Why Do Real Estate Agents Fail? (2024)

FAQs

Why Do Real Estate Agents Fail? ›

Three common mistakes that agents make are inadequate prospecting, failing to market properties in ways that lead to timely sales, and not following up with clients to maintain relationships. Real estate agents must be motivated because generating leads and properly marketing listings takes creativity and hard work.

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.

Poor work ethic

A common reason why new real estate agents fail is because of their work ethic. Even though the profession permits flexible hours, the working hours are long. Also, one may have to work many nights, weekends, and holidays. For those starting, there is no substitute for hard work.

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.

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.

Many, if not most, real estate agents fail in their first year—75% is a commonly cited figure online. Why is the failure rate so high? Often it's because agents are poorly prepared for what might appear to be an easy way to make big money.

Dealing with difficult clients. All realtors have had to deal with difficult clients at least once in their real estate career. Clients are always coming up with the most ridiculous demands and realtors have to deal with them no matter how crazy they may sound.

Being a real estate agent is a risky job, as these professionals often meet in empty houses with prospective clients whom they have never met before. They regularly drive strangers in their cars and hold open houses that attract people off the street.

What is the biggest problem in real estate? ›

As a real estate agent, you may be on long calls and expected to work long hours. You must be able to handle stress to successfully sell homes. Your personal life will suffer if it is not properly managed.

However, the 85,049 agents lost between October 2022 and January of 2024, is still well below the 400,000-agent drop recorded between 2008 and 2012.

A Stark Reality: 49% Failure Rate Among Newcomers

When looking at both year 1 and year 2 fall-out, that is agents who fail to record a transaction two years after the first closing year, the total failure rate of new agents who started in 2021 rises above 50%.

The difficulty of the real estate exam varies by state, but the California real estate exam is known to be one of the most difficult. In fact, the pass rate for the California real estate exam in the last two years was under 50%, which means it's incredibly competitive and difficult to pass.

If you are already doubting yourself, stay out of the real estate business. There are statistics, some of which have been quoted in other answers to this thread. You can be one of the 20% who have a great career or you can be part of the 80% that scrape by and don't ever see real success.

Real estate investing can be lucrative but it's important to understand the risks. Key risks include bad locations, negative cash flows, high vacancies, and problematic tenants.

And even though attractive agents may command higher selling prices, they do not necessarily outperform their less attractive counterparts; though their homes may sell for more, they also sell fewer properties, and the final sale totals balance out.

Introverts can be real estate agents too!

Sure, it probably won't be easy. A fear of social interaction is one of the most difficult fears to overcome, and it will no doubt take a great deal of effort to get past yours. Don't be discouraged, though; with some time and effort, this fear can be overcome like any other.

What percent of people fail in real estate? ›

Your Privacy is important to us. This article is part of a larger series on How to Become a Real Estate Agent. 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.

First is the total commission paid by the seller. In California, it ranges anywhere from 1-6% of the sales price. The standard is 5-6%, but for high-priced properties (i.e. $1+ million) the commission may be more like 4-5%. The amount is negotiated between the seller and listing agent before a contract is signed.

Why do most investors fail? Real estate investing is a difficult and often unpredictable business. Many investors have failed because they did not have the necessary knowledge or experience to navigate the complexities of the property market.

Managing Cost Overruns

Real estate development can be highly lucrative, but profits can quickly erode due to cost overruns. From fluctuating labor and material costs to unexpected snags and change orders, budgets can be blown.