Many, if not most, real estate agents fail in their first year—75% is a commonly cited figure online. Why is the failure rate so high? Often it's because agents are poorly prepared for what might appear to be an easy way to make big money.
The most common mistakes that new agents make include inadequate prospecting, failing to market properties in ways that lead to timely sales, and not following up with their contacts to build lasting relationships. Other factors that could affect the success of a real estate agent include their level of motivation, the economy in which they operate, and their ability to weather the early days as they learn the industry and build a client base.
Key Takeaways:
- Many, if not most, real estate agents will fail in their first year.
- Three common mistakes that agents make are inadequate prospecting, failing to market properties in ways that lead to timely sales, and not following up with clients to maintain relationships.
- Real estate agents must be motivated because generating leads and properly marketing listings takes creativity and hard work.
- Word of mouth is a powerful way for a real estate agent to build a reputation and gain new clients.
Understanding Why Real Estate Agents Fail
There are some universal aspects to succeeding in real estate, as in most other businesses. If agents fail to execute certain key tasks properly, they will not last long in the competitive real estate market.
Three major functions of a real estate agent are prospecting, listing properties in an appealing and dynamic way, and building relationships with clients. Here is a bit more about each of those and how to do it well:
Prospecting
Real estate prospecting refers to outreach and marketing efforts that bring in new clients. Rather than waiting for the phone to ring, a real estate prospector picks up the phone (or emails or texts or knocks on the door) to initiate contact with potential clients. For some agents, cold outreach, or cold calling, can be humiliating and seem like hard work for little reward. However, learning how to prospect in real estate can be one of the most important aspects of an agent's job.
If there are no leads, there will be no business. Many agents dedicate a certain portion of their day, no matter how busy they are, to prospecting or lead generation to ensure long-term business. There are software programs and websites that can take some of the grunt work out of prospecting. They offer data on owner demographics, recent buyers and sellers, current and expired listings, for-sale-by-owner sellers, school information, and local amenities, among other useful facts. Some software also has automatic calling to streamline prospecting. Other outreach tools include automatic emailing to curated lists and social media postings.
Becoming a listing agent can be particularly profitable because they will be guaranteed a commission on the sale of a property, regardless of which selling agent brings in the eventual buyer.
Showcasing Listings
Marketing listings in an appealing way is crucial for property sales. Homes must look their best during showings, in marketing materials, on websites, and on social media. Attractive photos and virtual tours are popular tools for showcasing listings. Many agents even use drones to photograph properties from above and show how they fit into the neighborhood. In a tight seller's market, some home buyers today will bid on properties without ever seeing them in person.
Open houses are another classic tool that agents can use to market a listing, and some agents develop unconventional methods to draw attention to a listing, such as themed open houses where a specific type of buyer is the target.
Client Follow-up
An axiom of business is that the fortune is in the follow-up, particularly when it comes to selling something as significant as a home or building. Successful agents develop lasting relationships with buyers and sellers by following up with them after a transaction and staying in contact. A long-term relationship is built on trust, and agents who engender trust will see clients return when they need the services of an agent again. If a real estate agent succeeds in building strong client relationships, they will also gain business through word of mouth, which even in this digital age remains a potent force.
Successful agents also know how to network. As the government's Occupational Outlook Handbook notes, "Some brokers and agents become active in community organizations and local real estate organizations to broaden their contacts and increase their sales."
How Much Do Real Estate Agents Make?
According to the U.S. Bureau of Labor Statistics, the average annual pay for a real estate agent in the United States is $ 54,300, or $ 26.11 an hour.
How Do I Become a Real Estate Agent?
First, you should research the specific requirements in your state. The typical steps involve completing the necessary pre-license education, passing your state's real estate licensing exam, activating your real estate agent license, and finally, joining a real estate brokerage.
What Are Other Professions in the Real Estate Industry?
Real estate professionals include, in addition to agents, brokers, salespeople, trainers, property managers, appraisers, attorneys, investors, and developers. There also also real estate professionals who specialize in either residential or commercial properties.
What's the Difference Between a Real Estate Agent and a Realtor?
The main difference between real estate agents and realtors is that the latter are members of the National Association of Realtors (NAR) and subscribe to its code of ethics. Realtors also have access to their local Multiple Listing Service (MLS).
What's the Difference Between a Real Estate Agent and a Broker?
Real estate brokers can perform the same tasks as agents but have more advanced training and additional licensing. Sales agents are required to work with brokers.
The Bottom Line
The real estate industry has changed rapidly as digital technology has advanced. Online real estate platforms are providing more options for buyers and sellers in searching for properties, comparing prices, and finding agents to represent them. Not everyone who sets out to become a real estate agent will succeed, but those who are well-prepared and sufficiently enterprising stand a far better chance. Investopedia also has these additional tips for succeeding as a real estate agent.
