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9 Simple Reasons Why Real Estate Agents Fail In 2022

It’s common knowledge that 87 percent of real estate agents will fail within the first five years. But it’s not as simple as that.

A combination of housing inventory challenges, anxiety around the country, and ever-changing effective lead generation strategies make the real estate industry more complex throughout 2021.

In part, real estate is just a challenging field. But for every nine real estate agents that fail, there’s one real estate agent that will make a tremendous amount of money. What distinguishes these agents has to do with marketing savvy, self-motivation, and the ability to embrace disruption.

Let’s take a look at why real estate agents fail in 2021 — and what they can do about it.

9 Reasons Why Real Estate Agents Fail

1. Social networking isn’t what it used to be.

In the old days, a real estate agent would hand out their card to their friends and family and be swiftly inundated with requests about local real estate. In fact, pretty much every family had someone who was a real estate agent, and all their transactions flowed through them.

It wasn’t easy, but it was easier. Comparatively, consider the young real estate agent entering the industry today. If she or he is 25 to 35, how many of their peers are actually purchasing real estate? It’s possible that the answer is “none.”

It’s harder for a real estate agent today to gain traction because much of their social circle just isn’t in the market for a new home. Boomers are holding on to their properties because millennials aren’t interested in larger estates. Millennials aren’t buying properties because they’re trying to keep their heads over water.

A successful real estate agent today can’t rely upon the people they know for leads; they have to reach out beyond their own social sphere. This flies in the face of a lot of conventional wisdom, through which an agent mostly networks in their own community.

2. Realtors need to be exceptionally self-motivated.

A successful real estate agent has to be self-directed. They need to tell themselves when to work. They need to perform lead generation every day and carefully curate their social media. No one’s going to tell a real estate professional how to do these things; a new real estate agent is going to need to develop their processes and their marketing strategy from scratch.

Courting a real estate transaction from start to finish can take months. Even finding the right brokerage takes time and courage. You may need to meet with a new prospective client every day to secure a single client a month. Still, that one potential client may pay your bills for the next two months.

With real estate transactions as delicate as they are, realtors need to be constantly moving, and they can’t be easily discouraged. The failure rate is high because the perception of “failure” can be so significant. For a new agent, it’s important to note that a failed real estate sale isn’t a failure; it’s the cost of doing business.

A real estate agent showing a couple a home

3. Today’s buyers and sellers both want to self-service.

According to the National Association of Realtors, 51 percent of home buyers are now finding their properties online. That’s compared to only 28 percent who went through realtors. Most buyers and sellers want to self-service. They want to sell their properties through Facebook Marketplace — not through a listing agent.

Part of this is that these home buyers and sellers don’t see the value of working with a realtor or a broker. They feel they can save time and money by doing it themselves. And unless you can provide value to them, they aren’t wrong. Part of building a real estate career is finding your niche and convincing your client that you can help them.

When conducting lead generation, realtors need to focus on the individuals who are still looking for a Realtor — the individuals who do still see the value in working with a professional. They need to emphasize the advantages of working with a realtor: getting exactly what you want, covering all your bases, and getting what you want a lot faster.

4. Companies like Zillow are getting into the game.

Some reasons why real estate agents fail have nothing to do with the agents themselves. The real estate market is changing. Fewer people are going through a regular broker and more people are going through third-party marketplaces.

Services such as Zillow are getting into the real estate business — not just highlighting houses for sale outside the MLIS, but even selling them directly to the buyer. A new agent is going up against millions of dollars of disruptive technology.

That doesn’t mean that there won’t always be potential buyers looking to work with an experienced agent. But it does mean that the average agent is going to have to work a lot harder for their commission check.

5. It’s easy to get into real estate – it’s hard to succeed.

A lot of people go into the real estate profession for the wrong reason. They assume that once they get their real estate license and graduate real estate school, they will immediately become successful agents. Compared to a lot of high-level professions, real estate is very easy to get into. You can become a real estate agent within a year, with a few thousand dollars spent.

Once you’re a real estate agent, you will always have the potential to make six figures a year. But whether you actually do so depends on your own motivation, your knowledge of the real estate industry, and how well you choose your broker.

So, a not insignificant number of people wash out of the real estate profession because they simply thought it would be easier. But that doesn’t mean that motivated, prepared realtors commonly wash out — it just means that a lot of people go into the real estate industry unprepared.

A calculator, documents, and glasses on a table.

6. Real estate professionals need superb money management.

You probably know quite a few people living paycheck to paycheck. But how many people have a paycheck that only comes once every three months? Between all the social media, showings, and closings, a real estate professional also needs to be managing their own budget.

Part of this has to do with having a business plan: knowing exactly how much money you can spend and estimating how much you’ll bring in. Financial goal setting ad budgeting are both essential to success. Many real estate professionals will start off as part-time agents, both to get a feel for the industry and to augment their real estate income.

Once an agent builds a client base, they can make a significant amount of money. Until then, they need to be extremely conscientious about their cash flow and savings. Being a real estate agent is expensive. There are fees, travel costs, licensing costs, and more.

7. Real estate today is all about having an online presence.

Lead generation is happening through social media, websites, and “going viral” more than it is by networking with other real estate professionals. Successful agents have to build out their online presence. They have to livestream their listings, get on YouTube (or TikTok), and otherwise extend their reach.

For a long time, the real estate profession was based on in-person communication. But with fewer young individuals purchasing homes, it’s very unlikely to find a buyer in your social sphere. Social media and an online presence is very likely to be instrumental to success in the business.

Today’s real estate professionals are posting interesting content on Twitter. They’re posting housing-related news on their Facebook. They’re educating new landlords on the real estate industry, or new homebuyers on energy-efficient initiatives. And they’re working with their brokerage to build their reputation and their authority.

8. The housing market has become incredibly unpredictable.

Apart from the industry itself changing, the housing market is more unpredictable than ever. The housing market crash took out a lot of real estate agents. Few people would have realized that the pandemic would actually cause the real estate market to boom. There are significant shifts occurring. New housing products are being built, but private investors and even pensions are also buying up a lot of housing stock.

With a lot of money flowing into the market, there’s a lot of opportunity. But it also means that the way the traditional brokerage is being disrupted and there’s a lot of uncertainty. Even a savvy real estate agent can’t say with certainty whether the market is heading toward a crash, whether it’s a boom that will last, or whether it might even accelerate — they can only advise their client as best they can.

A frustrated man at a computer

9. Many people give up too early in their careers.

A NAR statistic claims, 74 percent of buyer would use the same Realtor again. On average, people spend about 13 years on each property. If most Realtors are washing out within the first five years, they’re never getting the chance to take advantage of the recurring clientele. There are first-time homebuyers who would be purchasing an “upgrade” home in five years – these sales won’t be seen by a realtor who quits too early.

It takes time to build recognition within a community. It takes far more than five years. Many real estate professionals may need to struggle part-time for the first few years before they are able to transition to full-time work. Realistically, many real estate professionals simply quit before they have built up this momentum and never give themselves the time to grow. In part, this is because the barrier to entry is so low – people go in thinking that they will be able to become a real estate professional and immediately start pulling a six-figure real estate agent salary.

On average, real estate agents make anywhere between $41k a year to $102k a year. It’s a highly variable career, depending both on geographic location and self-motivation. It’s absolutely a career with a lot of opportunity — but it’s also a career that is what you make of it.

FAQs on Why Real Estate Agents Fail

What is the most common reason why real estate agents fail?

It’s very likely that most real estate agents fail because they just aren’t prepared for the realities of the business. Because the barrier to entry for a real estate agent is so low (in terms of licensing, classes, and fees), many underestimate how difficult the actual career will be. But those who are knowledgeable about the profession and are prepared to build a business will be more likely to be successful.

How much money can a real estate agent make?

How much money a real estate agent makes is really down to marketing and their business savvy. A real estate agent makes as much money as they work for — no more and no less. If an agent wants to work 20 hours a week and make a modest sum they can. If an agent wants to work 80 hours a week and make a lot of money they can.

This is a double-edged sword. While it puts you in full control over the money you make, you can easily be tanked by bad habits and poor momentum. Real estate agents absolutely need to be able to self-motivate.

What should real estate agents do about the FSBO trend?

Realistically, it’s going to become easier for people to sell their homes online, and it’s going to become easier for people to buy things online. If a real estate agent wants to be able to grow their business, they aren’t just going to have to be savvy with marketing — they’re going to have to find a niche, such as becoming experts in particular types of homes (such as waterfront properties, luxury homes, new home builds, or historical houses).

How should a real estate agent start developing their marketing plan?

Real estate is hyper-local. An agent in one state isn’t going to have anything in common with another. Because of this, agents should look at what the average real estate agent in their area is doing, first. They should ask themselves what they can do well, what they can do better, and what they can do to differentiate their business from the others. Also, they can look at the common reasons why real estate agents fail in their housing market and learn to avoid them.

Kyle Handy

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I’ve helped hundreds of real estate agents, team leaders, & brokers all over the country increase their sales, online presence, and create scalable systems. I would love the opportunity to work with you. Together, we can make this year your best yet!

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