Why do most real estate agents fail in their first year?

The financial risk and the time it takes to establish a customer base and make connections make the first year of a new real estate business particularly challenging. Since many new real estate agents don’t make any money within their first six months— or even a year— of work, many have to stop and switch jobs to pay for their expenses. That’s why it’s recommended to save up at least six months of living expenses before starting as a new real estate agent.

Is real estate a dying career?

Absolutely not — in fact, many industry leaders think that the field is growing rapidly. The business of real estate, like all businesses, is currently changing along with the rest of the world. Technological advances now allow for virtual tours, online marketing, and streamlined paperwork processes. In many ways, real estate has become much more advanced.

Why are real estate agents unsuccessful?

Failure to set goals or follow through with plans is one reason many real estate agents find themselves discouraged and looking to switch jobs. Like with any new business, having a successful real estate career takes careful planning and constant updates to a business plan. Having a strategy worked out before starting as a real estate agent is essential to staying in the industry. Be sure to head over to our "real estate guides" section to learn how to maximize your time in the industry.

What is the biggest problem for real estate agents?

The biggest real estate issues are going to depend on where the agent is working. Many areas are facing low housing inventory right now, making it difficult to find prospects. Lead generation is also a common issue, as is creating and cultivating an online presence. There are many potential problems, but diligence and research can solve many of them.

Why Do Real Estate Agents Fail? 3 Main Reasons

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Lack of money, planning, and leads drive many budding real estate agents into other lines of work.

But it doesn’t have to end this way for you. Learn how to get an advantage over the competition using hard work, careful strategy, and research.

Why Do Real Estate Agents Fail?

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The long answer is that there are many reasons why a real estate agent might end up failing.

This is an industry with many variables and a ton of important information a professional needs to find and understand in order to be successful.

Here are a handful of the most common reasons real estate agents fail:

1. Poor Money Management

Real estate agent looking into an envelope and pulling out a check to symbolize why real estate agents fail: lack of proper budgeting

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It’s no surprise—or secret—that closing your first real estate deal takes some time.

This isn’t the typical twice-monthly-paycheck type of job; the emerging real estate agent will probably have to support themselves for a good while before making any money at all.

Many real estate leaders recommend saving up at least six months’ living expenses before starting a new real estate career, as many new professionals struggle to support themselves as their new business gets off the ground.

Closing deals takes time, and there’s always the possibility that a new sale will fall through or be delayed.

Being unprepared to survive for a while without a new income is one way many new real estate agents find themselves turning to different sources of work.

For a successful first few years in the business, one should expect not to make money for a while and plan accordingly.

Maybe a commission-based job isn’t for you. If not, no sweat. There are many other real estate jobs that pay just as well but require fewer hours, have a more flexible schedule, and still keep your foot in the real estate door.

2. No Direction

Real estate failing because she got shiny object syndrome represented by many arms doing many tasks

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One of the best parts of working in real estate is that, in many cases, you get to be your own boss. The downside is that you’ll need to make your own business plan to keep your real estate career on track.

And you’ll need to avoid shiny object syndrome. This is a huge cause of failure for many agents.

Think about it. After getting your license, what next? And after that? Navigating an emerging real estate career can be exceedingly challenging without well-defined goals, step-by-step roadmaps, and solid strategies.

You’ll also need to make a budget to ensure your financial goals will be met without draining all of your finances.

For all these reasons—and more—a business plan is essential for new real estate agents. That will help you determine and stick to a course of action for achieving your real estate objectives.

3. No Leads

Man in a gingham white shirt writing on a notepad and sitting next to a rolodex for a piece on why real estate agents fail: no leads

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The backbone of any successful business (especially real estate) is a customer base that can support your company’s goals.

Generating real estate leads is one of the most important aspects of the job since, without customers, there is no business.

For this reason, a solid marketing strategy or lead generation plan is needed to connect with the right kind of customers and outshine your competitors.

You can reach potential customers through social media, creating a marketing site, and online real estate listings from reputable websites. Even if your budget is tight, there are many cost-effective ways to reach a large audience.

Things to Consider

Before you get started in your new real estate career, here are some things to consider about this unique and exciting business:

Does working as a real estate agent suit my personality, business goals, and financial needs?
Am I ready to create and maintain a website and social media pages to connect with customers?
Do I have a business plan and a budget prepared?
Am I prepared to work full-time as a real estate agent?
Do I have enough saved up to survive without any income for six months? A year?

These are all important questions to answer before diving head-first into the complicated business of being a real estate agent.

Frequently Asked Questions

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So, Why Do Real Estate Agents Fail?

The simplest answer is a lack of planning—for the business, finances, and customers.

However, a strong business plan and monetary strategy can get the emerging real estate agent through that first challenging year and into a promising new career.