In addition to being unprepared and overwhelmed by real-life situations that aren't covered in real estate licensing classes, new agents have another reason why their failure rate is so high - they don't go after the business.
Getting a real estate license is just the first step toward preparing real estate agents for their new career. Other steps include Internet readiness, having a business plan to follow, learning the ropes with mentors or by reading agent advice, and much more. But one thing agents aren't prepared for enough is how instrumental they have to be to get sales going.
Where do sales come from? Many agents don't give enough weight to this question. Are you one of these agents? If you are destined for success, you already know that you are responsible for generating your own business. You are prepared to get on the phone, knock on doors and tell everyone you know and meet that you are ready to do business with them.
If you are destined for failure, it is because you hold one of these three erroneous beliefs:
Your broker, family and friends owe you sales
Many brokers like to boast that they are the most well-known or the largest brokerage in town, or that they are affiliated with the finest franchise. These superlatives are great recruiting points but only if they translate into helping you make more money.
For example, being associated with a large franchise can be prestigious, but did you know that franchises are not about helping agents? They are about helping the broker be profitable. Very few franchises care about the brokers' agents, because the agents are not their customers - the broker is. In fact, with most franchises, the franchise fees for some franchise affiliates are so steep that many agents feel handicapped by them. Some franchises also charge the brokers' agents for referrals and relocation business. You might get business from a franchise broker, but you'll pay dearly for it.
Everyone shakes their heads over poor agent retention without looking at the number one reason why - franchises and brokers expect the agents to bear most of the costs of their businesses. Agents, in turn, who can bring in business, have turned the tables and have strong-armed the brokers into paying higher commissions. So a bitter war is going on between the agents and brokers on who will pick up the check for lead generation.
Brokers expect you to pay all the costs of getting your business up and running so that you can bring business to them. That's why you're called an agent, rather than a partner.
The bottom line is that if you expect your broker to help you get business, expect to pay the broker a hefty referral fee for doing so. Many brokers charge their own agents as much as 30 percent of their commissions for a broker referral.
You can assume, therefore, that a broker will only pass this business along to someone he or she is certain can close the deal.
So don't expect to be handed sales from your broker. The most you can expect is to do "floor time," where you answer the brokers' phones to get business. While this can result in some business, it is certainly more profitable for the broker, who is saving receptionists' costs in exchange for your time.
Family and friends shouldn't be counted upon either. First, the odds that someone in your close circle is buying or selling a home just when you get licensed is lucky timing, and you shouldn't depend on luck. Second, what makes you think they want to bet their money on a rookie? You charge the same commission as an experienced agent, don't you?
While you may get lucky and someone you know hands you a listing on a silver platter, that's not real life nor what life will be like after the sale. You'll only be putting off the inevitable - that moment when you are right back where you started - needing new business. However, if someone you know is selling or buying and is uncomfortable about working with you, you can always offer to bring in a more experienced agent and split the sale with him or her in exchange for letting you learn under his or her wing. Then your family or friends get two for the price of one, and you get some much needed experience and tutelage. Plus, the more experienced agent might refer business to you one day, if you've proven yourself with a high work ethic.
You think you won't have to farm to get business
Conjoined to the notion that your broker will bring you business is the idea that all you have to do to get business is to advertise. Advertising is spending money to attract strangers, and strangers are a lot harder to turn into clients than people who know you. While a little advertising is good, especially on the Internet where buyers and sellers look for strangers to do business with, it should not be the only way you rely on getting business.
There is no substitute for mining what is already at your door - friends, family, neighbors, acquaintances, and past business associates - people who know you and would put their faith in you. There's also the neighborhood where you live and other areas with which you are familiar.
That's why all real estate pros will tell you that you have to "farm." Farming is just like it sounds - hoeing, planting seeds, watering, nourishing the soil, and spraying for bugs. It's also harvesting and replanting for next year, so it is a continuous process.
Farming in your business means establishing a geographical area to be your area of expertise (you may be licensed by the state, but do you really have time to drive back and forth to all its borders?), knocking on doors and introducing yourself, sponsoring neighborhood interests and events like schools and fund-raisers, and getting your face and name generally known as someone who cares about the area.
Farming can also include concentrating on a group, like an association, networking group, or club.
Farming means going out and asking for the business - telling people you want their business, and convincing them you will do a great job if they give you their business.
You think you'll get lucky
Many new agents, because they are undercapitalized to go into business for themselves, hedge their bets by keeping their day jobs. This is especially true if they are secretly afraid that they won't be successful.
But you can't serve two masters because one's demands won't be subordinate to the other's. Imagine telling your boss that you can't come to work because you have a listing appointment. Could you tell the listing appointment you can't come when it is convenient for them because you have a second job? Either situation underscores why having two jobs is a sure reason you won't be successful as an agent.
"In my opinion, the biggest reason new agents fall out of real estate is failure to get up and go to work each day," says Realtor Mary Leizinger. "Not everyone is cut out to be an entrepreneur and has the self discipline to work seven days a week for a couple of years to learn the business and build a pipeline. Many never cut the cord from other careers and aren't able to make the full-time plus commitment it takes. For many agents, it takes 4-5 years to turn the corner to a good, after-tax income."
So luck is a matter of hard work, and the harder you work, the more your "luck" improves.
Published: September 6, 2002
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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment.
Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's.
Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.
Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans.
Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR
"The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors
Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment.
