Why Real Estate Agents Fail And Get Out Of Business

Agent Advice

Written by

Eduardo Albuquerque

Published date:

Updated: Feb 26, 2024 by

business people fail parperwork

A good business person should always have a well-thought-of backup plan and an exit strategy for every eventuality. Let’s leave the carpe diem mentality to romantics. Though quite frankly, to live for and at the moment has its sentimental and idealist merits once you are a teenager, still, a grown-up should not embrace this fatalistic approach. A ‘Plan-B’ will come in handy if all hell breaks loose, and you should make up one in time. Why? Much similar to a game of chess, you should consider all variables. Having a backup plan will relieve tension off your shoulders and an unexpected turn of events will not affect you. Have the worst-case scenario in mind to hope for the best outcome.


Let us highlight the significant benefits of implementing the backup strategy. A good student will learn from the mistakes of others. We will now examine why real estate agents fail and retire, so you, dear reader, will not have to leave the game like ever. Although many rookies join the business every year, the real estate agent dropout rate is pretty considerable and telling. Some give up altogether, and some maintain the license just in case an easy prey comes along in the shape of estranged kin, who, by some miraculous turn of events, has decided to finally buy some property just from you, a.k.a. the expert in the housing market. You can be referred to as ‘a hidden agent’ since you don’t have an active practice in the field. So, hopefully, by reading this article, you will not join the list of burnout has-beens. Instead, you will learn from the mistakes of your predecessors, acknowledge them and shift the power from fear of failing to the drive for success.


How long do most real estate agents last?

hour glass calendar concept for time

At some point in time, you most probably thought about pursuing a career as a real estate agent (because of the money). Your expectations were hazy, and you felt a little confused. Most likely, you were discouraged by others saying that it is quite a complex field to succeed in. All the evidence supported this fear: agents do quit on a massive scale as the results hoped for didn’t come to fruition. 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 trade? Here are some statistics and facts for you.


The NAR (the National Association of Realtors) disclosed intriguing statistics regarding the real estate agent dropout rate. In 2014, nearly 87% of new agents failed after about five years and left the business for good. This means that only about 13% of agents made 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 real estate agents have their license for a year or less, and 71% of realtors specialize in residential real estate. From the year 2000 until the 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 pay for an agent working 60 hours a week is about $145,000. Are these statistics justifying the real estate agent dropout rates? Let’s look at some of the main reasons why real estate agents fail after about 2 to 5 years in the industry.


In 2020 we experienced lots of city lockdowns to put an end to the spread of the COVID-19 pandemic. As a result, many opted to leave their residence in the metropolitan area, and moved to the more peaceful and greener suburbs. Therefore, 2022 saw intense activity in the housing market. The profession of real estate agent has once again become a dream job.

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Where it’s hip to be a real estate agent, and where it’s not in 2022

agent showing house plan

If you are uncertain where to start your career as a real estate agent, here are a few tips. According to 2017 statistics, California had the most certified realtors in the United States, with about 194,570 active agents (and Florida came second best with 173,480). 


What makes being an agent so appealing in certain states? First of all, the average income of an agent after each property they sell. Secondly, the low number of competition makes it easier to make a decent profit off the market. Also, the economic development, business prospects, and job market of a state play a defining factor in choosing this career.


In Zippia’s survey, Pennsylvania ranked as the best American state for realtors, and Hawaii the worst. (The truth is that there were only 83 registered real estate jobs available.) Let’s compare the best with the ‘worst’: the average income of real estate agents in Pennsylvania is $96,250, while in Hawaii it’s just $50,240. 


From the point of view of agents’ annual salary, we can also recommend the state of Montana, where there were only 157 registered real estate agent jobs available, with an average annual pay of $99,970. If you wish to be an active and registered agent, we suggest considering the following US states, which rank in the top ten payscale: Missouri, Idaho, and South Dakota.


Factors leading to your professional burnout 

The career of a real estate agent is not always a Horatio Alger type of success story, a rise from rags to riches. A can-do spirit helps, but you must be aware of the road bumps you must either keep clear off or get over once you have rammed into. Let’s get a closer look at these bumps, know what to expect from this career and how to solve the problems that come along the way.


The schedule is too demanding

too demanding

The life of a real estate agent is no joke. If there is one genuinely demanding job where reality beats all expectations, it is the realtor’s profession. The fundamental problem with this career that plays a big role in the escalating real estate agent dropout rate is the chaotic nature of their schedule. So, while, for instance, an office clerk might be demanding because you have to stand still for hours, eventually run some errands, and get your fair share of stress; still, there is usually a (mostly) well-respected schedule of working hours. Virtually, you know when and where it starts and when it ends. Real estate agents, on the other hand, have no fixed schedule. You might go to work and wake up in an entirely new location and will have no idea how you got there in the first place. Or, they might not get real action or active fieldwork for weeks at all and spend working hours looking for clients from behind a desk. During this period, they can improve on making cold calls (and most probably hate it, since no tangible results come from it), another viable solution would be direct mail marketing. Then, the fortune wheel turns and all absent clients suddenly knock on your door. Obviously, you have to engage all of your options and sometimes pull all-nighters in order to find out,new at the expense of your agenda. 


This hectic lifestyle applies merely to a rookie real estate agent. More established ones do get to choose their working hours and have better schedules, but they suffer from a totally different source of problems: the continuous ringing of their mobile phones. Senior real estate agents will feel like they’re always working. Murphy’s law applies: the phone will ring only in the worst moment possible. Like a shark in deep waters, always ready to hunt, realtors are always working. They dress up sharp, check out their surroundings, and consider their chances. To be successful, you have to mirror success and charm every new client. 


Being in top shape mentally and physically is a must. Information is precious, and an agent should be aware of every aspect of the property they represent, from its foundation to the roof. And here comes a huge responsibility, the power of knowledge. Educating yourself is demanding and sometimes can be stressful. You, however, must get it, even at the expense of your own free time. Our advice is easier said than done: find a healthy balance between the concerns of your vocation and the essentiality of recreational time. 


They don't understand the importance of building a team

beautiful business woman in a group

Another reason real estate agents fail is that they can't seem to comprehend the divine wisdom of “divide and conquer”. To some extent, it’s even understandable: once you start going down a spiral of water hauls and flops, and all of a sudden, something promising emerges on your path, you would rather do the work all by yourself. Why share the profit with someone else, right? You will bury yourself under a load of a perfectly futile extra amount of labor. Afterward, you will feel burnt out, and your mandatory psychological and physical recovery will result in losing more essential deals and clients. All because of one job and you being a lone wolf. 


Building a Real Estate Team is of the utmost importance when striving for success in this business. Trying to do it all by yourself is why real estate agents fail, so find the perfect team and share your workload!


Not finding the right real estate niche

Exploring and targeting a niche for your products and services is a tough nut to crack. Both entrants and old roadsters will face the same challenges.


Understanding every demand that a customer might have is quite rewarding, and you feel like you can do anything. Also, when you get started and begin to close a couple of transactions, you may feel like you can handle any demand and target several real estate niches. Still, for instance, selling a home to first-time buyers and clients with special requirements are two different things and should be handled accordingly. 


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 are doomed to fiasco just after a short period of activity. They fail to identify and target a particular niche. Time is valuable, without improvement your competition will soon outsmart you.


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 clientele. Maybe you consider 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, become a specialist, and from there be on your way to success. Fail to do so and you might have the competition outrun you because they have learned to take advantage of different real estate niches.


Nonsense brawls with the ‘enemy’

competition box

Yes, it’s a competitive business; you always go up against someone. You battle other agents over a client, and, to some extent, you compete with home sellers. Still, being too offensive about competition does not advance anyone’s career, and is definitely one reason why real estate agents fail.


If you become obnoxious and start spilling bad blood with your competition, all you will harvest is animosity. Why do that? Instead, try to maintain a decent relationship with your business rivals. In some instances, you might even entertain the idea of collaboration. “You scratch my back, and I’ll scratch yours”. On the information highway, every newsflash, especially if it proves true, might be worth a fortune.


Let us elaborate on that. Why try selling commercial real estate if your niche is luxury real estate? In exchange, you can tip your rival. You will earn a referral fee by doing a minimal amount of work. In their turn, their agents might send you their clients if the property in question does not fit their business profile. Therefore, you have the chance to manage lively and thriving relationships with those people, who, in a typical case, you would fear. 


Agents wisely exchanging precious knowledge and information will rarely go bankrupt. They will not get on the has-been list. In the ideal case, they will also share profits and help each other out.


They don't follow up with clients

business man in suit holding keys

A common mistake real estate agents make is endlessly and almost exclusively pursuing new customers. What they fail to see is that the best client is the one they have already worked with. Firstly, the one who already purchased or sold a house with your assistance will hopefully be more willing to ride with you again. Secondly, another one, who quit doing business with you after an unsuccessful house-hunt six months ago but now they show an inclination to correct that blunder. Thirdly, someone who said no to your past advances but had a positive attitude towards you.


Just the fact that you prove you didn’t forget about them will convince them to reconsider their original stance. Emphasize the difference in the real estate market now and then. Who knows? You might get lucky! An additional piece of advice: knowing a personal detail about your existing clients and leads goes a long way, for example remembering their birthdays and their wedding anniversary. Recalling these seemingly trivial things will make them realize that they are unique to you!  


As a thoughtful realtor, you can also give your clients a creative closing gift after a successful deal. A minor gesture of amiability goes a long way!


They overestimate the importance of their failures

too much weight

This is a common characteristic of all human beings, not just real estate agents. We are terrified of failure. We look upon it as being harmful, dangerous, and degrading to our self-esteem. No one wants to be seen as a loser! But it’s a part of not only life but of success! We need to know what it feels like to lose, to understand the value of winning, and have the right motivation to push for the win. You lose. I lose. A lot. The deal, the client, the commission. And everyone who is now successful has been on that path too. It does not matter how hard you can hit but how hard you can get hit, and still be able to get up. What kept them going was their creed, drive, and inner strength. Start focusing on the minor successes first. Make a big fuss about it, advertise it even if you have to. Assume “the next will be better” mentality: it’s all about the next deal, the next client, the next commission. Learn from the mistakes but don’t let them define you! 


Is real estate a promising career in 2022?

We hope that some of the reasons why real estate agents fail provided you with a better understanding of the business, and mistakes you should avoid along the way. You might still have some doubts about whether to follow in the footsteps of the great realtors and with the ongoing pandemic, you are probably even more concerned. So, is being a real estate agent a good career in 2022?


Despite the pandemic, real estate 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 circumstances. 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 business schedule 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 to growth. By continuously improving yourself, reading the right books as a real estate agent, and having a solid background education in one of the US’s best real estate schools you are surely on your way to success.


On the other hand, real estate is on a rising trend. Property prices and the scarce inventory reflect this. 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 that are going to help any real estate business that decides to use them to its advantage. As you can see, as far as the real estate market goes, the trends are favorable for any real estate agent..


Overall, becoming a real estate agent will require a massive investment on your behalf, your time, money, and effort. Additionally, passing the licensing exam is difficult as well as expensive. Once you have passed the exam, you will probably not get any sales right away but it can turn out a blast in time and with genuine dedication. Your salary, as an agent, is commission-based. It is not limited to hourly pay. Tangible results matter, so the more you sell, the prettier your financial state will turn out to be.


The golden list of advice for realtors in 2022

notebook with phrase golden rules

Keep up with the pace of the modern digital age. Many realtors still believe in the old-school fashion to sell houses. Make no mistake, these traditional methods will never go out of style but ignoring the achievements of a good & professional online presence is a capital mistake.


Digital Marketing should be up high on your list of priorities. Be present on as many social platforms as possible. Create a specialized Facebook account, join Facebook groups in your domain, and post on a regular basis. Twitter, Instagram, Linked In, Pinterest must not be strangers either. Plan and launch well-targeted Google AdWords. Participate actively in real estate forums, since many readers concerned about selling/buying real estate visit these forums looking for a piece of much-needed advice and assistance. Many people are still working remotely and social distance is still a thing. Most private property purchasers search for homes online.


Good quality pictures are a must when it comes to the housing market. Shoot hi-res photos on location and prepare an expert portfolio. Besides, at least an entry-level Photoshop will bring you success in the long run.


Personal Brand reflects who you are, what you represent in the domain, and separates you from the competition. Create a professional brand with a distinguished emphasis on what type of real estate you are an expert in, and what niche and clientele you target.


Pay attention in your professional relations to the Sphere of Influence. In other words, a sphere of influence is a regional division over which you have a certain level of business exclusivity.


Dream up your business plan! What, where, when, and to whom you wish to advertise and sell real estate. Don’t go all in, targeting everything and everyone in your shooting range for fear you’ll fall between two stools.


No one can be called a genuine real estate agent before actually selling something. Prepare a career-defying big hit so you can display the trophy in your resume.


Walk your path but learn from the seniors in the business! There is no shame in asking for advice from an experienced mentor. Bridge the generational gap and you will not be sorry! 

Is it cool to be a realtor in 2022?

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, the truth is that it is. Now, however, that you know why real estate agents fail, your anxiety shouldn’t get over your head. Put an end to worries. Mission: accomplished, instead of mission: impossible. In RealEstateAgent.com, you trust: with discipline and the right attitude, this becomes an easy-peasy, captivating, and, ultimately, a profitable profession. May the fortune of good sales be with you!


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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