It is well known that 87 percent of real estate brokers fail during the first five years of their careers. But it's not as straightforward as that.
Throughout 2021, the real estate sector will get more complex due to a combination of home inventory challenges, fear across the country, and ever-changing effective lead generating tactics.
Real estate is, in part, a difficult field. However, for every nine real estate agents who fail, there will be one who succeeds and makes a lot of money. Marketing expertise, self-motivation, and the willingness to accept upheaval are what set these agents apart.
Real Estate Agents Fail For 9 Reasons
- Social Networking Is No Longer What It Once Was
In the old days, a real estate salesperson would send out his or her business card to friends and relatives and be overwhelmed with inquiries for information on local real estate. In reality, almost every family had a real estate agent, and all of their transactions went via him or her.
It wasn't easy, but it was a step in the right direction. Consider a young real estate agent who is just starting out in the business today. How many of her or his peers, aged 25 to 35, are actually buying real estate? It's possible that "none" is the answer.
Because much of their social circle isn't in the market for a new house, it's more difficult for a real estate salesperson to acquire momentum nowadays. Because millennials aren't interested in larger estates, boomers are holding on to their homes. Because they're attempting to keep their heads above water, millennials aren't buying real estate.
Today's effective real estate agent can't rely on the people he or she knows for leads; they must look beyond their own social circle. This goes against a lot of common knowledge, which holds that an agent should largely network inside their own group.
- Real Estate Agents Must Be Extremely Self-motivated
Self-direction is required of a successful real estate agent. They must remind themselves when it is time to work. Every day, they must generate leads and meticulously curate their social media. No one is going to tell a rookie real estate agent how to do these things; they'll have to build their own systems and marketing strategies from the ground up.
From start to completion, courting a real estate transaction can take months. It takes time and bravery to select the appropriate brokerage. To secure a single client per month, you may need to meet with a new prospective client every day. Even so, that one potential client might be able to cover your expenses for the next two months.
Because real estate deals are so delicate, realtors need to be on the go all of the time, and they can't afford to get disheartened. Because the idea of "failure" can be so powerful, the failure rate is high. It's crucial for a new agent to understand that a failed real estate sale isn't a failure; it's simply the cost of doing business.
- Both Consumers And Sellers Today Prefer Self-service
According to the National Association of Realtors, 51% of home buyers now start their search online. In comparison, only 28% of those who used realtors did so. The majority of consumers and sellers choose self-service. They want to sell their homes on Facebook Marketplace rather than through a real estate agent.
Part of the reason for this is that these property buyers and sellers do not understand the value of dealing with a realtor or broker. They believe that doing it oneself will save them time and money. They aren't wrong unless you can bring value to them. Finding your specialization and persuading your customer that you can help them is an important part of creating a real estate profession.
When it comes to lead generation, realtors should concentrate on those who are still looking for a Realtor – those who believe in the benefits of working with a professional. They should emphasize the benefits of dealing with a realtor, such as getting exactly what you want, covering all of your bases, and receiving it much faster.
- Companies Such As Zillow Are Getting Involved
Some of the reasons that real estate brokers fail have nothing to do with them. The real estate market is undergoing a transformation. People are increasingly turning to third-party marketplaces rather than traditional brokers.
Zillow is moving into the real estate industry, not just highlighting houses for sale outside the MLIS, but also selling them to the customer directly. A new agent is up against disruptive technologies worth millions of dollars.
That isn't to say that there won't be purchasers who want to work with an experienced agent. However, this means that the typical agent will have to work much more to earn their commission.
- Getting Into Real Estate Is Simple; Staying In It Is Difficult
Many people enter the real estate industry for the wrong reasons. They believe that after they obtain their real estate license and complete real estate school, they will be successful agents right away. In comparison to many other high-level occupations, real estate is quite simple to enter. With a few thousand dollars, you can become a real estate agent in a year.
As a real estate agent, you will always have the opportunity to earn six figures every year. However, whether you succeed depends on your own motivation, real estate market knowledge, and how well you chose your broker.
As a result, a sizable percentage of people leave the real estate industry because they mistakenly believe it will be easier. That isn't to say that dedicated, prepared realtors aren't successful; it just means that many people enter the real estate market unprepared.
- Professionals In The Real Estate Industry Require Excellent Money Management Skills
You're probably aware of a number of people who live paycheck to paycheck. How many people, on the other hand, have a three-monthly paycheck? A real estate professional must manage their own budget in addition to social media, showings, and closings.
Part of this is establishing a business strategy, which includes understanding how much money you can spend and anticipating how much money you'll bring in. Setting financial goals and planning are both necessary for success. Many real estate agents begin their careers as part-time agents to develop a feel for the industry and to supplement their income.
An agent can earn a lot of money if they've built up a customer base. They must be extremely careful with their financial flow and savings till then. It is costly to work as a real estate agent. There are fees, travel charges, license prices, and other expenses to consider.
- Today's Real Estate Is All About Having A Strong Web Presence
More than networking with other real estate professionals, lead generation occurs through social media, websites, and "getting viral." Successful agents must establish an internet presence. They need to webcast their events, get on YouTube (or TikTok), and expand their reach in other ways.
For a long time, in-person communication was the norm in the real estate industry. However, with fewer young people buying homes, you're unlikely to find a buyer in your social circle. The use of social media and having an online presence will almost certainly be critical to the company's success.
Today's real estate professionals use Twitter to share intriguing content. They're updating their Facebook page with housing-related information. They're teaching new landlords about the real estate sector, as well as prospective homebuyers about energy-saving measures. They're also collaborating with their brokerage to improve their reputation and authority.
- The Real Estate Market Has Become Highly Volatile
Aside from the industry's evolution, the housing market is more volatile than ever. Many real estate agents were laid off as a result of the property market meltdown. Few would have predicted that the pandemic would really boost the real estate market. Significant changes are taking place. New housing goods are being produced, but private investors and even pension funds are purchasing a significant amount of housing stock.
There's a lot of opportunities when there's a lot of money going into the market. However, this implies that traditional brokerage is being disrupted, and there is a great deal of uncertainty. Even the most astute real estate agent cannot predict whether the market will fall, if it will continue to grow, or whether it will even accelerate – all they can do is advise their clients as best they can.
- Many People Abandon Their Occupations Far Too Soon
According to a NAR report, 74% of buyers would hire the same Realtor again. People spend an average of 13 years on each property. If the majority of Realtors leave within the first five years, they will never have the opportunity to take advantage of recurring clients. There are first-time homebuyers who will buy a "upgrade" home in five years, and these sales will go unnoticed by a realtor who retires too soon.
Building a community's recognition takes time. It will take much longer than five years. Many real estate professionals may have to work part-time for the first few years before advancing to full-time employment. Realistically, many real estate professionals resign before gaining this momentum and never allow themselves the opportunity to develop. This is partly due to the low entrance barrier — many enter assuming they would be able to become a real estate professional and start earning a six-figure real estate agent salary right away.
Real estate brokers earn ranging from $41k to $102k per year on average. It's a career that varies a lot depending on where you live and how motivated you are. It's a career with a lot of potential, but it's also a career that you create for yourself.
Why Do Real Estate Agents Fail?
What Is The Most Typical Cause Of Real Estate Agent Failure?
Most real estate agents will most likely fail because they are unprepared for the reality of the industry. Many people underestimate the difficulty of being a real estate agent because the entry barrier is so low (in terms of licensing, classes, and fees). Those that are knowledgeable about the field and ready to start a business, on the other hand, are more likely to succeed.
What Is The Average Income Of A Real Estate Agent?
The amount of money a real estate agent makes is mostly determined by marketing and business acumen. A real estate agent earns the same amount of money as the company for which they work. If an agent wants to work 20 hours a week for a low salary, they can do so. Agents who want to work 80 hours a week and earn a lot of money can do so.
It's a two-edged sword here. While it gives you complete control over your earnings, unhealthy habits and a lack of momentum can easily sink you. Real estate agents must be able to motivate themselves.
What Should Real Estate Brokers Do About The For-Sale-By-Owner (FSBO) Phenomenon?
Consumers will find it simpler to sell their properties online, and people will find it easier to buy items online. If a real estate agent wants to expand their business, they'll need to do more than just market themselves; they'll need to find a niche, such as becoming experts in specific types of homes (such as waterfront properties, luxury homes, new home builds, or historical houses).
How Should A Real Estate Agent Begin Creating A Marketing Strategy?
Real estate is extremely localized. An agent in one state will have nothing in common with an agent in another. As a result, agents should first consider what the average real estate agent in their area is doing. They should consider what they can do well, what they can improve upon, and how they may set themselves apart from the competition. They can also learn to avoid the common reasons why real estate brokers fail in their local home market.