Why do the majority of real estate agents fail?
A friend of mine who is newly licensed reached out to me last week to say he thinks he just “stinks at this real estate thing.” Questions immediately came to mind when I saw his message and it got me thinking about just how many real estate agents fail.
Depending on the source the percentages vary from 85-90% in the first five years. That’s a HUGE percentage and yet the perception remains both with the public and many interested in real estate that you get your license and start making serious money. It couldn’t be further from the truth.
There are a variety of reasons real estate agents fail. For this article, I’ll stick to the top 5 reasons real estate agents fail. Whether you’re already licensed or studying to get your license being aware of why agents fail is important. You’ll want to avoid these reasons to avoid becoming part of the statistic.
Not Knowing How To Lead Generate
There is no one size fits all for lead generation in real estate. Which is a great thing because it means real estate professionals can generate business in a way that works best for them. The problem is that if you don’t know how to generate leads and referrals you’re going to fail.
Successful real estate agents know exactly what they’re going to do to generate leads and how they’re going to do it. They know their business depends on it. One of the first things new real estate agents should do is create a business plan that outlines how they want to generate leads.
It doesn’t matter if it’s through door knocking, social media ads, or any of the other hundreds of ways there are to generate leads. What matters is the agent knows what they’re going to do and how they’re going to do it.
No Understanding Of How Or Where To Market
If you shake a tree 20 real estate agents will fall out. What are you going to do to make yourself stand out? Real estate agents who look at marketing as an opportunity to say look at me…ME…ME…ME will find themselves blending in and not getting business.
A self-serving mentality is a sure fire way to fail in real estate. Your marketing needs to come from a place of value and be consistent with your brand.
Share helpful advice, personal stories, checklists, and first-hand experience. Solve a pain point your audience has. No one cares if you sold 5 houses last week and are “crushing it.” Serve your audience with what they can actually use.
There are a ton of different ways real estate agents can market themselves but, until you have a plan in place don’t spend a dollar on marketing.
No Mentor Or Coach
I purposely didn’t list this one first to illustrate that you’re going to need someone to teach you how to lead generate and market yourself correctly. Whether it’s your broker, a team leader, or a successful individual agent who you partner with as your mentor or coach you’re going to need someone to teach you to be an expert.
This is, in my opinion, a factor that can make or break a new real estate agent.
Passing the test to get a real estate license is easy and teaches you absolutely nothing about actually selling real estate. The test is just like school, memorize the info and then answer questions. Day to day life as a real estate agent requires running your own business which requires an extremely high level of various skills in order to be successful.
Soak up every ounce of knowledge from someone who is successful and who already has a business like the one you envision yourself creating. Be a student of the industry and be willing to make less money in return for gaining expertise. You cannot put a price on expertise and I see far too many new agents focusing on their splits when it comes time to select a brokerage or team. Stop worrying about commissions because 100% of nothing is nothing.
Get Into Real Estate For The Wrong Reasons
A lot of real estate agents fail because they get into the business thinking they’re going to pass the test, start selling a ton of houses and make a ton of money. If it were that easy everyone would be a successful real estate agent. This couldn’t be further from the truth. Let’s not forget the average real estate agent makes $40,000 annually.
Another reason people get their real estate license is they love “looking at houses.” Yes, houses can be nice to look at but, that’s not what real estate is about. Simply opening a door to let someone in a house is not going to get you anywhere remotely close to being successful in real estate.
If you want to get into real estate you need to first ask yourself why. You are signing up to assist people with what is most likely one of the biggest investments in their lives. That comes with a massive responsibility to be an expert and advocate on their behalf.
Poor Work Ethic
When you become a real estate agent you are entering the world of entrepreneurs. There will be blood, sweat, and tears to become successful. If you have a 9-5 mentality you are going to fail. Successful real estate agents work long hours, nights, and weekends.
You don’t get paid to show up when you own a business. Real estate is not for everyone nor is owning a business.
Real estate is flexible in that you can very likely run errands on a weekday which equates to your personal business revolving around your client needs. It is not flexible in the sense of being able to work whenever and wherever you want.
It requires working every day, there is always something to do. Many agents fail because they don’t have a plan or action items to complete each day.
Successful agents make themselves available to their clients and respond quickly to phone and email contact. Being successful in this business requires a high level of communication and it’s not uncommon for that to occur 7 days a week. Agents who don’t put the work in will not be successful.
The perception of what being a real estate agent involves and the reality are on opposite ends of the spectrum. The barrier of entry into the profession is low and the failure rate is high. Being a successful real estate agent might look easy on the surface but, being in business for yourself is never easy no matter what the industry is.
The failure rate is staggeringly high but, if you understand what you’re getting into, surround yourself with the right people, and work tirelessly you can beat the odds and become successful.