Here are 9 reasons why real estate agents fail

One of the most shocking statistics in the real-estate industry is the fact that between 85% and 90% of agents quit within five years. This means that if you are in a prelicensing group of 10, nine out of the 10 will no longer be in the same industry five years from now. We have examined the nine most common reasons real estate agents fail and how to avoid them.

1. Failure to account for upfront expenses

Agents in real estate are independent contractors and not salaried employees. Even if you are employed by a brokerage, this means that you are the sole owner of your business. This means that, while some brokerages offer perks such as advertising or marketing, most of your expenses must be paid for. A typical real estate agent will spend an average $11,500 per year on business expenses. Top performers often spend more. This includes everything, from leads to insurance, advertising and marketing costs to travel.

Real estate agents often fail when they do not account for these ongoing expenses as well as transaction fees charged by their brokerage, which are also known as fee splits. For example, an agent might see a $100,000 commission check and adjust their lifestyle accordingly, when the take home pay they should expect is closer to $34,000 (34%), and that’s before taxes. Also, taking into account that the average time to complete a deal from offer to closing (not including finding your client the home) can take between 30 and 45 days , your paychecks may be more sporadic than a typical salaried position when you are first starting in the industry.

The key to overcoming this challenge is having a money cushion and budget

It's crucial to have some money in reserve to help you get started in real estate. This will ensure that you don't have to struggle to pay your bills while you learn the process and wait for your first paycheck.

You can use many online software programs to organize and track your expenses in real estate accounting. A system like QuickBooks can help you organize your finances. It is crucial to understand where your money is going and how it is coming in. This will help you build your business and keep you in the real estate market.

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2. 2.Lack of Mentorship & Training

Training is essential to be able to function in any new role. While the prelicensing course will give you an overview of the rules and regulations in real estate, the real-world knowledge of how to be a real agent and close deals will be shared with you by your brokerage and other agents. Although all brokerages claim to have a training program and many do, if the training is not tailored to your learning style it will not be a good fit.

Finding a mentor is key to your career advancement. Eighty percent of CEOs , including Mark Zuckerberg from Facebook and Mary Barra from General Motors, stated that they had received mentorship which helped them achieve their goals. Mentorship can boost your confidence, increase your network and give you constructive feedback. With the help of a mentor, 70% of businesses survived the first best brokerage to work for. What length is the training program? What are their pedagogical methods of training? What happens after they have completed their training?

Ask yourself these questions: Am I a learner? Do I prefer visual learning or kinesthetic learning? This program will provide me with the most complete and up-to-date knowledge in the industry.

There is no right or wrong answer, but it is important to make sure the brokerage you choose matches your needs and includes processes that will help you succeed.

Although finding a mentor can be difficult, a survey by Olivet Nazarene University in 2018 found that 81% of people felt their mentor worked within the same industry. 61% said they worked for the same company and 67% claimed their mentor was their boss. Ask your brokerage if they offer a mentoring program. You can also ask other agents about their mentor experiences. Usually, mentors are provided by managers at the firm.

If you’re looking for a mentoring program to get an outside perspective, take a look at SCORE Small Business Mentoring, a national nonprofit service organization that matches small business owners to volunteer mentors for free.

3. There is no defined strategy or business plan

Real estate agents often jump into their careers and go wherever the money, clients, and properties take them. These components can be exciting and will help you build your business. However, they won't set you up for long term success as a business plan. According to the Bureau of Labor Statistics an astonishing number of real estate businesses fail in the first, fifth and 10th years.

The Journal of Small Business Management found that business planning and success go hand-in-hand. In a study, they found that companies with over 92% growth in sales from one year to the next usually have business plans. It is difficult, if not impossible, to understand how your business is progressing without solid plans of where you want it to go.

The key to overcoming this challenge is setting and measuring goals

It's in your best interests to develop a business plan to combat these grueling statistics. 71% of companies that are rapidly growing have business plans. These plans include budgets, marketing strategies, and goals for the next month, quarter, or year. Your mission statement and strategies should be included in a real estate business plan. Also, your specific goals for reaching these milestones must be stated. You should always revisit your goals and adapt them as necessary.

You can find more information in our step-by-step guide to creating an estate business plan .

4. Treating Real Estate as a Part-time Job

When I was looking for real estate agents to hire, I was frequently asked the question, "How much money can I make?". A part-time agent usually works between 21 and 39 hours per week, while full-time agents may work 40 to 60 hours per week.

Many people prefer to work part-time in real estate because they are afraid of the idea of only working on commission. Part-time agents are less likely to make the money they want, due to the time they have to dedicate.

Key to Overcoming This Challenge: Determine Your Needed Salary Requirements

It is possible to make a decent living as a part time worker. However, you only have so many hours in the day, especially if there are other full-time or part-time jobs. Agents who don't make enough money are trapped in a vicious circle. This hurdle can be overcome by deciding the realty salary that you are comfortable with, and then deciding if a full-time or part-time career in real estate is best for you.

5. Real Estate Lifestyle Burnout

Real estate agents often leave the profession due to burnout. Agents tend to work more hours per week in order to earn the highest salary. Clients can find a suitable house in between 4 and 10 weeks .

Agents are busy year round to get clients and money. My experience shows that clients are also anxious and eager during the homebuying or renting process. This could include texts, emails and calls beyond "working hours".

The key to overcoming this challenge is setting boundaries

The "typical" work week has five days of work and two days off. This is because you need to take time to relax. It's a difficult problem to solve as time is money in real estate. However, agents need to set boundaries. Schedule at least one day per week to be "off."

You don't have to answer urgent emails, but you should be careful about what you communicate. By setting up controls on your phone to restrict access to certain apps during certain hours, you can limit screen time. These boundaries can make a big difference in your ability to maintain a healthy mind and body so that you are able to succeed in real estate.

To automate communication and complete other tasks, you can use the features in your customer relationship manager (CRM). You can maintain contact while not being glued to your computer. Freshsales can be used to instantly reply to queries, qualify leads and integrate social media.

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6. 6.

Marketing is used for promoting who you are and your business. What are you promising your clients? What makes you different than other agents? While many agents adopt the branding of their brokerage, they forget to market themselves separately. However, it is important to find a balance between them to best display your qualifications to the public.

Most agents suggest spending about marketing strategies guide.

To ensure that you have multiple lead generation pipelines, it is a good idea to invest in lead generation tools. To meet your needs and match your marketing strategy, there are many leads generation providers. Real Geeks is a product that can help you with website design, ad management and auto-text responders.

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7. Not Utilizing Your Personal Networking

Building your client base is one of the most difficult parts of any real estate or business. Placester found that 60% said they prospect for clients daily and 26% spend several hours per day. While buying leads is an option, they can be expensive at $20 up to $200. Agents often forget that the best leads they have are from people in their personal networks. Agents often say that they are afraid to reach out their network because of rejection or embarrassment. However, if you don't do this, you will miss out on a huge potential client pool.

Key to Overcoming This Challenge: Focus on Networking Strategies & Social Media

You can generate leads organically through your network and leverage your influence to help you build your client base. This is an excellent way to increase your client base without spending any money. You can help local businesses by participating in local networking events and sending handwritten notes. Check out our article Top Real Estate Marketing Tips for more ideas.

In addition, it's reported that in 2021, 82%" of Americans use social media. If you aren't using it to network, you will miss out on many opportunities. Social media tools such as Loomly make it easy to automate, schedule, and create content that will help you get your brand noticed and generate leads. You can maximize your lead generation by integrating your brand to popular platforms like Instagram, LinkedIn and YouTube.

8. 8.Don't be disorganized with your client base

Once leads begin to come in, you need to know how to manage them efficiently and effectively. You will receive leads from many sources so it is important to keep track of them and monitor their progress so that no one gets left behind. A standard industry practice is to respond within five minutes . Persistent follow-ups are essential in order to convert leads. If an agent is not organized, they will lose clients and their money every day.

The key to overcoming this challenge is to invest in a CRM

The key to creating a cohesive and powerful organization is a client relationship manager (CRM). CRMs offer a wide range of functionality and features, including lead tracking, qualification, email integration, automation, reporting and many other functions. You can find CRMs that are specifically designed for real estate agents and teams.

LionDesk is a CRM that can keep track of leads, nurture clients with automated responses and drip marketing campaigns. You can also get marketing resources at a low cost to help you get your leads flowing.

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9. Follow Every Lead

It's normal to want to meet every person you come across, especially if you spend a lot of time and money gathering leads. It's important to remember that not all leads will be the same. According to the National Association of Realtors (NAR), the lead conversion rate ranges from 0.4% to HTML2_. This means that if you get 400 leads, you may be able convert four people into clients. Although there may be many reasons that leads don't convert, they are rarely your fault. There are many reasons why clients may not be a good match, including unreasonable expectations, unreliable information, dishonesty or rudeness.

The key to overcoming this challenge is to screen your clients and know your limits

It is important to screen your clients before you work with them. Before you meet your client, research them through LinkedIn to get a better understanding of their background. To talk to your client and get to know their financial situation, schedule a video or phone call. This will enable you to get to know and understand your clients' personalities and sincerity. It is important to meet with your clients face to face to assess the seriousness and authenticity of any transaction.

After your first conversation, you will be better able to determine if the client is worth your time. You can fire a client if you feel the client is not worth your time. You, the owner of your business, have the right to refuse services to anyone you wish. However, it must not be done in a discriminatory way. While remaining professional, gently explain to them why you are unable to represent them in the real-estate transaction. Although it may seem like you are throwing money away, sometimes it is necessary for your business to be prioritized.

Bottom line

Real estate is not without its difficulties, but it is certainly a rewarding career. The joy of helping people find their home is the best part of real estate. Real estate agents must find the right balance between work and fun. However, if you use effective strategies and tools to help you achieve this balance, your career in real estate will be successful for many years.