Several scary statistics loom on the internet regarding the extremely high failure rate of real estate agents. The rate at which agents quit varies, depending on the source, but the overwhelming average tells us that every 8 out of 10 real estate agents will walk away from the business within their first five years. If you are considering a career in real estate or are an active agent within your first five-year window, these numbers are ominous. The good news is, there are ways to avoid failure and build some insurance into your success. We will look at the most common reasons agents fail and what things you can do to be one of the lucky (or smart) 2 out of 10 agents who succeed.
The Most Common Reasons Agents Fail
They don’t dedicate enough time
For starters, many real estate agents fail simply because they don’t dedicate enough time to grow their new businesses. In a perfect world, you can work on your real estate business like you would a nine-to-five, but that’s not how real estate works. Realtors® have to work on their clients’ schedules as well as their own. Their hours are unorthodox, and, in the beginning, their days can be long. Clients will want to see houses and that often happens during after work and school hours. So, when all your non-real estate agent friends are getting off from work, you may be starting your day. Weekends can be especially busy with open houses and your clients having more time to commit to touring multiple homes, so you need to be prepared to work weekends. The most successful agents have constant availability, and since your goal is to be one of the agents who make it in the business, you will need to adopt a similar mindset.
They don’t have an entrepreneurial mindset
Agents who fail to succeed in real estate, often fail to think like an entrepreneur. Being a real estate agent is not a career in a conventional sense, it is a business. All successful real estate agents know that they have to work just as hard at building their brands and growing their businesses, as they do at closing transactions. Every business must differentiate itself from its competition and real estate agents need to do the same. Building a brand requires agents to identify their target audience and find unique ways to get their message in front of them. Agents who quit fail to develop effective marketing techniques and plans for getting high-quality referrals. It is also important to establish strategic partnerships with non-competing businesses to help grow their customer base. The fact remains, many unsuccessful agents disregard the importance of growing their business like an entrepreneur, not an employee. They became real estate agents for money
As the late business mogul Steve Jobs often said, “The only way to do great work is to love what you do.” Like many other career paths, one should only choose to build a real estate business if he or she is passionate about doing the work. Many agents who walk away from the business do it because they started their journey with making money as their main motivation. This isn’t charity, so naturally, an agent’s goal is to make more than enough money to meet their basic needs, but it shouldn’t be the motivating factor. Real estate agents must have a service mentality and a desire to help others throughout the process of making one of the most significant purchases they will ever make. Because Realtors® work on 100% commission, there may be months when they have no income, especially at the beginning of their career. That is a common point of frustration for agents who got into it for the money. After several consecutive months with no income, many accept defeat and quit.
They don’t have enough savings
New agents should anticipate working full-time hours for several months without any income, but most are blinded by ambition. They believe that they will be the exception, not the rule, and expect success to come to them without much effort. Those agents often jump into the business without adequate savings. Real estate professionals suggest that new agents should have at least six months of savings. The money saved has to be enough to cover all living expenses AND enough to fund the expansion of your new business. This problem isn’t unique to new agents only. Many Realtors® who have been in the business for years can have their lives overturned when the market slumps. Without enough savings to survive the downtimes, eight out of 10 agents will bow out.
They are hard to work with
Real estate is a customer service industry; that means, attitude and work ethic play a large role in customer satisfaction. Some agents fail simply because people don’t want to work with them. Every real estate transaction involves multiple parties working together for a common goal. If any player in the process fails the team by being hard to get in touch with, dishonest or having poor ethics, the entire transaction can fall through. When an agent gets a reputation for being difficult to work with, other agents tend to avoid his or her properties in order to avoid working with them. There aren’t many agents who can afford to isolate themselves from a robust network, so those who do often fail.
How to Be One of the Elite Agents Who Succeed
Consider your expenses beforehand & set aside savings
The best way to ensure your success as a new or even rebounding agent is to prepare for the worst case scenario. Take count of all your expenses, outside income and savings. Be prepared to cover your costs of living for at least six months while you commit to building your business full time.
Use digital marketing
Because most homeowners begin their searches online, it’s vital for agents to use digital marketing to reach them. Spend some time researching the best digital marketing tools for real estate agents and chart out a plan to use them as soon as possible.
Plan, plan, and plan
The old adage holds true- if you fail to plan, you plan to fail. Start by setting both short and long term goals. When you’re approaching a milestone, always review your progress and look for new opportunities. To succeed, you need to be flexible and willing to revamp your plans as needed. The real estate market is affected by economic and consumer trends; the best agents have plans to thrive no matter the scenario.
Follow these tips and you will build a progressive real estate business that withstands market fluctuations just like the 20% who succeed.