Every year, a number of new real estate agents hit the market with impeccable optimism. A large number of them, however, also quit just after their first two years. Interestingly, the data doesn't show that this is caused by a lack of income. Not when the market is paying agents an average hourly rate of $17.73, without accounting the commissions and bonuses. With that kind of potential income at stake, it begs the question why do real estate agents fail?
What’s the Secret to a Successful Real Estate Career?
Studies show that even with such promise, hardly 10% of all real estate agents make more than $110,000. This is primarily because only some agents are willing to put in that extra work that others won’t. It’s not entirely about the unwillingness of those who fail. A number of people who take their jobs seriously and are committed to also putting in some extra effort still fail because of the lack of awareness or other factors. The fact is that the property industry has existed forever. Over time, it has developed a few proven ways to do good business. We offer some of those here as tips and to shed a bit of light on the puzzling reasons on why real estate agents fail.
While real estate can certainly be lucrative, it’s also a tricky business—and not everyone succeeds. If you’re considering a career in real estate, you should be prepared for the common pitfalls real estate agents face and armed with smart strategies for overcoming them.
- Why do real estate agents quit?
- Is being a real estate agent hard?
What Causes Real Estate Agents to Fail?
1. Treating Real Estate Like a Hobby
Not being fully dedicated to a real estate career is the number one reason real estate agents aren’t successful. When you’re a real estate agent, you have to hustle! If you want to be successful, it can’t just be something you do on the weekends like a hobby—treat it as a career. While one of the perks of real estate is that you get to manage your own hours, you still need to dedicate enough time to your career to see results. The most successful real estate agents work extra long hours, including weekends and evenings. They know that to be successful you have to be available when your clients need you.
The Solution: Go in Fully Dedicated
To start your real estate career, you have to go all-in, knowing that it’s going to take a significant amount of time. But as many current agents will tell you, if you are passionate about helping clients with one of the biggest decisions of their lives, it’s all worth it. In fact, we recommend that before you take the plunge into real estate, you interview real estate agents to get an understanding of a typical agent’s daily life. While not every real estate agent is the same, the top-performing agents have a lot of similar qualities and a similar work ethic.
2. Not Generating Enough Leads
A real estate agent only gets paid when a client hires them to sell a house or to help them find a house. To be a successful real estate agent, you’ll need to have a steady stream of people looking for your services. While many of your clients are likely to be from word of mouth, how are you supposed to build your portfolio at the very beginning?
The Solution: Invest in Marketing
Marketing is the best way to generate leads at the beginning of your real estate career. All real estate agents need to be paired with a brokerage, and sometimes these brokerages will assist you with your marketing (after all, if you don’t get paid, they don’t get paid). However, it’s not guaranteed. At the very least, you will get your photo and a short biography on their website. But with so many seasoned real estate agents listed on the brokerage website, many clients are likely to choose them, so new agents need to take marketing in their own hands. Common ways new real estate agents can market themselves are through open houses, social media, personal websites, and other online marketing. To be a successful real estate agent, you’ll always need to know where your next lead is coming from.
3. Underestimating the Work
Being a real estate agent is hard work. And if you’re switching to a career in real estate thinking that it’s going to be easy, you’re probably going to be disappointed. Successful real estate agents need to go into the field knowing they’re going to work strange hours, deal with opposing personalities, and feel the pressure to work all of the time. Almost all successful real estate agents put in a lot of hours, frequently more than a typical nine to five, and any assistance you’d want to hire will come out of your own pocket.
The Solution: Prioritize Your Time
The solution to this problem is more mental than anything. You’ll need to make sure your lifestyle will mesh well with an active real estate career. Ask yourself:
- Are you okay working with people that you wouldn’t normally associate with?
- Are your working hours flexible? Can you handle late-night texts and emails?
- Are you as a person flexible? Are you comfortable with people constantly wanting you to drop everything to assist them?
While you’ll certainly want to set some work vs. personal life boundaries when you’re new to the real estate world, you will need to understand how hard you will have to work to get ahead in the game. That doesn’t mean you can’t have a life; it just means you need to be really good at prioritizing your time. Once you become successful, you’ll be able to delegate a lot of your administrative tasks to people on your team, which will free up your personal time significantly.
4. Not Earning Consistent Income
Unlike a typical nine to five job, you won’t be paid every two weeks as a real estate agent. Instead, your paychecks come when a client purchases or sells their home. While these paychecks are certainly a lot larger than one you may receive every two weeks, these commission checks have to last you until you next help a client sell or purchase a home. And if you’re not successful at lead generation, who knows when that next client will show up.
The Solution: Learn How to Budget
You need to learn how to budget to ensure your income lasts you from paycheck to paycheck. The hardest part of real estate pay is that the next paycheck isn’t always guaranteed and the amount of the paycheck can vary drastically depending on the client. Another best practice is to make sure you have savings set aside when you start your new real estate career. As we mentioned, your next paycheck isn’t guaranteed, so ensure you have enough cash set aside to support yourself during your 6-8 month ramp-up period.
5. Can’t Handle the Unpredictable Nature of Real Estate
As you may have gathered, your success isn’t guaranteed and throughout your real estate career. You will face peaks and valleys. Not only does this unpredictability apply to your paychecks, but it also applies to the clients you work with, the number of clients you work with, and how many clients you’re juggling at a time. You will also face unpredictability in your schedule and when people contact you.
The Solution: Get Comfortable with Unpredictability
The most important trait successful real estate agents have is flexibility. Before you jump into a new career as a real estate agent, ensure that you’re comfortable enough with unpredictability in your everyday life. You’ll also need to make sure your familial commitments won’t cause you to overextend yourself.
Get Prepared for Your Career with Pre-License Courses
The best way to prepare yourself for a new career is to understand what you’re up against. We hope this blog post has been helpful in doing just that, but it’s no substitution for more formal real estate pre-license education. Sign up for your course today and be well on your way to a new career in real estate!
Written and Published by: VanEd