Why Do Most Realtors Fail In Their First Year?

Why Do Most Realtors Fail In Their First Year?

July 7, 2020

Produced by:
Elizabeth Welgemoed

Elizabeth is a Senior Content Marketing Manager with over 10 years of experience in the field. Having authored or edited 1,000+ online articles, she is a prolific content producer with a focus on the real estate vertical.

Real estate is a popular industry, offering flexibility and the potential to earn a good income in relatively stable conditions. Many people think about joining the industry and becoming a realtor. It is estimated that there are two million real estate licensees in the US and many more hopeful applicants hoping to build a realtor career. The problem is that things aren’t always as easy as they seem.

Just because there is a lot of money in real estate doesn’t mean that every prospective realtor becomes successful. Industry experts have estimated that the number of realtors that fail in their first few years of business is close to 90%. The reality is that many realtors fail in their first year of business, and are quickly overrun by the challenges that can come with working exclusively in real estate. While working in this industry can be highly profitable, prospective realtors need to carefully consider not only the benefits but drawbacks too.

In this article, we’ll break down the reasons why most real estate agents fail or drop out in their first year of business.

Table of Contents

Lead Scarcity

One of the most essential parts of becoming a successful realtor is the ability to get consistent leads, also known as prospective buyers. This can be difficult as a new real estate agent without an established network of clients and other realtors.  Most realtors start by relying on their existing contacts like friends and family, but the problem with this approach is that the reach is limited. Creating a network of clients and other real estate professionals is essential to keeping your selling rate high. 

On average, realtors earn around $50,000, but that number can go as high as $150,000 if not more depending on location.  The few realtors that succeed expand their reach by finding leads elsewhere, such as by looking for off-the-market properties or getting tips about new property developments. It’s also important to bear in mind that in certain states around the country, there is not a lot of new housing being built and supply will be lower. These areas are not only highly competitive when it comes to real estate, but will deal with more expensive properties. More expensive properties have a higher threshold of difficulty and it can be tough for new realtors to break into that market.

The other reason that realtors fail is by compromising on the quality of their leads. Many less-experienced realtors will take on any property thinking that a sale is a sale, but being flooded with bad leads is a one-way ticket to failure. Taking on a collection of properties that are difficult to sell will not bode well for your future as a realtor, and will cause more hassle than it’s worth.  It’s best to focus on finding qualified leads and to spend your time and effort on them instead of on leads that are unlikely to close.

Time And Effort

In order to become a successful realtor, you’ll need to dedicate a lot of time and effort. The effort starts by getting a license in the state that you plan to sell homes in. The majority of states require between 60-90 hours of college-level education on subjects such as titles, deeds, contracts, property ownership, and more. The work doesn’t end once you’ve gotten your license either.

As a licensed realtor, you can expect to work long hours and weekends. While realtors do make their own hours to some extent, there is a lot of work to be completed. During the week you may spend your time doing administrative tasks and marketing, and on weekends you’ll spend your time showing homes or driving clients around. Being a real estate agent is a full-time gig. This is just another reason why some realtors fail – they are unable to dedicate their full attention to making it work. It is often said by people in the industry that real estate is not a typical 9-5 type of job. The best realtors are not people who are in the game part-time either, especially when selling homes in competitive markets. In order to get ahead, you’ll need to commit to being a real estate agent full-time.

If you’re wondering what realtor work entails, try and connect with an experienced real estate agent to get a better idea of what their days are like and how much work goes into it.

Underestimating Internet Marketing

The majority of home buyers nowadays start their search for property online. What that means for realtors is that without an online presence, they will be invisible to the majority of buyers. Today, nearly 85% of all realtors use social media platforms and other online means of advertising properties for sale. Without some knowledge of digital marketing, you will miss out on a lot of valuable business. Modern realtors often make use of email campaigns, websites, pay-per-click advertising, and a host of other online methods to get their listings in front of as many potential buyers as possible. The internet is also a great way to expand your reach, network with other real estate agents, and connect with new buyers in your area.

The major driver of using the internet to find real estate deals is convenience for clients. Recent statistics show that nearly 98% of buyers between the ages of 29 and 38 rely on the internet to find their property purchases. Other age groups showed similarly high numbers. As a realtor just entering the field, you need to consider the internet to be multi-tool that encompasses sales, marketing, administration, and more. You also need to be aware of what the buyer demographics are in your area of operation. If you are selling in an area that has older homebuyers, you will need to put some stake into print and other traditional ads. Know your market, and you will know which approach to take. 

Developing an online presence as a realtor is also a great way to garner more clients and grow your brand. Making effective use of the internet will have the additional benefit of making it easy to connect with clients on multiple platforms and build up leads that you might not have come across otherwise


For many budding realtors, it can take months or longer before they successfully close a deal, especially when selling in a highly competitive market. The average realtor income may be good, but it can take some time to work up to that point. Having earnings based on commissions means that there could be little to no income coming in until that deal is closed. In order to be a successful realtor, you’ll need to have enough money saved up to support you until you have a more consistent deal flow and income. There are many expenses that come with being a realtor, with the most significant cost being for advertising. It is recommended that you start with at least $1,000 dedicated to advertising alone when you start out as a realtor.

The rule of thumb is to have saved up enough money to sustain you for at least six months. It will be easier to work effectively as long as you manage your finances carefully. You’ll need to keep careful track of recurring costs such as those associated with real estate associations and MLS membership.

Handling Fluctuations

The housing market, while more stable than many, can still experience a lot of fluctuation that will affect both property prices and demand. It’s easy to get started when the market is bullish. However, once the market starts to turn, many realtors are unable to handle the downturn and jump ship. The most recent example, the outbreak of COVID-19, saw realtors unable to work at all for a significant amount of time. 

It’s very important for realtors to plan ahead for tougher times, and grow their network during the good times to help their business during the bad. During times when the market is experiencing a downturn, property sales often decrease in volume until things become more stable. To be a successful realtor you’ll need to find ways to make it through these times without taking too much of a financial hit. There is no easy ride to the top, and it will take some time to become comfortable working during less-than-ideal economic times. It’s important to consider how to diversify your income during times when business is more difficult. It’s not uncommon for realtors to explore other aspects of the real estate industry, such as flipping houses or developing properties, in order to diversify their income. Once you’ve gotten more familiar with the different facets of real estate out there, deciding which one to pursue will become much more clear.

Final Thoughts

Being a realtor is often depicted as a glamorous, high-power, and top-earning career choice on television and in the movies. The reality is often a bit more complicated. Yes, there is potential to make a great income and become successful, but it comes with the caveat of having to work long and hard hours and sustain yourself during times when the market is bad. 

One of the most key parts of becoming a successful realtor is generating qualified leads consistently, and making sure to stick to properties that you know you can close. It’s recommended to vary where your leads come from but beware of spreading yourself too thin and collecting bad leads. If you are stuck with properties that you are unable to sell, you’ll put yourself under a lot of pressure. 

Becoming a realtor is not an easy journey; the level of competition is high and chances are you’ll be competing against more experienced agents if you’re entering a popular real estate market. In order to get ahead, you will need to dedicate your time and effort to the profession and try to find ways to outshine the competition. This can be daunting, but with the right preparations, you will not fall victim to the pitfalls described in this article.  While there are drawbacks to be aware of, there are also great advantages to being in the real estate industry and helping people find their dream homes.

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