The real estate profession is growing. In fact, according to the U.S. Bureau of Labor Statistics (BLS) Occupational Outlook Handbook, employment for brokers and agents is expected to grow at a rate of 7 percent from 2018 to 2028. This is a faster growth rate than the average for all occupations. That being said, there is also a pretty high attrition rate among real estate agents. In fact, NAR reported a few years back that 87% of real estate agents fail within their first five years. This is an even higher rate than the 50% of all small businesses that fail in the same timeframe.
What many new real estate agents often misapprehend is that becoming a real estate agent is going into business for yourself. Anyone running a business can tell you there are plenty of mistakes to be made, both by beginners and veterans alike. Included below are seven of the most common mistakes new real estate agents make. Avoid these common mistakes to start your career off on the right foot.
1. Failing to Communicate with Clients
The biggest mistake a real estate agent can make, regardless of tenure in the industry, is not properly communicating with their clients. A lack of communication often results not only in clients who have an unpleasant experience but also any chances of referrals. It is in your best interest to keep your clients apprised of what is happening every step along the way, even when there’s not much to report. If this is the case, an email or phone call to explain the reasons why things might not be moving will go a long way toward bolstering your client’s trust and confidence in you. Set aside time every week to communicate with your clients.
Another important aspect of communication with clients is educating them on the process of buying or selling a home. Letting them know what to expect throughout the process helps to avoid negative feelings that you can scarcely afford later on. Good communication also requires that you actively listen to your clients and respond to their needs and concerns. You want to build relationships with clients who will in turn refer friends and family to you. Remember, word of mouth is your most valuable marketing tool, along with your reputation.
2. Neglecting Their Education
Even during your first few years in the field, failing to keep yourself educated can be disastrous. Just getting your mandatory continuing education is not enough. Read, listen and experience as much as you can to stay up-to-date in this industry. Educating yourself can help you in your specialty, as well as help you keep up with and even surpass agents with more experience in your market. And let’s face it, if you are new to the real estate industry, the only way you are going to effectively compete with more experienced agents is to be better educated and prepared to provide a higher level of service to your clients.
3. Not Turning Down Overpriced Listings
You know it’s overpriced. You’ve done the research and you know your market. Still, one of the costliest mistakes a real estate agent can make is to agree to take overpriced listings. Not only do these listings cost you time, effort and precious energy, but they also cost you the money you could be earning elsewhere. So, if your potential client won’t listen to reason, then it is your responsibility to try to educate them. Otherwise, your time could be better spent elsewhere.
4. Failing to Prepare a Business Plan
As stated above, to be a real estate agent is to be in business for yourself. With that being said, you truly need to have a business plan when you start out, or ideally before you start. It begins by setting out your goals for your business and how you plan to meet those goals. It should also include what services you intend to provide and to whom they will be provided, as well as a realistic budget and plan for marketing your services.
Periodically, you should go back to this plan to measure how well you followed it. For example, what became of your budget and what you can do about any overspending in the future. Tracking your progress as you go along is as important as preparing the plan in the first place, for new agents as well as the more experienced.
5. Poor Financial Planning
Beginning a career in real estate is not an immediate money-making proposition. In fact, you can expect to be without income for at least 60 days, so financial planning at the outset is critical. You should have enough money to cover business and living expenses for at least three months before you start out as a real estate agent. Even then, be aware that your income may not be enough to pay the bills.
According to the BLS, the median income for real estate sales agents in early 2018 was $48,690. Keep in mind that “median” does not mean average or typical. It is simply the number in the middle of the entire set of numbers. The lowest 10 percent of agents earned less than $24,650, while the highest 10 percent earned over $112,610. And, according to data from the National Association of Realtors®, agents who had two or fewer years of experience had a median income of only $9,300 in 2018.
6. Not Finding Their Niche
You’ve heard the old adage: “Jack of all trades, master of none.” Even if you’re just starting out, you should focus on a particular niche. Here’s another instance where educating yourself becomes important; knowing your target market and your ideal client. You won’t be able to do this if you generalize. Choosing a niche will also help you immensely in your marketing efforts. In addition to this, you’ll be able to compete with more experienced agents more quickly and efficiently if you have educated yourself about your niche.
7. Poor Time Management
It’s easy to get distracted when you work for yourself, especially if you happen to work from home. But family matters aren’t the only issues. Getting caught up in too much tech or too much social media can be just as unproductive. Remember the goals you set out for in your overall business plan? Well the same concept can work for your day to day planning. Set attainable goals and spend your valuable time working towards achieving them each day. For instance, take some time to communicate with past clients, or other people you know (your sphere of influence), and help them recall that you are in the real estate business. This is a good way to get referrals. Or, spend time contacting your leads. The point is, the lion’s share of your time each day should be spent on income-producing activities.