only real guarantees in life are that we all only have a certain amount of time on this planet, and you are going to pay taxes the entire time you are here.
Sorry, it’s true.
Somehow, popular opinion has deemed guarantees as something good, and uncertainty as bad. While uncertainty can certainly be unnerving, the idea that anything in life is guaranteed is foolish.
As the Great Recession (2008) and COVID (2020) have so vividly illustrated, nothing we thought to be certain actually was, and the guarantees we all assumed existed … well, they vanished in an instant at the first sign of market upheaval.
To quote the great Inigo Montoya in The Princess Bride, “You keep using that word. I do not think it means what you think it means.”
Guaranteed? Sorta …
When I was first licensed in 1993, real estate looked nothing like today.
No Zillow, Trulia, Boomtown, Ylopo, Facebook/Insta, Realtor.com, no CRMs, no email, no cell phones, and, of course, no internet.
The idea that you could simply outsource lead generation to a third party and sit back and wait for the phone to ring was laughable –– you had to beat the street and create your own opportunities.
Today’s real estate business is far different.
New agents no longer have to sink or swim on their own, they just have to join a team and get fed leads.
For many, it removes the greatest fear about entering the real estate business –– starvation.
The Price of Certainty
But of course, nothing in life is free, and being fed comes at a price –– the price is upside and independence.
When the new agent joins one of the ‘Mega Teams,’ they essentially make a deal with fate –– in an effort to guarantee their success, they give away their potential upside as well as help build a team that they do not own.
Stated differently, for that privilege of not having to make their own phone ring, the new agent/team member typically gives up 50% or more of their income and the opportunity to start building an independent business immediately. Call it a ‘Certainty Tax.’
Certainty sure is expensive.
The Certainty Tax
I get it, I was lucky. I entered into the business without the option of certainty –– I had to make it happen.
Being forced to sink or swim has probably had more impact on my life and career than any other factor I can imagine –– I never had the opportunity to take a guarantee supplied by someone else.
In effect, I was never tempted to pay the ‘certainty tax.’
As the market continues to recover (and even thrive!) the crop of agents who entered in the last several years have had a chance to cut their teeth, build a book of business, and develop a loyal following –– they have paid their dues.
However, far too many are still paying the same rate for the ‘Certainty Tax’ as they did on day one of their career.
It is as unfortunate as it is unnecessary.
The Solution
This may seem like I am bashing the large teams –– I’m not. I’m actually taking aim at the agent who no longer needs to stay on one but continues to do so.
Teams are a tremendous addition to the real estate scene and many team leaders provide both fair compensation to their members and what is also tantamount to a Ph.D. in real estate sales.
But these large ‘Mega’ teams extract a sizable premium for the privilege of certainty and their system is designed to take a new agent from zero to productive, but not much further. The agent may evolve, but the compensation often does not, and far too many agents who no longer need to accept any ‘certainty tax’ unfortunately continue to do so.
Safety and certainty are hard-wired into our DNA and the tradeoff makes sense on the surface –– that is until you acknowledge that the ultimate safety is self-sufficiency, not dependence.
When you control your own destiny, you have the closest thing to ‘certainty’ that exists.