Why Most Real Estate Agents Fail In The Business
The real estate profession can be one of the most rewarding for many reasons. A few of the best things I love about being a professional real estate agent is the flexibility of my schedule, unlimited income potential, and of course, helping people with one of the largest transactions of their entire lives.
Most successful real estate agents are able to provide way more benefits than drawbacks of being a real estate professional. One thing that is rarely discussed about the real estate profession is the alarming percentage of agents who fail to succeed in the business. Depending on the source, the percentage of real estate agents that fail in the business within the first 5 years ranges between 85-90%.
When you think about it, nearly 9 of 10 new agents can expect to fail, which is an eye opener. I hear my coaching clients saying they were working with an agent who was brand new in the business. Long story short, the transaction didn’t go as planned and did not close. The buyer’s agent was pretty difficult to work with and certainly didn’t do his client justice with the service they provided which played a significant role in the deal falling apart.
This led me to start asking myself, is this agent going to make it in the business? What could be the reason why the agent isn’t going to make it?
This week we look at the top 10 reasons why real estate agents fail. If you’re thinking about getting your real estate license, are newly licensed, or are a 20 year veteran, you need to keep in your mind why most agents are failing in the business. Being aware of these reasons why real estate agents fail can greatly reduce the chance that you’re going to fall victim to the startling statistic of the percentage of agents failing in the business.
1. They Don’t Work Hard Enough. – Being a successful entrepreneur takes a lot of hard work. It doesn’t matter what industry, starting a business is going to mean long hours and lots of blood, sweat, and tears. One of the top reasons why real estate agents fail is because they simply do not work hard enough. Successful real estate agents work odd and long hours. There are few successful agents who work “banker hours” of 8 AM – 5 PM, Monday through Friday. Being a successful real estate agent means working many nights and weekends and being available via phone or e-mail nearly 24 hours a day. Advice: Find out what successful real estate agents are doing on a daily basis. Learning the habits of top real estate agents can go a long way. It’s no guarantee that what one agent is doing to build their business is going to work for the next, but the work ethic of top agents is often very similar.
2. They Get Involved In Real Estate For The Wrong Reasons. – Selling real estate is not for everyone, end of story. Another reason why most real estate agents fail is because they get involved in real estate for the wrong reasons. One of the most common reasons why people attempt to sell real estate is because they think all real estate agents make boatloads of money. This is a huge real estate myth and actually is the furthest from the truth. The average real estate agent makes less than $40,000 per year. Another very common reason people obtain their real estate license is because they love “looking at houses” or like watching shows on HGTV. Being a successful real estate agent is so much more than being a professional door opener. Becoming a professional real estate agent for one of the two reasons above is not a good idea. It’s important to get involved in real estate for the right reasons, otherwise, you may be another real estate agent that fails in the business. Advice: Make sure before getting involved in real estate that you evaluate why you want to sell real estate. If the answer is that you have a desire to help people with one of the biggest purchases of their lives, than real estate could be a great career for you.
3. They Don’t Save Enough Money To Live On. – Successful real estate agents spend money to build their business because they know how important it is. Whether it’s investing in promoting themselves to their sphere of influence or using top real estate marketing strategies to sell homes, it costs money. Many real estate agents fail because they don’t realize that it costs money to run their business and when they realize it does, they don’t have enough money to live on. Not having money to make car payments, student loan payments, buy groceries, or to buy other necessities is another reason why real estate agents fail. Advice: Before selling real estate, it’s extremely important you have enough money saved so that you can pay your bills and have money to also buy lives necessities. It’s highly recommended that before you attempt to sell real estate full time with no other means of incoming capital, that you have at least 6 months of money saved to pay all your bills.
4. They’re Selling Real Estate Part Time. – Another popular reason why real estate agents fail is because they’re attempting to sell real estate part time. Now, before part time real estate agents lynch me in the comments below, I acknowledge that it’s feasible to be a successful part time agent. The reality, however, is that the majority of part time real estate agents fail to make it in the business. Why do many part time real estate agents fail? Well for one, many buyers and sellers have to decide whether to hire a part time real estate agent or not. Many buyers and sellers will avoid hiring a part time agent at all costs, simply because they’re not readily available like a full time agent would be. Nothing against part time agents, but this is the thought process of many consumers. Advice: If you’re going to sell real estate part time, remember, honesty is the best policy. If you’re interviewing with a buyer or seller, explain to them that you’re a part time agent so that there are no problems in the future. If your full time position allows you to answer phone calls relating to real estate, explain to them that you’re able to answer calls and inquiries. If not, make sure you’re upfront about that as well. Being honest with buyers and sellers about your part time position will get you many more victories than it will defeats.
5. They Don’t Set Goals Or Have Action Plans In Place. – Goal setting and action plans are a critical part of any successful business. Most real estate agents fail because they don’t understand how to properly set goals or create action plans. Successful real estate agents are constantly setting and reviewing goals and action plans. It’s not as simple as setting a yearly goal and not revisiting it until the end of the year. It’s constantly being aware of your progress towards your goals and action plans. Advice: A few of the most important goals for real estate agents to set for themselves relate to their sales. Goals such as the number of transactions and number of sales are obviously important. Other goals and action plans, such as, how many weekly prospecting calls will be made, are also critical. Bottom line, setting goals and action plans can make agents more accountable which, in many cases, will lead to better results.
6. They Don’t Know How To Lead Generate. – One of the best things about being a real estate professional are the numerous ways business can be generated. The problem though is that many real estate agents fail in the business because they don’t know how to lead generate. One common trait of successful real estate agents is that they understand how they’re going to generate new leads for their business. For example, there are many PROs and CONs of open houses, one benefit being that open houses can be effective for generating leads for agents. On the other hand, a successful agent may determine that open houses are not the way they want to generate leads and they’d prefer to get leads through online marketing or social media. The commonality is that successful agents will know how to generate leads which keeps new business opportunities coming in. Advice: One of the first things that new agents should do is decide how they want to generate new leads. Are you the type of person who wants to door knock? Hold open houses every weekend? Utilize Facebook ads to get real estate leads? Whatever the answer is, knowing how to lead generate will greatly reduce the number of real estate agents who fail.
7. They Don’t Understand How Or Where To Market Themselves And Their Business. – A fairly common reason why most real estate agents fail in the business is because they don’t understand how or where to market. There are dozens of places a real estate professional can market themselves and their business nowadays because of the internet. Real estate agents fail because they often use the internet as a “look at ME” venue. There are so many real estate agents promoting on their Facebook pages about their latest and greatest listing or about the number of homes they sold in a week. While this may seem like an effective strategy of marketing themselves and their business, it’s actually a great way to get unfollowed or unfriended. The majority of your connections on the internet aren’t in the market for your new listing or don’t care if you’ve sold 3 homes in a week, however, sharing with your connections helpful information relating to real estate may interest them enough to read it or share with someone they know who maybe making a move in the near future. For example, if you were to share on your social networks a helpful article you wrote on the most important steps to buying a house, there is a much higher probability your friends and family shares your post with their friends and family because it’s helpful, not self-promotional. The same can be said about a helpful video you create for first time home buyers in your area about first time home buyer programs and grants. Advice: Successful real estate agents, those who make it in the business for extended periods of time, aren’t always promoting themselves. Successful agents know the importance of providing value when marketing themselves. In the long run, agents who’re viewed as an authoritative real estate professional will be more successful. As your considering a new marketing technique, always ask yourself, is this going to be helpful for others? Is your marketing piece providing value? If the answer is no, resist the strong urge to use the marketing technique as it may end up making your look foolish or even worse, lose friends or potential business.
8. They Believe That Being Successful In Real Estate Is Easy. – Real estate agents fail to make it long in the business not only because they don’t work hard, but they also believe that being successful is easy. The top agents in any real estate market didn’t get to where they are easily, in fact, they’ve likely worked for years and years perfecting their skills and talents. For example, the top real estate agents in ________ didn’t drink a magic potion that made them multi-million dollar producers. These agents weren’t just “given” business, they’ve earned it. The same can be said in any city in the world. Being successful in real estate is anything but easy. Advice: Even though there is a common misconception that top agents often get to where they are easily, don’t fall for this misconception. Being a successful real estate agent is not easy and also doesn’t happen overnight!
9. They’re Difficult To Work With. – When you’re working in a profession that deals with other people, it’s extremely important that working with you is enjoyable. Another common reason real estate agents fail to make it very long in the business is because they’re difficult to work with. Whether it’s because buyers and sellers don’t enjoy working with an agent or other local agents don’t enjoy working with an agent, being difficult to work with is a surefire way to fail as a real estate agent. Advice: When working with buyers and sellers, always keep in mind that there are hundreds or even thousands of other agents in any given market they could chose to work with. If working with an agent is difficult, it’s easy enough for a buyer or seller to find a new agent that’s easy to work with. An agent who has a good reputation with other agents also has a greater probability of making it in the business. Many real estate agents fail because they’re difficult to work with and other agents will do everything they can to avoid working with them.
10. They Don’t Know How To Overcome The Tough Times. – There are dozens of reasons why real estate markets are different, in fact, markets can be significantly different even if they’re close in proximity. This means that one market could be strong while another is weak. Another reason why real estate agents fail to make it in the business is because they can’t make it through the tough times. While a real estate market is strong, it’s common to see the majority of agents doing well and thriving in the business. Since real estate is cyclical, it’s inevitable that a tough market is in the future, which is when you get to see if a real estate agent is going to fail or not. Many real estate agents fail because they cannot power through a poor real estate market. Advice: Always plan for tough times ahead. It’s extremely important to continually grow your pipeline, number of contacts, and your overall business even during a strong market. Successful agents are always learning and evolving how they can market themselves to strengthen their business further. Bottom line, don’t get complacent during a strong real estate market!
There is plenty of business to go around in the real estate industry. The percentage of real estate agents failing is way too high. It’s extremely important that all real estate agents, whether new agents or seasoned veterans, realize why real estate agents fail. If the number of strong real estate professionals entering the business increased, it would be good for the industry and profession. Stronger agents entering and staying in the business would mean a better experience for buyers, sellers, and other real estate professionals.
Strength and courage,
Wade
