From salesperson to principal

From salesperson to principal

01 November 2012 by Tom Panos 0 comments

It may seem natural for a gun sales agent to become an agency principal, yet as prominent industry professional and trainer Tom Panos warns, it’s not as easy as you may think

The biggest dilemma a successful real estate agent will have in their career is to decide whether they should set up their own office and be a principal. The line of thinking is, if you’re great at sales the next step up is to be the boss.
Unfortunately for many this is one of the worst decisions they ever make in their professional career.
Apart from the detrimental effect on their income they are also negatively impacted from a general health perspective due to the high levels of stress and, of course, their work satisfaction also decreases as their role in real estate changes.
They go from selling and love working with buyers and sellers and move to managing staff, doing bookkeeping, becoming the IT manager, and much more.
There are exceptions to the rule where people who have reached a certain stage in their career are suited to being a business owner. Generally, the success stories of people being a business owner are about that person being a great fit for the role.

They have a tendency to prefer managing people and mentoring them, rather than selling and listing. They also tend to have an entrepreneurial mindset. Stress is something that they can handle significantly better than the majority of the population.
Finally, they have cash or access to it, at least two years cash reserves for running costs during the establishment period.
Salespeople who are not prepared to invest 70 hours a week for the first two years and not expect a good return should avoid the option.
There is nothing more tragic than watching real estate salespeople capable of writing $1 million in gross commission income (GCI) end up working enormous hours, stuck doing paperwork and managing staff problems. Unfortunately this is a recurring mistake that happens in the real estate industry yearly.
An increasingly popular model is where an exceptional salesperson secures their future by becoming a shareholder in an existing asset.
In recent years, it has been commonly used by current businesses for succession planning. The infrastructure and expert knowledge in the business is already there, which means there is a significantly higher probability of success.
It’s worth noting though that most new real estate businesses fail within five years. Of course, a possible downside is that you become a business partner and the relationship between you and your fellow partner sours.
A partnership is like a marriage. Under no circumstances should a salesperson become a shareholder in a business that is debt ridden. You do not want to buy someone else’s problems.
There are exceptions when new start-ups transform into great businesses. But generally this is not the norm. My advice to you is to carefully consider all the options that will help you make a rational decision.

Tom Panos is the general manager of sales at News Corp as well as a real estate coach. His weekly blog goes out to 14,000 agents, and focuses on being an attraction agent. He regularly interviews Australia’s highest-producing real estate people. For more information, visit

More articles from this author:
promoted content
Recommended by Spike Native Network
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
At the top of his game: how this agent evolves to stay number one

Get up close and personal with the best real estate sales agents in Australia in Secrets of the Top 100 Agents. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
upcoming events
REB Awards
Sydney The Event Centre 12 Sep
REB Awards
Sydney The Event Centre 12 Sep
Melbourne The Event Centre 14 Oct
Brisbane The Event Centre 18 Dec
View all events
Do you have an industry update?