Why 87% of real estate agents drop out within 5 years… (2024)

FAQs

Why 87% of real estate agents drop out within 5 years…? ›

Without a business plan in place, you won't have a path that can lead you in the direction you're trying to go. 87% of real estate agents fail because they're missing a business plan that outlines the steps they need to take in order to reach their goals.

Some of the most common factors why many real estate agents fail are unrealistic expectations, lack of budget, and not letting go of the employee mindset. Your reasons for joining the industry and how you generate leads also affect your chances of being successful.

Having false expectations in real estate can be catastrophic. It is the number one reason why people quit the business. It is important to keep a goal mindset and to get rid of any expectations you may have.

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.

Many, if not most, real estate agents will fail in their first year. 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.

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.

According to the National Association of Realtors (NAR) failure is defined as as those who get a real estate license and then leave the industry within the first five years. According to them, 75% of real estate agents fail within the first year, and 87% fail within five years.

The demand for real estate agents is on the decline and is likely to continue this trend over the next 10 years.

Most real estate client firings center around the need to remove stress or a giant time suck.

Why is being a real estate agent so stressful? ›

Uncertainty about real estate market

Every realtor is worried about not being able to sell their properties and how it will affect his or her commissions at the end of the month. This uncertainty is real and can cause a lot of stress for realtors and their clients.

One of the hardest things about being a real estate agent is smoothing your income so that it is consistent throughout the year. This requires discipline and rigorous budgeting. Some agents take second jobs.

California: 44% New York State: 24%

Slow periods. As a real estate agent, you earn money based on your own transactions. Without a set salary from an employer, slower months can negatively affect your income. If you're not selling property, you won't receive a paycheck.

The lack of experience among some realtors contributes significantly to the negative reputation. Clients who encounter agents with limited expertise might face inadequate guidance, incorrect information, and ineffective negotiation skills. This lack of proficiency tarnishes the overall perception of the profession.

In a survey of 1,154 UK adults back in 2021, we learned that just 1% of people think estate agents are trustworthy.

Typically, real estate commission is 5%–6% of the home's sale price.

Many investors have failed because they did not have the necessary knowledge or experience to navigate the complexities of the property market. Even experienced investors can fail if they do not understand the risks involved or underestimate their abilities.

A central factor in the unfavorable reputation of realtors is the perceived lack of transparency. Clients sometimes harbor the notion that real estate agents withhold essential information to facilitate swift transactions. This perceived opacity can breed mistrust and skepticism among both buyers and sellers.