At the last brokerage I worked at in New York City, I saw dozens of agents quit after just a year or two. Looking at the data from the National Association of Realtors (NAR), it’s easy to see why so many Realtors fail—the median income for Realtors with under two years of experience is just $8,500 per year. They could have made more money working at Burger King.
I know many agents who consistently clear seven figures in gross commission income (GCI) annually after only a few years in the business. Their secret? They avoided common mistakes that cause many new agents to burn out and quit. To help you avoid some common pitfalls, we put together this list of the seven most common reasons realtors fail.
1. They Didn’t Budget Their Marketing & Lead Generation Spends Effectively
There are few things scarier in life than watching your bank account go down every month—especially if you’re working full time. If you want to become a successful real estate agent, you’re going to need to learn to face that fear quickly. Even top-producing brokers with decades of experience have lean months where they close zero deals and make zero dollars.
For new agents, the lack of a steady income during their first few years can go from scary to downright terrifying very quickly. It causes many to fail and many more to spend the money they budget for marketing and lead generation erratically.
How to Avoid This Mistake
To avoid this mistake, plan out your budgets for marketing and lead generation and stick to them. Throwing good money after bad when you’re not getting the results you wanted is human nature, but you need to stick to your budget if you want to succeed.
Creating an actionable marketing plan is an excellent first step to planning a budget. You can learn how to build one here: The Real Estate Marketing Plan Template Every Agent Needs.
2. They Didn’t Align Their Lead Generation Strategy With Their Personality
The second biggest reason realtors fail is that they don’t align their lead generation strategy with their personality. Instead, they think pushing themselves “outside their comfort zone” every day is a realistic strategy for success. While pushing out of your comfort zone is crucial for success in real estate, doing this every day for years is a recipe for burnout and failure.
How to Avoid This Mistake
In his 27 years as a top-producing agent, broker-owner, and real estate coach Sean Moudry has helped hundreds of struggling agents rediscover their passion for real estate and build long and lucrative careers.
His process is devilishly simple. First, he has his coaching clients take a Myers-Briggs personality test, then he helps them plan out a lead generation strategy that aligns with their personality. He then has them develop a mission, vision, and values statement to help them discover (or rediscover) their passion for real estate and motivate themselves with something other than money.
This last part is critical. Money will only keep you motivated for so long. You need to dig deeper to stay motivated. You can learn more about Sean’s system on his website 16strategies.com or by reading his articles that outline his system, including How to Create an Inspiring Mission, Vision & Values for Your Brokerage and What’s Your Real Estate Sales Personality?
3. They Didn’t Set Concrete, Achievable Career Goals
A recent study on goal setting found that students who wrote out both positive and negative visions for their future and came up with realistic plans to achieve the positive future increased their grades dramatically.
The same principle applies to your career in real estate. You need to combine positive motivation with a fear of failure to stay motivated. Most agents set unrealistic goals for their careers and then predict doom and gloom when they don’t hit them every month or quarter. Others never set any goals at all. As you can imagine, this can quickly lead to burnout.
How to Avoid This Mistake
Work with your managing broker to set concrete and realistic goals for the first five years of your career and then develop a strategy to meet them. “I want to be successful” is not a concrete goal. “I want to close 10 deals per year by my third year in real estate” is. If you’re brand-new, work with your broker or a good real estate coach to make your goals realistic, then develop a plan to achieve them.
The Close Special Report: The Best Real Estate Coaches of 2022
4. They Didn’t Build a Strong Enough Foundation for Referrals
Almost everyone will tell you that building a referral network is crucial to taking your career to the next level. They always seem to forget that if you don’t have an actionable strategy for generating referrals in place, you will have to put in the same amount of effort generating leads every year. This makes scaling your business without burnout nearly impossible.
Experience will give you incremental improvements, sure, but nowhere big enough to become wealthy, that’s for sure. If you want to become truly successful, you need to steadily increase the percentage of your clients that are referrals every year.
How to Avoid This Mistake
The cold hard truth is that referrals generally come from strategy, not luck. Agents who get a significant percentage of their clients from referrals almost always have strategic plans to build their referral networks. For most agents, this means working your sphere of influence. Here are some actionable resources to help you build out a foundation for future referrals:
- 7 Savvy Ways to Generate More Real Estate Referrals
- 7 Tips for Building Your Sphere of Influence in Real Estate [+Email Script]
- The One Skill That Separates $40k Agents From $500k Agents
5. They Didn’t Scale Their Lead Generation Spend
“It takes money to make money” is a cliche for a good reason. As long as you have a strong work ethic, a bit of talent, and a willingness to learn and adapt to new lead generation strategies, you can almost literally buy your way into a successful real estate career.
That’s not an exaggeration. If you’re working the right niche in the right farm area, doubling your lead generation spend can double the number of leads you get, and if you have a solid plan to convert and nurture them, double the number of deals you close.
That’s not an exact formula. Doubling your spend on poorly performing ads might only get you a few more clients and only one or two closed deals. That said, how many deals do you need to close in a year to break even if you spend twice as much on lead generation?
How to Avoid This Mistake
While identifying scalable ad spending is not easy—like the lottery, you will never win if you don’t play. The trick is to study your ads and A/B test them and then increase your spending incrementally until you discover a formula that can scale. Once you do, throwing a ton of money behind your ads that produce results can have a massive ROI, whether you advertise on Zillow, Facebook, or Google.
[Related article: How to Create Real Estate Facebook Ads That Actually Generate Leads]
6. They Chose the Wrong Brokerage, Farm Area, or Both
Every experienced agent has a story about working for a bad broker or chasing leads in a farm area that was over-saturated or dead. In my career, I worked at one brokerage that was run with a culture of dishonesty, laziness, and unprofessionalism. I was miserable.
Because I was miserable, I avoided the office, avoided networking with my coworkers, and was even embarrassed to tell other agents where I worked. This eventually spiraled into the least productive and most miserable six months of my life. I was also trying to draw blood from a stone in a farm area that just didn’t have the listings or clients I wanted to work with.
[Related article: Real Estate Farming: How to Become the Go-to Agent in Your Neighborhood]
How to Avoid This Mistake
Luckily, getting out of a lousy brokerage is par for the course in real estate. Most brokerages will be happy to have you and won’t think twice because you bailed on a dysfunctional relationship. Just remember not to bail too early. Give it a couple of months. Some brokerages and farm areas might start out miserably but morph into someplace you’ll love over time. Change is always hard.
What’s the Best Real Estate Company to Work for in 2022?
7. They Didn’t Manage Their Time Efficiently
If you’ve been in the industry for more than a year or so, you’ve more than likely realized that the whole “make your own schedule” thing was a big fat lie. Not only that, but you’ve given up on the idea of ever having a normal weekend again. The only problem is that just because you work weekends doesn’t mean you get to have a “weekend” during the week.
If you’re working with higher-end listings, chances are you will have demanding clients who will expect you to be available at the drop of a hat. That means that every minute you spend working needs to be a productive minute. After all, you never know when you’ll get an actual break!
How to Avoid This Mistake
If you want to be productive with your time, you’re going to have to sit down and figure out what is truly important to you. From there, you need to categorize and prioritize all the little tasks you have until you can plan out blocks of time for each depending on how important they are.
A handy way to keep track of this is to use what’s called the Eisenhower matrix. First used by Dwight Eisenhower, it’s a simple system to prioritize your tasks and manage your time more efficiently. You can learn more about the Eisenhower matrix and other tips for managing your time as an agent here: Realtors: Why Are You Still Working 70 Hours a Week?
Over to You
Have another reason you see agents give up after two years? Let us know in the comments.
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