Why 87% Of Realtors Fail Within 5 Years Of Starting Their Careers & How To Beat The Odds - sGrow CRM (2024)

July 14, 2022July 15, 2022

Business Strategy by Andrea Romano

Read time: 4:23

As a real estate professional, you’re probably familiar with the NAR’s research that found 75% of Realtors fail within the first year, and 87% fail within five years of entering the industry.

After initially hearing these shockingly high attrition rates, you probably thought “That won’t be me, I won’t be one of those Realtors” because it’s not natural to commit to something if you can’t see yourself achieving success.

Despite a confident mindset, nearly 90% of Realtors will change careers within five years of entering the real estate industry.

The most common reasons for failure are:

You Got Into Real Estate For The Wrong Reasons

Many individuals looking for a career change gravitate towards real estate because they believe it pays well, isn’t hard to learn, and offers flexible work hours.

We can thank reality shows, like Selling Sunset and Million Dollar Listing, for this skewed perception of how hard it can be to achieve success as a Realtor.

These reality shows focus on lavish lifestyles, extravagant networking events, quick and easy sales of ultra-luxurious properties, and impressive six-figure commissions.

But, they fail to capture the years of hard work these reality star Realtors have put into cultivating their networks and building their brands within their markets. And, they never show you the behind-the-scenes support that allows these Realtors to appear so effortlessly successful.

The truth is if you aren’t in a position to work long hours without a guaranteed paycheck and invest in support systems to help you manage your business, it will be difficult to achieve success as a Realtor.

You Don’t View Your Real Estate Business As Your Business

If you aren’t operating out of a traditional office setting or have a “boss” to answer to, it can be easy to think of each deal you close only as your next paycheck.

To build a successful and lengthy career in real estate, you need to change your mindset and understand that being an independent Realtor means you’re a business owner. A commission isn’t solely a paycheck – it’s revenue to support your daily business operations, lead generation services, and marketing initiatives to drive future transactions.

If you aren’t already treating your real estate business like a business, it’s time to create a business plan. Your plan should include marketing strategies, sales goals, and a budget to pay yourself while contributing back to the business.

You’re A Part-Time Agent Until Business Picks Up

The cost of entry into the real estate industry is often more than most new Realtors realize, and many do not have the savings or support systems to make the leap to full-time status right away. Instead, Realtors often opt to maintain their 9-5 job they were planning to quit to support their new career.

Maintaining a part-time status may be necessary but can create unforeseen limitations.

If your full-time job doesn’t allow flexibility to field calls, texts and emails from your real estate leads and clients, step away for meetings and showings, and process contract documents in a timely manner, it will be challenging to sell yourself as the best agent for the job.

Additionally, by not being able to attend local training and development opportunities designed to help new Realtors learn the ropes, you will miss out on how to navigate market changes, sales training, marketing strategies, and networking with other real estate professionals.

And, of course, the biggest obstacle you have is gaining enough business to transition into a full-time Realtor. The longer it takes for you to prove your value and ability with potential clients, the harder it will be to earn enough to give up your “safety net” job.

If you’re stuck in part-time status because you don’t have the schedule to support the demands of real estate clients, it may be time to partner with another Realtor in your network with similar goals to share the workload.

You’re Targeting Anyone & Everyone To Be Your Next Client

During your first few months as a Realtor, you were thrilled to win anyone’s business. Being open to working with any and all residential real estate clients may be necessary to gain experience and earn much-needed incoming early on, but this strategy rarely yields the same or more business long-term compared to a niche marketing strategy.

When the topic of Niche Marketing comes up, new Realtors typically think they should focus on the luxury market. Those large commissions can overshadow the fact that real estate is still a relationship-driven business. Before committing to the luxury market, pause to evaluate how your lifestyle, personality, and experience can be used to carve out your space in the local market.

For example, if you live in a community filled with young families with modest budgets, branding yourself as the local expert for helping these families find homes that meet their growing needs can result in more success than focusing on million dollar sales.

If you need to identify your real estate niche, you can find helpful tips and resources here.

You’re Trying To Do It All Yourself

If you made it through your first year as a Realtor, congratulations! You’re that one Realtor out of four who beat the initial odds for success.

The next step is critical in maintaining your momentum.

During that first year, you most-likely worked with one client at a time and remained on top of each step within the process to ensure a smooth closing. You implemented all the sound advice you learned by regularly attending development classes: call new leads right away and continue to follow up as needed, routinely reach out to past clients and important contacts within your network, consistently make a point to ask for referrals, follow up with people when you say you will.

As your business and network continue to grow, it is increasingly harder to do all those things that lead to success as a rookie Realtor. Critical interactions with past clients and sphere of influence happen less, active client demands slow down response time to new lead inquiries, and you don’t have the time to follow up with leads as frequently.

The good news is there are two simple options to help sustain or surpass the repetitive but necessary follow up, maintain organized lists, and track critical business data:

  1. hire an assistant
  2. implement a system like sGrow CRM

TLDR: There are many ways to fail as a new Realtor; implementing proven strategies can help you beat the odds. Get to know sGrow and learn how our system can help you quickly, easily, and affordably take action to build a successful and long-term career in real estate.

Why 87% Of Realtors Fail Within 5 Years Of Starting Their Careers & How To Beat The Odds - sGrow CRM (2024)

FAQs

Why do 87% of real estate agents fail? ›

According to them, 75% of real estate agents fail within the first year, and 87% fail within five years. Some common mistakes that agents make include, inadequate prospecting, not marketing properties in ways that lead to fast sales, and not following up with clients.

Why do most real estate agents quit after 5 years? ›

Money, or lack of it, is another main reason why real estate agents fail. Agents often make the mistake of hearing how much commission other agents make and think they're raking it in. But they don't consider their expenses, such as brokerage or team splits, taxes, education, marketing, and lead generation expenses.

Why do most real estate agents fail in their first year? ›

The most common mistakes that agents make is inadequate prospecting, failing to market properties in ways that lead to fast sales, and not following up with their contacts so that strong relationships result in returning clients.

What do realtors struggle with the most? ›

5 of the Biggest Real Estate Challenges + How Agents Can Overcome Them
  • Fierce Competition. ...
  • Long Hours. ...
  • Time Management. ...
  • It Feels Like a Thankless Job.
Nov 18, 2023

How long do most realtors last? ›

Why 87% Of Realtors Fail Within 5 Years Of Starting Their Careers & How To Beat The Odds. As a real estate professional, you're probably familiar with the NAR's research that found 75% of Realtors fail within the first year, and 87% fail within five years of entering the industry.

Why do real estate agents have a bad rep? ›

The portrayal of realtors in popular media often accentuates aggressive sales tactics and a willingness to prioritize sales over clients' needs. These stereotypes can influence people's perceptions even before they engage with a realtor, perpetuating the unfavorable image.

What percent of realtors become millionaires? ›

California: 44% New York State: 24% Florida: 7% Massachusetts: 6%

How to tell a real estate agent you are no longer interested? ›

In-Person Is Always Better

Honest and direct communication is the number one trick to tell an agent you are not interested. Of course, there is no defined communication method for dumping real estate agents, but I think in-person communication is better.

How many realtors leave the business? ›

The National Association of Realtors announced that more than 60,000 Realtors have left the profession since the beginning of 2023. So why are they leaving? Homes are selling, and they are selling in record time and at record prices.

What do most realtors make their first year? ›

Top examples of these roles include: Real Estate Partner, Entry Level Commercial Real Estate Agent, and Work From Home Reo Real Estate. Importantly, all of these jobs are paid between $24,433 (30.6%) and $28,167 (35.3%) more than the average First Year Real Estate Agent salary of $79,753.

How to make $100,000 your first year in real estate? ›

How to Earn $100k in Your First Year as a New Real Estate Agent
  1. Make 20-30 Contacts a Day. Prospecting is an important part of success in the real estate industry. ...
  2. Hire a Coach. ...
  3. Be Coachable. ...
  4. Learn Scripts. ...
  5. Create A Business Plan. ...
  6. Buy Leads. ...
  7. Surround Yourself With Top Producers. ...
  8. Stay Focused on Your Goal.

Why is it so hard to get started in real estate? ›

You won't have any income coming in from a steady paycheck. This is one reason this transition to a real estate agent can be difficult. Another reason the first year is challenging is because of money issues.

What scares realtors the most? ›

1) Fear of rejection.

This is often the first thing to come to mind when realtors are asked to share their biggest fear, especially for those agents who are new to the industry. It's a scary thing to put yourself out there—to go door-knocking or cold-calling.

What state is the hardest to be a realtor? ›

Some states present more hurdles than others due to high living standards, low average salaries, strict licensing barriers, or depressed home values. The worst states to be a real estate agent include Hawaii, California, New York, New Jersey, and Florida.

What are the cons of being a realtor? ›

The Pros and Cons of a Real Estate Career
  • Pro #1. Achieving Freedom. ...
  • Pro #2. Feeling Responsible. ...
  • Pro #3. Being Respected. ...
  • Pro #4. Excitement. ...
  • Con #1. Having Nothing to Do. ...
  • Con #2. Doing the Wrong Things. ...
  • Con #3. Weird Working Hours. ...
  • Con #4. Irregular Income.

What percentage of realtors fail? ›

The Bureau of Labor Statistics shows that the real estate failure rate is between 43% and 54%. However, common statistics state that 87% of real estate agents fail within five years. Regardless, that means about half or more of real estate agents who enter the industry fail, which is a very high number of people.

What percentage do most real estate agents get? ›

Typically, real estate commission is 5%–6% of the home's sale price.

What percentage do most real estate agents make? ›

Our December 2023 survey of local agents found that the average real estate commission in Los Angeles is 5.38%, which is less than the national average of 5.49%. Calculate your estimated commission in California. The average total real estate agent commission rate in Los Angeles is 5.38% of the final sale price.

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