Even in good times, real estate is an industry where over 80% of the agents will not make it. Most agents never survive in real estate because they did not enter the business with their eyes open. They became real estate agents because they assumed you can make quick easy money and a lot of it. They were enamored with a false image without looking at the reality of what it takes to survive. Long hours, and many dissappointments do pave a pathway for success. We can learn by our mistakes and no repeat them in the future. Those that cannot grasp it sometimes takes many months to close a buyer when there is an excess of inventory, and that is almost impossible to sell a home while interest rates are high and no one is looking to buy a home...will just not make it. Instead of saving money when times were good, many agents spent whatever they earned and more on expensive cars, dining out and vacations with no expenses spared. The reality of real estate is quite different than watching an easy home sale on TV. There are times where we have many months of no closings, followed by a great month where just about everything we earn is due on maxed out credit cards, estimated taxes, catching up on bills. For survivors in the industry, success has always been built on common sense. Having separate charge accounts for personal life and business, for keeping a set of books to see profit and loss, keeping spending in control, placing funds aside for taxes and expenses and most importantly lead generation.
The false notion that times are just around the corner and magically fall into their laps has caused the demise of many an agent. They assumed that their sphere of influence, referrals, relocations would pull their butts out of the fire at the last moment, and are easily disappointed when once loyal clients list or buy with someone else. The secret of surviving and making a great living in real estate has always come from being a self starter and consistently developing your own leads. It is built on actual sales knoweldge, and understanding the fundimentals of marketing and sales. Success cannot be purchased at seminars, with real estate software or even Blogging. If you have no real estate skills of plans, and don't really understand the basics of real estate...Blogging is not going to help. Success starts with a plan, a budget, a purpose and a solid source of lead generation that delivers good and bad leads to every day. Do you understand real estate? Do you have a plan? Those that do will survive, and their clients will not be dissppointed. Better yet...these agents will prosper even in tough times!
RE/MAX Paramount Properties 678-595-5286 Direct
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Jim, This is not the most positive post I've read today but it is really an eye opener!
Jim, when I got in to real estate I didn't ever look at failure as an option (I guess the way I was raised). I have been surprised in the 12 years that I have been in at how many agents I have seen come and go.
Paul Henderson, Realtor ® Lacey & Dupont Washington homes (RE/MAX Professionals & Four Seasons Inc.) Paul many real estate brokers and trainers are totally to blame. This is an industry where we pump up all the good news, and pooh-pooh the facts. More could survive if they had realistic expectations. They do not. Real estate remains a very rewarding career that does not have to be lived by working short sales for pennies or showing rentals.
Marchel Peterson Spring TX Real Estate E-Pro ABR (Results Realty) In some real estate offices I have seen the agent count drop by over 60%. Did they expect it was all up up and away? I know agents that cannot pay the mortgages, and keep their own homes. Most of the experienced agents I know are still holding their own closing deals, and working harder to earn less.
Evening Jim, I see your post as positive reinforcement for those who will make it in this tough business. It is so obvious when working with an agent totally lacking in sales skills ! For those who entered this business for all the wrong reasons it will be a long and frustrating journey.
I think alot of the issue has to do with the false expectation. Most agents/ people think that "liking to look at houses" has everything to do with beginning a career/ business in real estate. Most people will come to know very quickly that that has nothing to do with it.
People/ Agent fail to recognize that a career in real estate is going in business for himself/ herself. It is so much easier to "show" up at work and be told what to do. When you and I go into business for yourselves, no one would tell you what you need to do/ what works and what doesn't. Even your broker. And even training as we have seen in agent failure rates.
Eexpensive hobby, yes.
Bill Gillhespy Fort Myers Beach Realtor (Century 21 Tripower Realty) Thanks. For full timers and experinced persosn like yourself this is just 'real estate 101!" I love my career! Real estate is a very rewarding business but it is not without headaches. That is why the commissions we are paid are a major incentive to get a home sold. Our knowledge, negotiation abilities, advice, experience and track record can make the difference of getting a listing or selling the listing. Too many agents focus on the commission and do not have the skills to get the deal closed.
Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 (3:16 team REALTY) What is interesting that many brokers in the business for the last few years that had all the answers are now out of business themselves. Their only fault? They could only look at one perspective...the upside of real estate.
Good information for newer agents to consider. Many enter the real estate field with no preparation other than the licensing course. Most professions require much more.
Some of the older agents that were successful in the past are finding that the old methods no longer work. It is a new world of challenges to be successful in real estate.
Jim, again you have hit the nail on the head!
hope all is well
talk soon
Charles
Jim,
You saw they didn't have their eyes wide open. Quite true. They just had their hands open to make all the big money. The reason most people fail is because they don't see and treat real estate as a business. :)
Steve
Jim: Perfect post. This should be the disclaimer on every Real Estate School brochure.
There should be a reality show on your post.
I was blessed to have a young broker share me the real picture before my career started.
You are 100% correct. I had a plan when I started and my eyes were wide open. This is hard work! Every commission I get is earned and even the easy deals are hardwork.
Thanks, again-John
I have worn a number of hats in my professional life. Starting out working for small and regional companies in sales and sales management to owning my own small computer firm to working for giants like HP and IBM, and back around to owning my own small business (Real-Estate).
By far, the hardest job I have had is in real-estate. Not because it is inherently hard, but done with the idea to succeed requires many things, including hard work.
There is no easy pill, or shortcut, no matter what that latest e-mail ad you just recieved tries to tell you.
As a rookie real estate agent, I think I'm guilty of all of these things: focusing on the upside, loving to look at houses, and not coming from a sales background. That being said, I have always been a true optimist, a hard worker, and dedicated to succeeding at whatever it is I set my mind to.
As for my lack of sales experience, wait a minute now...I was a criminologist for 18 years before going into business for myself. Have you ever tried to convince a drug addict that it was time to go into rehab? Or a prison shop instructor that he should take back the inmate that has been slacking off and giving him attitude for the past three weeks? Or the head of research for federal corrections that it was time to publish a compilation of research on early indicators of future criminal behaviour? Guess I do have some experience in sales... :)
Thanks, Jim. I truly appreciate all of the real-life "warnings" from experienced real estate agents and brokers. It's just what we rookies need to hear to dedicate ourselves even more to achieving our goals.
Roy Kelley (RE/MAX Realty Group) Roy you are so right. There is an awful lot of to consider in real estate these days. An honest assessment of choices is needed before moving forward.
Charlottesville Real Estate - Your Trusted Broker Charles McDonald (RE/MAX Assured Properties - No one sells more Real Estate) Take care Charles.
Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies (Hoffacker Associates LLC) You are so right. It is a business with a set of books that allows you to see the result of your efforts.
John Meechan (Ward Wight Sotheby's International Realty) John you are right on the money. When times were good, I paid off the vehicles, we placed kids though school and college without loans, and purchased only the best equipment. The work in real estate is always been hard, but it is very rewarding. Even in tough times, I have no complaints.
RE/MAX Southern Advantage You are also right on. The word that comes to mind is 'Dedicated!' I also agree that there are no shortcuts to success.
Amen!
My career turned around when I stopped selling houses and started building a business.
John
Tanya Nouwens (JJ Jacobs Realty Inc. & Ready, Set...Sold!, Montreal Canada) Tanya, we have all been there...you mentioned the word 'dedicated' and that is what it is all about. We all have to go through that learning curve, and when we understand and comprehend the 'Big picture" I am of the camp that it becomes easier. You will be very successful in real estate because 'passion' is a key component!
John Duncan - It is interesting but I feel the same way. Years ago we incorporated our business and have since unincorporated! However, the lesson we learned was to keep a set of books. Profit and loss is the biggest motivator..not dreaming of the next sale. When you have a set of books you can see where you money is coming from, and where it is going out.
Great post Jim! I talked to many agents who have been in the business that informed me they did very little "back in the day" as far as prospecting, lead generation, and marketing. Their phones constantly rang and they had a "unending" string of clients. If they got a client in the car with them it was a sale!
As the market changed many had to assume jobs to make ends meet because they did not know what to do. Being a newer agent coming from corporate America they told me that I possessed a different mind set, was willing to learn and adapt to the changing industry. Those honest interactions have been the premise for developing a business plan for my business, reviewing it often, making lead generation a priority, and providing my clients with the best possible service that I can. Of course, I have integrated continuing education and the utilization of social marketing to help achieve my goals and grow my business.
There are a number of points to connect to in this post. I'd love to see our real estate courses give some attention to just this topic - setting up your real estate business. It's not enough to just go out there and get a license! I was rather shocked the first time our broker asked who had a written business plan, and mine was the only hand that went up. At the time, I was the rookie in the room! This has not been at all an easy business since I started three years ago, but I do love it.
Even in good times, real estate is an industry where over 80% of the agents will not make it.
That statement alone is evidence that the entry standards are far too low. The ease with which one can be licensed to sell real estate is, IMO, a industry disgrace and a national embarrassment.
Jim...How true the words are that you speak. I think I have found real estate a bit harder than I thought it would be, but for different reasons.
I have learned the value of a business plan, and hence, created one for this year. It's time for a 6 month reality check as to what has and has not been accomplished.
I think one of the biggest amazements I have had is, where in the heck DOES the time go? There is never enough hours for blogging, prospeting, marketing, networking, listing appointments, working with Buyers.....
I'm hopeful confident I will rise from the challenges we currently face to be even more successful than I have been!
Thanks for YOUR words of wisdom!
http://activerain.com/xavier
Jim, Thanks again for your comments. I always enjoy reading your opinions and I hope everyone that views your blogs realize that you have helped thousands of real estate agents over the years be more successful.
I will disagree, however with the above comment of Lenn's. I do not believe that we are a national embarrassment as an industry.
The standards are not too low. The training provided after licensing is too low. Simply making it harder to get a license will only turn it into an old person society and still will not solve the problem.
A lot...most...of the failure stems from one source...the newly licensed agent is not given the proper real life, hands on training by the company he/she is hired by. They are not given the correct tools to succeed.
There are 10's of thousands of cases where the new agent succeeded and in most of those, someone cared enough to train them correctly.
There are even more cases of failure and in those cases most were simply given a business card, had 50% of their commission taken from them and then sent packing or left hanging. That is where the problem lies in the two states that I have sold real estate in.
Years ago I had a former broker tell me that he couldn't wait for the next down market...he made more money in a down market and the down market chased away the inexperienced agents, thus creating demand and higher commissions...Now I think I know why he did little or no training for his agents. Almost all of his former agents left the business and most had little or no training for a tough market. Now sadly, that is an embarrassment.
Mike McCann
Over my twenty five years in the real estate business, I have seen the ebb and flow of agents in bad times and good times. I must say, however, that the recent boom in real estate drew more agents into the business than the real estate business could realistically support over the long haul. That's why we are seeing so many agents fall out of the business. In my area, we need to see many more fall out because the business just isn't there for everyone to make a living. If the number of units sold in an area drops 40% to 50%, then the number of agents is going to have to drop, too. In my area, we haven't seen that much fallout yet. I'm interested to hear what agents in other parts of the country are seeing regarding the number of agents still in the business today.
Greg Saunders (RE/MAX Around Atlanta) You are starting with a plan. You will do fine. Real estate is still the most rewarding field one could ever have been blessed to work in.
Jim it really is funny how many people think Real Estate is easy. Once you are in it you realize just how tough it is to be one of the best.
Karen Crowson (Alain Pinel Realtors, Livermore, CA) You are so right. I was first licensed in 1979 in NY, and in Virginia in 1988 I had he pleasure of being in Merrill Lynch. Thier training was excellent and realistic. A good broker will make all the difference in our success. I do not need a cheerleading squad and the office singing "Happy Days are here again...!" I need facts, techniques, dialogues and shared experience that only those that are successful can share. We do not need BS and pie in the sky!
Great post, one of the best I have ever read. I'm a new agent, got my license in February of this year. I'm 40 years old and have a diverese background. My last five years I have made my living as a professional poker player. I taught a class two weeks ago titled, "The parallels of poker and real estate." The failure rate of poker players is 90%.
Some of the key points that I talked about where money management and discipline. The exact points you have here. Before I went on my first interview in real estate I had a fourteen page business plan.
P.S. The way you comment and reply in your post to people is freaking awesome. I recognize the extra work.
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate Lenn you are so right. We have persons in our trade with as little as 75 hours pre-license training giving advice on marketing a million dollar homes despite the fact they have never sold anything. Has anyone ever wondered why some homes are selling and others just site there forever? Skill sets, knowledge, training and education have a lot to do with it.
The Thom And Ray Team Midtown Atlanta Real Estate Hey Thom, a big part of my success is that I work in a team. Ellen and I share ideas all the time, and keep an open ideas to doing things more efficiently and we constantly look at ways to improve ourselves.
Mike McCann (Wade Corporation in Kearney, Nebraska) Thank you for sharing, but I do agree with Lenn. Most of the so called active agents in our real estate markets today have never sold 1 home. Perhaps the majority of them sell 1 home a year. That does not prevent them from going out and listing homes and even placing sellers near the edge into bankruptcy because they never succeed in their efforts, nor have they shared their inexperience with their clients. Instead they BS, boast, and offer pre-formated presentations that make them look like they graduated Harvard. I think it is very sad. It is no wonder as a profession we are ranked below used car sales persons.
Carol Fox, Real Estate Broker, Union County NC Real Estate (Allen Tate Company) We are seeing the same thing here in GA. In the late 90's we had about 8500 agents, but 2003 it was at 12-13000 agents. And in the last few years it was up to 46000 agents. The problem is that sales are now back at the late 1990 levels of about 3600 homes sold a month, and we still have over 36000 agents. We need a reduction of almost 80% to get back to a level where a full time real estate agent can earn a decent living again.
Bill Gassett Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) As they say in Brooklyn..."It ain't easy!" However it is very rewarding.
Mike Henderson 303-949-5848 Genius Ventures (People-Property-Money ~ Everything the Investor Needs) I am glad you enjoyed this. It is interesting that even persons that buy a lottery tick must realize the odds are against them/ There is only 1 person out of a population of 300 million Plus can be president. Only 10 persons can show up on page 1 of Goolge for the term "Atlanta real estate" or "Atlanta homes for sale". Yet we all assume we can achieve the same results as other experienced agents.
As far as the replies, I love all the responses and love to address each and every one whenever possible. On one Blog last week I could not. It was too big!
Jim,
I had two very good deals just fall apart this week and then I read your blog. I had to take a minute and go out side to see if the sun had even came up today. It did and I feel better. As for Lenn's comment on the state of real estate, coming from another profession, I can tell you its not just real estate thats lacking in education. Tommorrows going to be better, I promise.
I tend to agree with you, that you need to have your eyes open and I plan. I wish I had better guidance when I started.
On the other hand not knowing can be good too. I had another business I ran successfully for over 10 years. I did not know the odds were against me and a I was statistically supposed to fail. I just did what I did and did it well. It eventually did fail after 9/11, but that is another story.
I've taught in real estate schools for over 20 years. Never full time as my real business is listing and selling, but I did it to give back to a business that has been good to me and to earn the right to complain!
Real estate schools are there to make a profit from teaching courses. That does NOT include real world real estate sales and service. I agree with the post about wishing it were part of the curriculum.
I am also a trainer, and our training is offered free. It's amazing how few agents take advantage of it. The classes I have the most problem with attendance is Goal Setting/Business Planning and Prospecting and Marketing. The new agents do not see it as a self-employed "you own it" business. They got into it for the bonuses from builders and quick money. They know nothing about service nor do they care. These are the ones that fail because they never learn how to be a real estate consultant who offers terrific service and consultation. From my perspective, I like that. If you're willing to work hard, look at the job as REAL JOB, do what needs to be done, then I'm here to help. Even when I'm not doing training, I'm willing to share what I've learned. Everything! Why? Because almost nobody is going to copy what I suggest so they are no threat to my business or income. The ones that do... I'm happy for them.
Thanks Jim; As a new agent I am entering the field now not to make big money but to establish a career. I appreciate your explanation to steer me in the right direction.
Jim,
You are very correct and have hit the nail on the head with this one. I also think Lenn has an excellent point.
The entry barriers are so low, just about anyone can get through the course and advise on multi-million dollar deals within a few months.
In Ontario, it's all self-learning except for 5 days in class. I always refer to the real estate business as an "industry" rather than a "profession".
Once you get people in the business, they do one or two deals for family and friends, but they don't have any "real clients", so they leave.
All in all, it simply drives down the price for those who are trying to survive in the market.
Brian
Jim
AMEN. We have all come across agents that think this is a piece of cake. Then they sit at a desk and wait for the phone to ring.
Succeeding in whatever market it happens to be almost requires us to be chameleons and change with the times.
Thanks again for your inciteful views.
Loved your post! Only the strong survive in this business!
It reminded me of the time I asked another agent if they had a business plan and they looked at me as if I was crazy! Okay, I really am to have stayed in this industry during the past few years, but that's reason I've survived so long!
Good post. I guess I could say you took the word right out of my mouth. I agree with some fot he comments to... it seems as though everyone was a real estate agent at one time and the industry lacks a professional standard that many of us desire. It makes me so upset to hear people classify us with used car sales men but at that failure rate the industry has, that is what the consumer perceives.
Thanks for a good article... enjoyed it.
Celeste
I have definitely met far too many agents who got into the business expecting to sit at a desk and take orders - they had no idea that there was WORK involved!
They didn't last long, and it's a shame that they wasted months or years and spent all that money to get a license. There really should be a disclaimer: "This is a real job."
But, it's a widespread belief. I used to have people come to my office to visit - because they knew I "wasn't doing anything" if I was at my desk.
I think most realtors are always looking for a magic pill. Alot of good agents have gotten out of the business and the ones that should have are still around. It's a tough business that most people just don't understand, and they're in it! All the rules I thought I knew have been thrown out the window in this market!
This is my second go round in the real estate profession. I got in part time during the boom and was basically an order taker. After 25 years in corporate sale sand marketing, I decided to jump in again with both feet.. during the bust. i figured if I could make it during these tough times, I could make it period. This is so much more difficult than any sales job I've ever had. Business planning , budgeting and prospecting are essential to making it. Prospecting is not the same as having an assigned account list to call on, to be sure. But this is my job and I intend to see it through. After seeing agents selling their investments and their own homes just to stay afloat, I know that's a position I never want to be in ever.Thanks for the great words of wisdom for us newbies.
Expectations are very powerful. If you enter this business expecting to make a quick or easy buck, you are guaranteed to be enormously disappointed. I love my job and am proud to be a Realtor, but I also understand why so many people leave the business before they even have 1 year under their belts. It's not for whiners!
Hard work, yes, but the feeling you get from really helping people with such an important thing as home ownership is worth it. There is promise in adversity.
Lenn, Steve Shatsky, Matt Stigliano, and Jenny Kotulak (sp?) had a series on this very issue a few weeks ago - I was wondering when I read this if it was a part of that. If it isn't, it should be. It seems now more than ever that we all need these reminders to actually have a plan in place in order to succeed in real estate. Thank you for adding to the discussion of this much needed training for real estate agents.
Harold Smith Thanks I agree.
Gene Riemenschneider Realtor Brentwood Homes for Sale (Area Pro Realty) I wish I had learned differnetly, but I did well in spite of failure. My first year I spent 36K and made 9K.
Tony Williams You are a true pro Tony! There is a lot of sticktoitiveness that has to be done to surive, but it is worth it.
Annika Berke, Ischgebibbel home staging Thank you for your comments.
Joanie Schaatt (Realm Real Estate Professionals) Very well stated. Too many agents are obsessed with the buck instead of education. The education and training will allow us to endure and overcome.
Linda Landry (Exit Realty 1st Choice) Best wishes for a long prosperous career in real estate.
Brian Madigan LL.B. (Royal LePage Innovators Realty) Brian, I was a featured speaker at a Canadian real estate event a few years ago. I was astonished at the the professionalism and all the agents were full timers! I was most impressed.
Jayne Vaughan - You are so right! The biggest lesson in real estate is that "We are our own rain makers!"
Jen Edwards - For those that do not have a plan I often wonder what are they thinking?
Choice Real Estate,LLC Thank you Celeste
Marte Cliff (Marte Cliff Copywriting) It really is sobering to realize what the realiites in life are.
Lyn Sims ~ Chicago Northwest Suburbs (Schaumburg Illinois ~ RE/MAX Suburban) You are right. Many of my friends with loads of experience have left the business.
Barb Mihalik (Coldwell Banker Sea Coast Realty) Best wishes for a long an prosperious career in real estate.
Denise Delozier, Realtor, ABR, ISS ~ Nashville, Brentwood & Middle TN Area (Realty Executives Fine Homes) We must hang in there!
Federal Way, Washington Real Estate 206-679-4768 Julianna Hind, REALTOR(R) (John L. Scott, Real Estate Agent and Staging Professional) Tough times makes us stronger. It should not be "when the going gets tough the tough gets going!"
William James Walton, Sr. (Century21 Access America) Anytime! That is why I do public speaking in real estate and hold seminars.
How many hear, "...I'm not paying some - - - - Realtor $30,000 for selling my house.."
GREAT post Jim - I totally agree that most agents have a jaded view of Realtors & think that you can just sit back and rake in six figures with minimal work...not so.
DON BUSH - I've heard that before, but I can demonstarte I can accomlish the goal. There is a difference between the agents that boasts and the one that can deliver.
Dan Magstadt (Meridian Financial) I agree Dan... there are many that once believed they can run this business from the golf course or from their lake house.
Hallelujah! Finally someone willing to tell the truth. I have been a marketing consultant for over 15 years. If you don't have a sound plan and strategy related to your product or service, all the marketing tools in the world won't help you. Thanks for the reality check.
Stacy Springer, Springer Staging & Consulting - I have to tell it like it is.
Jim it is all so very true unfortunately many Realtors do not work on their business in order to keep informed and educated.
Deborah Grimaldi (Re/Max 1st Choice),I agree, but since many think that the 75 hours they invested in their license is enough. It isn't! A real estate licenses is not a college degree, and it does not confer upon us wisdom or common sense. There is a lot of knowledge that has to be gained to survive and prosper in our trade.
I agree with your post, Jim. Mike McCann's comments about Brokers not training their agents is sometimes correct. However, even Brokers/franchises that offer an enormous amount of training, have the same problem of agents failing. Speaking from my experience, I was trained in a national franchise along with my peers in the early 90's. Why did I succeed and many of my peers fail? When I started I just worked, while others stood around the coffee pot and questioned where I got my leads. How about working for them, the old fashioned way? In 2002 I opened an EXIT Realty franchise and for 5 solid years I offered intense training. Why do some agents succeed while others fail? How about starting with the basic 'hungry" drive and the "failure is not an option" mentality and attitude. I constantly hunger for new knowledge and education. Yet, failing agents don't even realize they're failing. They don't do anything different and expect something new to happen, like a turn in the market. It will be too late for them. As Brokers we have to screen prospective "want to be" agents. If they don't demonstrate drive and the right attittude, no training will help them.
Margaret Vierra, Broker
EXIT Realty-Keystone Margaret, you brought up many interesting points. I could not help but thinking...do you suppose so many fail because they treat real estate like a 9-5 job? Do they wait for leads and instructions instead of being a self starter? If that were the case, it would explain a lot. It would even explain those that hang around the office all day moaning, gossiping, and being jealous of those that actually produce.
Jim. My keys: financial discipline, unsurpassed customer service skills, keeping in contact with previous clients...ALWAYS follow up everything and ALWAYS do what you say you are going to do.
Mark Velasco ~Los Angeles County~Team Leader (Century 21 All United) Mark you said a mouthful. That is the secret to surviving. It's is ALWAYS about "THEM!"