Why Real Estate Agents Fail And Get Out Of Business

Published date: Oct 19, 2018

Why real estate agents fail and get out of business

You know how they say you should always enter places, situations and even relationships with a backup plan and an exit strategy? Romantics say that’s not the right way to go about things, but it’s actually a way to take some tension out of the way, minimizing the fear of failing to let you focus on making everything work. If you have the worst case scenario calculated and you realize you will live through it, you can, then, work towards the best case scenario and aim for success.


With this article, we at RealEstateAgent.com want to do exactly that. Put the spotlight on the reasons why real estate agents fail and get out of business so you don’t have to. While a lot of people join the business every year, the real estate agent dropout rate is pretty big as well. Some give up altogether, some maintain the license just in case a relative decides to buy a house and they cash in together but don’t actively practice their agency on a daily basis. So, hopefully, by reading this article, you will not add up to the real estate agent failure rate but learn from everyone’s mistakes, acknowledge them and shift the power from fear of failing to the drive for success.


How long do most real estate agents last?

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 You probably thought about following the career path of a real estate agent, and you don’t really know what to expect. Most likely you were discouraged by people saying that it is quite a difficult field to be successful in resulting in agents quitting after some time. Well, that is partially the truth. Real estate is without a doubt a hard industry to get in as an agent. But, how long do most agents last in the industry? Here are some statistics and facts.

If you are interested in finding out the real estate agent dropout rate, then according to NAR in 2014, about 87% of new agents failed after about five years in the industry. This means that only about 13% of agents make it. Things haven’t changed much since 2014 because the failure rate among real estate agents remains high.

Not only that, but here are some other facts that you probably didn’t know about realtors. About 20% of realtors have their license for a year or less, and 71% of real estate agents specialize in residential real estate. From the year 2000 until present day, the number of real estate agents has tripled and statistics show that one in nine realtors in the US lives in California. 

Did you also know that the average income for a real estate agent working between 21 and 39 hours a week is about $46,400? On the flip side, the average income for an agent working 60 hours a week is about $145,000. Are these statistics justifying the real estate agent dropout rates? Let’s take a look at some of the main reasons why real estate agents fail after about 2 to 5 years in the industry.

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The schedule is too demanding

The schedule is too demandingThe life of a real estate agent is no joke. Some people enter the business thinking it will be okay because they already had experience with demanding jobs at their former occupations, but this is a different monster. We’re not saying real estate related careers are not demanding; they are. We’re not crazy to say that a career in the military forces, for instance, is not demanding. It is. But there are different kinds of demanding. The problem with this career that plays a big factor in the real estate agent dropout rate is the chaotic nature of their schedule. So, while a military career might be demanding because you have to stand still for hours, run, and get stressed… there’s usually a time restriction, and you know where it starts and when it ends. Real estate agents have no schedule; they can go weeks without no active work, just looking for clients, working from behind the desk, perfecting how to make cold calls (and hating it, seeing no results from it)… until one week all the clients that were absent suddenly knock on your door and you have to make room for all of them, pull all-nighters, miss long-scheduled appointments, events and even birthday parties in order to cash in and advance your career.

And that’s the starter real estate agent. Established ones do get to have better scheduling options, but they suffer from a different problem: the phone. Established real estate agents are never not working; their phone is ringing all the time, at the worst moments. And even if they have the wisdom and the courage to know that sometimes you just shouldn’t answer, they are still always working in the sense that they are approached by possible clients everywhere, so they always have to dress sharp, present themselves professionally and be able and willing to charm new clients. So, the chaotic and demanding nature of this job is one of the reasons why real estate agents fail. If you realize that and find a healthy balance between doing too much and too little, being organized and flexible enough to enjoy the free moments and make the most of the busy ones, you will not add to the real estate agent failure rate.

They don't understand the importance of building a team

Another reason why real estate agents fail is that they don’t understand the old adage of “dividing to conquer”. To some extent, it’s even understandable: once you start going down a spiral of no-success, whenever something appears on your path, you rather do it all by yourself so you can get the whole profit from it. It’s much easier to share and you have enough for you, right? The thing is, you will bury yourself with more work and afterward you will feel so burned out, it will take awhile for you to pick up the pace and dedicate yourself to other clients and deals. Building a Real Estate Team is of the utmost importance when striving for success in this business. You have no money to hire? You can go the startup route and offer people shares of the business - at least as a complement for the low wager you can buy. Like .5% of each liquid commission? Plus, there’s a lot of people that are looking for Internships in Real Estate and you can give them this opportunity. Trying to do it all by yourself is why real estate agents fail; so share!

Not finding the right real estate niche

You are probably just getting started on your real estate journey or maybe you have a couple of years behind you and you still fail to specialize in a certain niche. Being able to comprehend every demand that a customer might have is quite rewarding and you feel like you can do anything. Also when you get started and you probably close a couple of your first transactions, you feel like you can handle any demand, and target all the real estate niches.

While this might be only partially true, the reality is that it is impossible to cover all the real estate niches and be good at everything. That’s another reason why many realtors fail just after a short time because they fail to specialize in a certain niche and if time passes without you improving in some way you will be outsmarted by the competition.

If you like working with foreign investors as a real estate niche, then go with that and focus your energy and efforts on getting better at serving this category of people. Maybe you feel like working with disabled people is twice as rewarding because you get to earn a living and do a good deed at the same time, therefore you should stick with that.

If you are in for the top dollars , some of the most profitable real estate niches are luxury residential, investment, eco-friendly, and commercial properties. Learn how you can find your real estate niche, specialize in it, and from there on you are on your way to success. Fail to do so and you might have the competition outsmart you because they learned to profit from different real estate niches and specialized in them.

They think competition is the enemy

They think competition is the enemyYes, it’s a competitive business; you’re always competing with someone. You compete with other agents to get a client, you compete with other home buyers (and home sellers to some extent)… but being too defensive about competition does not advance anyone’s career and is definitely one of the reasons why real estate agents fail.

First: if you get too defensive and start spilling bad blood with your competition, you create animosity toward you… why do that? Is it not better to have allies? Why point a cannon of bad energy toward you and your business? And second: having a good relationship with other agents can be fundamental to your own earnings. The right way to think about competition is as if they were external members of your team. Select some that you like and think are good professionals and have them as your go-to referral guys for clients you can’t work with because of your schedule (don’t be too thirsty! Why try to sell commercial real estate if you’re niche is luxury real estate?!) or other situations. You will earn a referral fee by doing a minimal amount of work. And the opposite happens too when you don’t think competition is the enemy: other agents send clients your way. So, have them close to you. Agents who are friends with other agents rarely are acting part of the real estate agent failure rate because they exchange knowledge, share profits and help each other when things are not as good as they liked it to be.

They don't follow up with clients

An error behind why real estate agents fail is constantly trying to find new clients. They’re failing to see that the best client is the one they have already worked with. Not only the one who already bought or sold a house with you and will, hopefully, be more willing to ride a second rodeo with you, but also that guy from six months ago that went house hunting (or put the house on the market) with you but decided it wasn’t the time yet. Or even the one you called to ask if he was interested in buying or selling a home and said no. Just the fact that you show you didn’t forget about him and is catching up will make him more willing to consider trying again. Show him what’s different – with the market and with you, the tricks you’ve learned, successes you have had since then.

They put too much weight on their failures

They put too much weight on their failuresThis is common for human beings as a whole, not exclusive to why real estate agents fail. It’s almost a survival instinct; we tend to worry about the imminence of failure more than of success because we feel failure is a danger. But it’s part of not only life but part of success! We need to know what it feels like to lose to understand the value of winning and have the correct motivation to push for the win. You will lose. A lot. The deal, the client, the commission. And everyone that is successful has done that too. But what made them avoid adding up to the real estate agent dropout rate was focusing on their success. Advertising it, even. Do the same, have the “next play” mentality: it’s all about the next deal, the next client, the next commission. Learn from the mistakes but move on from them. Make it better on the next play.

Is real estate a good career in 2020?

We hope that some of the reasons why real estate agents fail provided you with a better understanding of the industry, and mistakes you should avoid along the way. But, maybe you are still questioning the idea of following a real estate agent career path, and with the ongoing pandemic, you are probably even more concerned. So, is real estate a good career in 2020?

In spite of the pandemic, real estate still remains one of the best investments out there. The great thing about being a real estate agent is the fact that you can adapt to new situations. Are you curious to know how agents get to sell a home during the pandemic? Their ability to adapt helps them implement new ways to close real estate deals from a distance using virtual technology. That is just one reason why agents are still prosperous even during a pandemic.

As a real estate agent, you control your own book of business and this will determine if you will fail as a real estate agent or succeed. If you make decisions that will impact your business and follow a solid work ethic there are no limits for growth. By continuously improving yourself, through reading the right books as a real estate agent, and having a solid background education in one of US’s best real estate schools you are surely on your way to success.

On the other hand, real estate is on an ascending trend and this is reflected in property prices and the inventory that is scarce.It is predicted that interest rates will remain low and the appreciation rate is slowly but steadily increasing. There is also the integration of technology and the digitalization of the industry is really going to help any real estate business who decides to use it to their advantage. As you can see, as far as the real estate market goes, the trends are favorable for any real estate agent.

Overall, being a real estate agent is an investment of time, money, and effort and passing the licensing exam is difficult as well as expensive. After passing the exam you probably won’t get any sales right away but with time and dedication, it will be well worth it in the end. Your salary, as an agent, is commission based and it is not limited to an hourly wage which makes it purely based on results, so the better you are the more you will savor the fruit of your work.

Is real estate still a good career in 2020? Of course, and with the guidelines we set for you in this article you can rest assured that your career will boost faster than you might think.

Is it difficult to be a real estate agent? Well, yes, but if now that you know why real estate agents fail you feel less worried about… then: mission accomplished; it’s not that difficult anymore! Trust us: with discipline and the right attitude, this becomes an easy, interesting and profitable job. It depends on you! We wish you good luck in your career and many sales.

If there are other reasons why real estate agents fail, make sure you let us know in the comment section below.



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