Is this the year you admit failure and quit the real estate industry?
Don’t worry, you won’t be alone.
At the last brokerage I worked at in New York City, I saw dozens of agents (some very successful) quit after a year or two.
If you’re ready to throw in the towel or just concerned about your future, take a few minutes to read these 7 common reasons agents quit after two years.
1.You Didn’t Build Yourself a Strong Enough Foundation for Referrals
Almost everyone will tell you that building a referral network is crucial to taking your career to the next level. What they always seem to forget is that if you don’t have a solid strategy in place for your first year or so, you will have to work almost as hard for the same results the next.
That means it will take many years to build your business and income beyond what you made your first year. Experience will give you incremental improvements sure, but nowhere near big enough to become wealthy, that’s for sure.
If you want to become truly successful, you need to steadily increase the percentage of your clients that are referrals every year.
Here’s an example. Let’s say had a decent lead gen and nurturing plan in place and closed ten deals in your first year. To get those seven deals closed, you worked with 250 leads, 50 who became clients.
If you were selling $300,000 homes, that would put you close to the gross median income for all Realtors; $42,500 in 2016. Not bad, but if you didn’t work on nurturing cold leads or generating referrals, you’re basically starting year two at zero.
How to Avoid This Problem: Invest in a Relationship Focused CRM
In order to both close more deals and build a strong referral network, you need to get a great CRM, and set up a nurturing plan as soon as you start getting leads.
A decent CRM like Contactually will help you automate your nurturing and stay organized enough to touch the right lead, with the right message, at the right time.
Second, and almost as important as having a great lead nurturing plan in place, you need to actively try to generate future referrals.
That means you need a plan. Generally speaking, that means both straight up asking your former clients and leads, as well as staying top of mind with drip campaigns and personal follow up calls.
2. You Didn’t Increase Your Lead Generation Spend as You Got Better
“It takes money to make money” is a cliche for a very good reason. As long as you have a strong work ethic, a bit of natural talent, and a willingness to learn and adapt, you can almost literally buy your way into a successful real estate career.
That’s not an exaggeration. If you’re working the right niche in the right farm area, doubling your lead generation spend can actually double your clients, and double the number of deals you close.
That’s not an exact formula obviously. Doubling your spend on poorly performing ads might only get you a quarter more clients and only one or two closed deals. That said, how many deals do you need to close in a year to break even on doubling your ad spend?
How to Avoid This Problem: A/B Test Your Lead Gen ads & Increase Spend on ads That Work
While identifying scalable ad spends is not easy, like the lottery, you will never win if you don’t play.
The trick is to study your ads scientificially and increase spend incrementally until you discover a formula that can scale. Once you do, throwing a ton of money behind that strategy can have a massive ROI whether you advertise on Zillow, Facebook, or Google.
3. You Didn’t Start Building Your Team to Help Manage Lead/Client Overload
Here’s a hard truth. Let’s say you implemented a strong lead nurturing and referral generation plan during your first year or so. You also tested and tweaked that plan to fit your market, and invested enough money into lead generation and marketing to get a steady flow of leads.
If you did all that properly, you should be starting off your second year even stronger. That means at some point during your second year, you will have too many leads to handle effectively even with a great CRM.
How to Avoid This Problem: Hire a Virtual Assistant or Junior Agent
In order to deal with more than a few hundred leads a month, you’re going to need help. Human help. That means hiring an assistant or even better, a junior agent.
Yes, a virtual assistant will mean more money out of pocket every month, but you will be able to more effectively handle a larger volume of leads and close more deals.
Hiring a full time virtual assistant from overseas will run you around $500 per month, and a part time virtual assistant roughly half that. Not cheap for most agents, but what if hiring that assistant meant closing one more deal per month on average for this year?
Remember that more leads = more clients = more closed deals = more referrals.
If you follow this formula by gradually increasing your ad spend, and hiring a virtual assistant to handle the volume, you’ll be well on your way to running a team in a few short years.
After that, if you continue the formula, growth can be exponential. That’s not an exaggeration. We sat down with Pearson Smith’s Eric Pearson who grew his team from nothing to 700 agents on just two years.
Check out the interview here to see what’s possible when you plan and work hard.
4. You Never Set Concrete, Achievable, Goals for Your Career
A recent study on goal setting found that simply by writing down your goals and coming up with a reasonable strategy to achieve them boosted academic performance dramatically. Even better, it did so across cultures and gender, which means the effect is close to universal.
The trick was that the researchers asked the students to think carefully about what they really wanted for their future five years out. They then asked them to think about what they didn’t want their futures to be like.
After writing about about both possible futures in detail, they were then asked to come up with a realistic strategy to make the positive future more likely.
If you don’t have something concrete and achievable to aim for, how can you measure and reward your success?
How to Avoid This Problem: Write Out A Positive & Negative Future, and Make Plans for the Positive
If you want to be more successful, than having concrete, achievable goals laid out for you is a proven way to motivate yourself more effectively. Start by writing about where you really want to be in five years, then come up with a plan to get there.
Next, write about where you might find yourself if you give in to all your bad habits. If you sleep in every morning, skip calls, and only show listings that are easy to show… Fear can also be a great motivator.
Here’s David Greenspan Vice President, KiTS on the benefits of setting goals:
“Too many have a sheep mentality of just doing what they hear is popular. Constantly chasing the roller coaster of marketing ideas. Spending too much, and having to work too hard. Hype doesn’t sell homes. It’s about practicality and a plan.”
5. You’re Not Passionate About Your Career or Goals
The best of the best at anything aren’t just smart people who work hard. They also have something that crucial for success and nearly impossible to fake. Passion.
Here’s the deal, you can most definitely live a comfortable life working as an agent without being passionate about it. If you want to get to the next level and become a top producer, you need to be passionate about real estate.
If you want to get to the top one percent, then you’re going to have to be passionate about all aspects of the industry, including cold calling.
The reason why becomes more obvious the longer you work in real estate. Passion is contagious. Everyone wants to work with, and spend time with passionate people. It’s also nearly impossible to fake.
How to Avoid This Problem: Change Your Perspective
Unless you have a major life changing epiphany, chances are if you don’t love working in real estate after a year or two, you’re not truly passionate about it.
That said, sometimes all that’s missing is the right brokerage, the right team, or the right niche. I know that my passion for real estate was flagging until I joined a luxury firm near my home.
So if you find yourself burning out or losing interest in real estate after a year or so, start casting your net for a new brokerage to join.
Who knows, you may find all the pieces fall together for you and (re) discover your passion for real estate.
6. You Chose The Wrong Brokerage, Farm Area, or Both
Every experienced agent has a story about working for a bad broker, or chasing leads in a farm area that was over saturated or dead. In my own career, I worked at one brokerage that was run through with a culture of dishonesty, laziness, and unprofessionalism. I was miserable.
Because I was miserable, I avoided the office, avoided networking with my coworkers, and was even embarrassed to tell other agents where I worked. This eventually spiraled into the least productive and most miserable six months of my life.
I was also trying to wring blood from a stone in a farm area that just didn’t have the listings or clients that I wanted to work.
How to Avoid This Problem: Dump Your Broker & Find a Better Farm Area
Luckily, getting out of a bad brokerage is par for the course in real estate. Most brokerages will be happy to have you and won’t think twice because you bailed on a dysfunctional brokerage.
Just remember to not bail too early. Give it a couple of months. Some brokerages and farm areas might start off miserable, but morph into someplace you’ll love over time. Change is always hard.
Don’t think we’re letting the brokerages off the hook though. Too many of them all but promise the world to get butts in seats. Here’s Irvine California Realtor Lori Namazi on how brokerages can change:
“There needs to be more effort spent on painting a realistic picture of what success in this business looks like instead of teasing people with the allure of making $100k their first year in the business. The interview isn’t about getting them to sign up. It’s about determining if this career is the right fit, at the right time, for the candidate.”
7. You’re Weren’t Managing Your Time Effectively
If you’ve been in the industry for more than a year or so, you’ve more than likely realized that the whole “make your own schedule” thing was a big fat lie.
Not only that, but you’ve given up on the idea of ever having a normal weekend again.
The only problem is that just because you work weekends doesn’t mean you get to have a “weekend” during the week.
If you’re working higher end listings, chances are you will have demanding clients that will expect you to be available at the drop of a hat.
That means that every minute you spend working needs to be a productive minute. After all, you never know when you’ll get an actual break!
How to Avoid This Problem: Learn to Love the Eisenhower Matrix
If you want to be productive with your time, you’re going to have to sit down and figure out what is truly important to you. From there, you need to categorize and prioritize all the little tasks you have until you can plan out blocks of time for each depending on how important they are.
A handy way to keep track of this is to use what’s called the Eisenhower matrix. Originally used by Dwight Eisenhower, the matrix is designed to help you plan your days more effectively.
Learn more about time management for Realtors here.
How to Stay Ahead of Burnout: Top Producers Weigh in
I get it. Even though I worked as an agent in Manhattan for years and interview top producing agents almost daily, who am I to tell a working agent how to avoid burnout? After all, I’m sitting here in a cushy office writing about real estate…
To help bring this article back down to earth, we decided to reach out to a few friends working in the trenches in order to get their take on avoiding burnout. Here’s what they told us:
Nelene Gibbs, Broker/Owner Nelene Gibbs Real Estate
“Agents think they will get into real estate and make a lot of money quickly. They are not prepared for the long period of time it takes to build their business. They also don’t realize they are starting their own independent business. It is unlike any other business out there.
How many people work a job where they may have to wait 3 months or more at times for their paycheck or about the time they have a paycheck coming the deal falls apart and they have lost all that time and And now don’t get compensated for that time at all.
They also don’t realize it is up to them to build their business from the ground up. No one is going to do it for them. It takes a lot of grit and endurance and a lot of start up cash to build a successful real estate business And many come in without the knowledge, experience or know how to be successful.”
David Welch, RE/MAX 200 Realty, Orlando
“You have to be constantly contacting, contracting and closing. When you first start, all your efforts are focused on contacting potential customers. Even with a targeted approach, it is easy to run out of patience, energy or money, before you finally get a customer.
You cannot rely on just one approach to finding customers, so you have to put a great deal of effort into everything you are doing to fill your pipeline. Another area where you can get tripped up as a new agent is when you find a great deal of success, and then don’t manage your time, efforts or money effectively and end up losing control. When I first started, I was actually able to get a few listings, which lead to working with a few buyers. I then spent about three months working on getting each to contract.
Suddenly, everything came together in one weekend, and I sold seven houses. Unfortunately, I had spent so much time getting to contract and then getting everything closed, I found myself starting over again looking for customers. If you are not putting efforts into all three phases of the business, you end up starting from scratch over and over again.”
Shannon Harrington, Blue Ridge Fine Properties
“It takes a long time to get great, and the money is scarce until you’re great. Or if it’s not scarce, it’s stressfully inconsistent. Most folks don’t have the means, support, or personal fortitude to hang in continue into the part where it gets easier.”
Valerie Garcia, Real Estate Speaker/Consultant
“Similarly to the way high school doesn’t really teach us basic life skills, real estate education focuses on the legality of the job, not the practical. Unless agents learn early how to manage time and money, plan for taxes & expenses, and convert leads into business… they will struggle or ultimately leave for a steady paycheck.”
Over to You
Have another reason you see agents give up after two years? Let us know in the comments.