Monday, February 3, 2014

Why is the real estate industry drop-out rate is so high?

The attrition rate in real estate is astronomical. In fact, a greater percentage of new licensees fail than do new restaurants. Some 90% plus will not see their second anniversary in the business.
Of course, there are myriad reasons why this is the case. Some agents discover that the business is not what they thought it would be when they decided to attend real estate school. Others attempt to pursue real estate sales when they are between regular jobs. Still others are in related professions, such as construction, and think that a real estate license would add to their professional arsenal, not realizing just how much time and effort it takes to maintain their license.
However, in my opinion, there are two other, more prevalent causes of why so many real estate licensees cannot make it.
Financial difficulties are a principal reason. In order to keep a real estate license, along with board memberships (which are all but necessary to function as an agent), it costs a couple of thousand dollars a year or so. Expenses include licensing fees, continuing education, insurance, transportation, printing, advertising, national/state/local Realtor memberships, MLS fees, lockbox and lockbox key expenses, office fees and more. TRR does not have any monthly fees, but most other real estate companies do. And they charge this whether agents work full-time or part-time, and whether they are closing deals or not.
I believe that an even bigger reason for agent dropout is their own personal lives. Yes - their personal lives getting in the way of their careers.
In a regular job, you need to go to work a certain predetermined time, and stay until a certain time. You have responsibilities,quotas, and the like. But real estate sales is not a job; it's a business. It's your own business. No one is going to be responsible for the agent except the agent himself. If he wants to sleep late, he can. So it takes the determination, dedication and work ethic to survive and prosper in our business.
Often, especially in this economy, agents have other jobs. That limits their schedules and availability, reduces their time to show properties and work with customers, and hampers their ability to take phone calls and handle emails. While I understand the financial realities, I have heard repeatedly over the years how turned off customers are when their agent is not available. Research has shown that the public is very opposed to part-time agents. In fact, people don't like part-time anything.
Studies show that part-time agents are less likely to keep abreast of changing laws and events, therefore becoming a greater liability to their brokers and to themselves. In many cases, they are simply not able to do a great job for their customers regardless of their best intentions. Frankly: if you are not doing something frequently, you start to lose the ability to do it at all. Real estate is not a hobby, and it's not to be taken lightly. Successful agents have found a way to practice real estate full-time, which in my opinion, is a prerequisite for making it in this business.
Agents also, to their own detriment, put other priorities ahead of real estate. I am not here to judge or assess whether they should or not (those are very personal decisions), but when soccer matches, piano lessons, weekend TV, religious holidays, ski trips and such are an agent's priority, then needless to say, real estate will suffer. There are literally thousands of licensees in the Las Vegas area who have gone a year or more without even a single successful transaction. Some have not updated their training in several years. There are licensees who do not even have business cards. Would you want an agent like that to represent you? Do you really think they are capable of handling today's complex transactions?
Too many real estate agents think that customers need to understand their lives and accommodate their schedules. The reality is just the opposite. Agents need to be available and willing to work with customers on the customers' schedules.
Today's customers are impatient, and justifiably so. In this age of instant gratification, online research that pops up in milliseconds and 24-hour news cycles, people want what they want when they want it. And if a phone call is not answered the first time, often a customer will simply move on to another agent. Not many of us are really worth waiting for when there are so many choices.
To be successful in real estate, it takes financial backing (like it does in every startup business), a strong work ethic, unyielding energy and passion, and it takes the dedication and commitment from the agent to put real estate first and foremost in his life. If he in unable to make real estate a top priority, I can almost guarantee that failure, or at best, mediocrity, is on the horizon.