When Bryce and I left our 9-5’s to get into real estate, we had a great sense of the fact that we “didn’t know what we didn’t know". It’s interesting because for how high-stakes real estate can be, there really isn’t a lot of formal guidance in getting started in this industry.
Real estate classes are designed simply to help licensees pass a test. It’s sort of like college where, you learn a bunch of stuff that really doesn’t apply to real-world scenarios. You learn things like legal jargon (which is almost never used in real conversations) and plat surveys, but none of that teaches a person how to start a real estate business from scratch.
The numbers back that up: in 2014, the National Association of REALTORS® revealed a study that suggested 87% of real estate agents leave the industry after 5 years, presumably by failing to make it a viable full-time income. I’d venture to say even a higher percentage will leave the industry and keep their license active to do deals part-time, or for their own real estate deals.
Why? Because this is a rapidly changing industry with extreme competition (not hard to see how with 45,000+ licensees in my market alone), and success relies on a skillset that cannot be taught and developed through pre-licensing courses. Furthermore, rarely does a brokerage have the resources or know-how to help agents work on these skills.
We knew these stats getting into this, and worked harder than heck to avoid being in that failing percent. I’d contribute much of our success over the last several years to our ability to avoid these 6 Fatal Mistakes that we see many new real estate agents make.
Mistake #1 - Not being financially prepared.
This might sound obvious, but let’s break it down. Being a licensed realtor is EXPENSIVE. Licensing fees vary state to state but can become costly. You also have to spend annual fees to access your local MLS, join local and national associations, and set up a LLC and business banking accounts. That’s before you purchase lockboxes, yard signs, and other marketing materials like business cards.
Start up costs and licensing fees arent the half of it - remember that we are 100% commission independent contractors, meaning we only collect payment for our services once you close a deal. A typical escrow that requires financing will take 30-45 days on average, and even if you already have a lead ready to go, a buyer or seller lead might not open escrow for 90 days until they find the right house or the right buyer for their home.
So prepare to have enough savings to cover living expenses for at least 6 months, in addition to paying for start up costs and fees.
Mistake #2: Not creating a business plan.
Something happens to real estate agents where they are so focused on finding the next deal, quick and easy transactions, that they forget to plan for future business. That’s when we see real estate agents businesses go up-and-down, feast or famine. They work really hard getting a few quick clients, they get busy working on closing their deals, and then they forget to do the important activities that got them those initial clients in the first place, so they have to start all over again.
What you want to see is a business with steady, consistent and expansive growth. The only way to accomplish that is by nailing down a business plan that details your quarterly and annual goals for sales production and income; identifies your primary lead sources, and sets your metrics for the amount of prospecting you have to do every day, rain or shine.
Subscribing to a business plan like this will keep your pipeline of new business full, even while you are busy coordinating multiple transactions.
Mistake #3: Choosing the wrong brokerage.
Oftentimes it’s easy to choose the first brokerage that comes to mind, or joining a brokerage just because you have a friend or family member who hangs their license there. But I recommend new agents to interview multiple brokerages before they choose one - in fact, Bryce and I interviewed 5 different firms before we settled on our brokerage and we haven’t wanted to leave even after almost five years, because their values and vision align with our business goals.
When interviewing with a brokerage, you want to factor in things like commission splits and fees, but more importantly the level of support they are able to offer you as a new agent. Many brokerages don’t have the resources available to help you learn the ropes as you build your business, so choose a brokerage that offers free classes, training, mentorships, or access to better teams, even if it comes with a higher commission split.
Mistake #4: Expecting immediate success.
There are a lot of real estate agents in this country, and your competition is fierce. Don’t expect immediate success unless you have a built in network or access to a loyal client who will be transacting a lot of real estate in the next year. Even then, sometimes even the people you would expect to support you most might end up choosing another real estate agent over you, so never act like any lead is a real thing until you have an employment agreement signed and in place (and honestly…nothing’s said and done until you have a commission check in hand.).
It’s better to cast a wide net and err on generating more leads than you can handle, then relying on just a few people you think might buy or sell in your first year to get your business up and running. Consider using a CRM to help you with this.
Mistake #5: Being inauthentic.
I get it, being a new agent can be kind of scary. There’s so much that you still don’t know, and yet you want to convey that you are the go-to professional in your area. While some might give you well-meaning advice like “fake it till you make it”, I say own the fact that you’re a newbie.
Buyers and sellers don’t mind if you don’t know the answer to a question they have; what they want to see is that you’re resourceful enough to find the answer quickly and efficiently. So if you’re ever put on the spot with a tough question, feel confident with a response like, “Great question, I actually don’t know the answer to that off the top of my head, but I know how to get it for you.” Then, deliver.
As a newbie, you should be surrounding yourself with a team, or at the very least a dedicated mentor, who can hold your hand through the ramp up period of being a new agent. That way, you always have someone to turn to when tough questions or trouble arises.
This also is a great way to overcome objections; if you have a client hesitant to hire you, let them know that not only are you a resourceful go-getter, you are backed by a powerhouse team of seasoned pro’s who support your every move.
Finally, Mistake #6: Poor lead management.
The most important part of a successful real estate business is an agent’s ability to stay organized with contacts and leads. Not everyone you meet is going to be ready to buy or sell today; so have a system in place to stay in front of them for 3, six, 9 months to a year.
Because even if it doesn’t mean a paycheck today, it means you’ll be able to eat 12 months from now. Don’t drop the ball on great long-term prospects because you’re busy with urgent deals. This is a sure-fire way to ensure your business never gains meaningful traction and fails.
Alright, who’s on the same page with me? If you have experienced any of these fatal mistakes in your own business, I want you to leave a comment for new agents reading this so they can avoid those costly mistakes!
The number one factor that sets the successful real estate agents apart:
Thinking like a brand, not just a business. When you build a brand, you’re focusing long term growth that is built on relationships, reputation, values, and a mission that people can buy into. A brand will have a strong marketing message and a clear identity on who you are, what you do, who you serve, and why it matters. I can’t emphasis how impactful that is to an agent’s success in a crowded industry.
Too often, unsuccessful real estate agents think smaller. They focus on finding quick deals instead of building the foundation to a greater mission that will create higher sustainable income to see you through market shifts and changes. I know that the business I have with my husband today would not be half as successful if we didn’t do the meaningful work of building a brand that would grow with us over the years, and it’s the number one tip I’d recommend to new agents.
