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Rainmaker
588,032
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Because it's much harder than it looks. Most people are not cut out to work on a straight commission. Most people have an employee mentality rather than an entreprenuer mentality. 

A real estate agent regardless of the brokerage whether they know it or not they're running a small business and most small businesses also fail within a year.

Jan 09, 2017 04:09 AM
Rainmaker
1,066,939
Kat Palmiotti
Grand Lux Realty, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

I thought it was something like 80% of new agents fail. It's due to a lack of information about what the job really entails up front, lack of financial cushion for first few years, lack of training/mentoring/etc, lack of determination, and I'm sure there are more reasons.

Jan 09, 2017 02:57 AM
Rainmaker
347,902
Peter Mohylsky
BETTER HOMES AND GARDENS REAL ESTATE - Destin, FL
Your Bucket List Broker in Destin, Fl..

This should generate some interesting comments. But my take is that the industry is much harder to gain a foothold than most individuals imagine.  Real estate is a business and like any business it needs a business plan, marketing budget and careful planning.  The failure rate ofmost small businesses is highreal estate is no different.

Jan 09, 2017 01:26 AM
Rainmaker
2,619,320
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Locally I heard something like 90% fail.  Perhaps because the licensing process teaches NOTHING about running a business??!! 

Jan 09, 2017 03:35 AM
Rainmaker
201,115
Dennis Swartz
Rickert Property Management - Columbus, OH
ABR, CRB, CRS, GRI, CMCA, MBA...experience counts!

As with most new businesses there is a few reason they fail:

  • Not enough capital to make it for 1-2 years while the business grows
  • No business plan-they wing it
  • No realization that this is a real job, and you have to work and show up
  • Lack of support from significant others while they make no income for a while
Jan 09, 2017 02:52 AM
Rainmaker
1,295,048
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Unreal expectations of what the job truly entails. 

Manager not telling the truth as to what it truly entails.

Fantasy expectations of selling homes that look like the pages of Architectural Digest.

'I can decorate' syndrome. Since I am talented I can sell these homes. 

Not having a plan.  Not having a backup money reserve.

 

Jan 09, 2017 05:16 AM
Rainmaker
940,740
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

I thought it was a much higher failure rate than that, but regardless, what @Mitchell Hall said is pretty much what I believe, as well.  We are entrepreneurs, not employees, and as such, need a plan and capital.

Jan 09, 2017 04:32 AM
Rainmaker
512,136
Kathryn Acciari
Cameron Real Estate Group - Shrewsbury, MA
RSPS, SRS, REALTOR(R) Sturbridge-Shrewsbury MA

Expecting the business  to come to them, rather than having an action plan for going out and finding business.

Jan 09, 2017 03:56 AM
Ambassador
1,851,159
Fred Griffin
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Unrealistic expectations of what it takes to succeed in real estate.

Saturation.  There are way too many agents in the business.

The fact that they are "new".

Jan 09, 2017 05:25 PM
Ambassador
2,159,942
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

So many people think we make easy money. I don't think many people realize how difficult our profession really is, and how much it costs. 

Jan 09, 2017 03:28 PM
Rainmaker
2,434,544
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - Probate Broker

Lack of training and planning. Most have no clue on how to run a business. Real estate can look easy.  It is not. It takes a lot of work and money to run a business. 

Jan 09, 2017 11:56 AM
Rainmaker
1,280,942
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Paul S. Henderson, REALTOR®, Broker, Tacoma Washington I believe the number is higher and a much higher percentage drop out of the business after the first year. The reason being many find this business is much more than showing properties. It requires hard work, persistence, and proper capitalization to run a business.

Jan 09, 2017 06:24 AM
Rainmaker
2,376,549
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker

Easy answer - the only place success comes before work is in the dictionary!

Jan 09, 2017 06:19 AM
Rainer
234,630
Ken Jones, ASA, SCGREA
Kenneth J. Jones - Newark, NJ
Kenneth J. Jones

Paul S. Henderson, REALTOR®, Broker, Tacoma Washington I think that a 40% washout rate is quite low.

In my experience and through my personal analysis, the washout rate is upward of 70%.

But, as to why . . .

There's such a low barrier to entry, that anyone who can read and write can get a real estate license.

It's not to say one must or should have an advanced degree, because I think that's total BS.

However, the lack of understanding regarding what's involved in being a successful real estate agent, combined with pre-licensing education that's not designed to educate, but to merely pass a test, tends to result in licensing mills that really do no one (the agent, the broker, and the public) any good.

Perhaps, if pre-licensing was more in-depth (e.g. 240 hours over 6 weeks of full-time - 40-hrs per week) that provided a more intense and expansive view of both the legal and practical sides of the real estate brokerage business, the entire industry would be better served.

The other side of the coin, is that most real estate brokerage firms fail miserably at providing new agents any useful, practical training. If they provide anything, it's more of an indoctrination as to how THEIR company operates, as opposed to how to help the agent to become more generally knowledgeable and productive.

This has been an area of my deepest interest for decades. I've even developed a new agent training course that I've used in my own brokerage firm to help new agents.

It's a 40-hour / 6-day course that's intended to be the beginning of an ongoing series of shorter courses and seminars.

However, when I tried to market it, I couldn't sell it to anyone, I can't even give it away because there are so few people interested in elevating their skills, because they all want to make money, NOW.

Thanks for a GREAT question.

Jan 09, 2017 06:05 AM
Rainmaker
2,105,126
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

I believe it's a higher figure than that and from what I've observed over the years might be as high as 8 or 9 out of 10. Maybe it depends on the market.

Jan 09, 2017 05:57 AM
Rainmaker
3,711,356
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

It is not easy to get people to work with a new agent.

Jan 09, 2017 05:04 AM
Rainmaker
1,112,912
Raymond E. Camp
Howard Hanna Real Estate Services - Ontario, NY
Licensed Real Estate Salesperson Greater Rochester

Besides the other great answers; I think the local board is just looking for the cash.

Jan 09, 2017 04:52 AM
Rainmaker
2,240,135
James Dray
Fathom Realty AR LLC - Bentonville, AR
Exceptional Agents, Outstanding Results

In my case I was promised training however, that didn't happen.  My first broker was out for themselves.  Number two it takes funds to get your feet on the ground and thankfully I had those funds, most don't.

Jan 09, 2017 04:24 AM
Rainmaker
471,860
Brenda Mayette
Miranda Real Estate Group, Inc. - Glenville, NY
Getting results w/ knowledge & know-how!

Unrealistic expectations.  We are are running a business.  Most consumers think we're out showing houses all day, every day and business falls into our lap.

Jan 09, 2017 04:07 AM
Rainmaker
2,566,066
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

There is little financial reality with many new agents who don't understand expenses continue even when there is no income...and that the phone doesn't just ring automatically when you are licensed.

Jan 09, 2017 02:49 AM
Rainmaker
675,439
Hella Mitschke Rothwell
(808) 226-1095 or (831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

I think "fail" means they run out of money and need to bring in a regular income. Real estate is hard work and not everyone is an "instant" success. But some are, and that brings in so many hopefuls.

Jan 08, 2017 11:29 PM
Ambassador
3,615,219
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

I thought the failure rate was a lot higher than this.  Maybe it's gotten better!

Jan 08, 2017 11:00 PM
Rainmaker
250,690
Nancy Robinson Ranked #111 by Real Trends/Wall Street Journal
Century 21 Town and Country - Royal Oak, MI
#10 Century21 Realtor in the US, #16 in the World

Paul , your entry level must  be higher  we have abut an 80% fall out rate.  I think one other issue I did not see posted  here is that some agents come into the market because they have a friend or family member who want to  buy or sell  and that makes it look easy and then when they do not have that any longer they fade away.

Feb 07, 2017 01:23 PM
Ambassador
2,229,342
Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

There's something about the stamina and drive that it takes to work 100% commission - that's terrifying to some and others, just don't know how hard you have to work.  When they find out, they're OUT!

Feb 06, 2017 09:08 PM
Rainer
4,358
Steve Martin
PalmerHouse Properties - Duluth, GA
East Atlanta Real Estate
  • They don't have enough money put back for them to last until they are consistently closing transactions.
  • New agents often have unrealistic starting expectations - they don't know what they don't know and often expect that it's going to be like their previoous jobs. 
  • They are often unable to quickly digest the firehose of new information and apply it for long enough to realize results.
  • Fear of the unkown and being unable/unwilling to engage in activities that are outside their comfort zone.
Jan 14, 2017 05:20 AM
Rainmaker
3,931,815
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Unrealistic expectations, work ethic and ability.

Jan 12, 2017 06:33 AM
Rainmaker
129,260
Diana White-Pettis
Exit Bennett Realty - Upper Marlboro, MD
GRI, CDPE, CNE, WHC Upper Marlboro Homes for Sale

I think they may have unrealistic expectations.  They are told about how much money can be made in the real estate business, but not always told what it take to build a successful business.

Jan 10, 2017 04:15 PM
Rainmaker
3,227,912
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Expectations are that this is an easy career choice, easy money, and most do not have the reserves to stay in long enough to make it.

Jan 10, 2017 10:11 AM
Rainmaker
457,645
Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

When I was hiring agents, I could teach them everything they need to know...

What I could not do is pay their bills while they were learning.  My main concern with new hires was "who is going to support you in the next few months?"

Eve

Jan 10, 2017 09:46 AM
Rainmaker
452,016
Tony Lewis
RE/MAX of Valencia (Hall of Fame) 30 year Valencia Resident - Valencia, CA
RE/MAX Valencia, Stevenson Ranch, Santa Clarita

I've been in this industry for over 20 years and still can't verify that people leave at this rate.  Most of our new agents seem to suceed and flourish.  I've heard these numbers forever.  They must be tainted by people that weren't really going to ever sell homes anyway.

Jan 09, 2017 10:03 PM
Rainmaker
495,869
Nathan Gesner
American West Realty & Management - Cody, WY
Broker / Property Manager

Without data in front of me, I suspect it's because they don't consider the expenses involved. Even if they are "average" in the first year, they are well below average income once expenses are calculated.

Jan 09, 2017 08:24 PM
Rainmaker
3,332,494
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

I heard it is more like 80%.  I think most people have unrealistic expectations

Jan 09, 2017 05:59 PM
Ambassador
3,577,260
Praful Thakkar
eXp Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Paul S. Henderson, REALTOR®, Broker, Tacoma Washington - one reason - they don't join ActiveRain.....lol!

On a serious note, they are not guided and are on their own!

Education makes the difference.

Jan 09, 2017 03:17 PM
Rainmaker
970,010
Ryan Huggins - Thousand Oaks, CA
www.HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Because it's not "easy money" the people make it seem.  They're not expecting or used to the level of work, doing the so called "working 80 hours to avoid working 40"

Because real estate school does not teach you how to sell homes.

Jan 09, 2017 01:35 PM
Rainmaker
138,171
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

I would say they don't realize how hard it is and how much face to face as well as money it takes to build.  

I mentor Agents in our office and once you work the numbers backwards it is always eye opening. 

Jan 09, 2017 01:23 PM
Rainmaker
3,949,441
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

training and mentoring is lacking....

Jan 09, 2017 12:29 PM
Rainmaker
83,867
Scott Lawson
America's Home loans - Santa Rosa, Petaluma Mortgage Broker - Santa Rosa, CA
Mortgage Broker FHA, VA, refinance or purchase

It's closer to 8/10. I tell everyone on my side it takes 6-12 months to get going--if ever...Many come in expecting to knock it out of the park right away. While I admire the spirit, it just never works out that way.

Seen quite a few throw in the towel just as it gets going for them. That one has always baffled the Hell out of me.

long term success is about lasting. The longer you last, the more likely it will turn into a career...Just my take...

Jan 09, 2017 11:30 AM
Rainmaker
813,937
Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida

It has something to do with not having any money left in their bank accounts.

Jan 09, 2017 10:52 AM
Rainmaker
1,395,939
Sandy Padula and Norm Padula, JD, GRI NMLS#1483386
Realty One Group - Carlsbad, CA
Presence, Persistence & Perseverance

They watch too many reality real estate shows and fail to understand just what it takes for success!

Jan 09, 2017 10:00 AM
Rainmaker
2,369,076
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Lack of money,  I have my newbie keep a job till they have 3 deals under there belt that they have money for marketing.  

Jan 09, 2017 09:56 AM
Rainmaker
455,551
Gloria Valvasori, ASA
Better Homes and Gardens Real Estate Signature Service - Streetsville, ON
Quality Service, Exceptional Results, Since 1987

Most people think its a cushy job and we all make huge sums of money... they don't realize how hard it really is.  Their expectations are not realistic... if you are not a self motivator you are not going to make it.

Jan 09, 2017 09:56 AM
Rainmaker
2,267,907
Richard Weeks
Dallas, TX
REALTOR®, Broker

No business plan, no daily schedule, no prospecting, no accountability.

Jan 09, 2017 09:45 AM
Ambassador
3,367,056
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Many cannot work as independent contractors and need a regular paycheck. Financial pressures keep them distracted with the continual outgo making it where they cannot focus on the long term results.They get disenchanted and start failing to do the daily routines of what it takes to build a business and spend less and less time on it. The spiral continues downward until they say, This isn't for me.

Jan 09, 2017 09:01 AM
Rainer
64,353
Cody Carmen
Adhi Schools, LLC - Rancho Cucamonga, CA
Market Analysis--Educational Content, Adhi Schools

I think most of the major contributors to failure have been mentioned. One that I haven't seen is the failure to transition from early business (i.e. the family and friend connections that make up a lot of agent's early business) to a sustainable operation. There are a lot of agents that can sustain themselves for a year off of the first step of networking and connections. But turning that business into new business is something that many cannot accomplish, whether that be inability to successfully network or failing to recognize when it is time to do so. This is where a lot of Year 2 failure comes from. 

Jan 09, 2017 08:52 AM
Rainmaker
3,424,587
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding and Marketing

Paul,

It is as simple and as rewarding as it looks.  Also some are not suited for this profession.  A

Jan 09, 2017 08:06 AM
Rainer
148,830
Macy Babb
Re/Max All Properties Realtor - 404-234-6166 - Cartersville, GA
Realtor, SFR, HUD/REO Certified

I would say they have unrealistic expectations of what "Real Estate" really is, as well as the actual "costs" to being an agent...it's not just lets look at 3 houses and they buy and you get a "HUGE" check .... and some of it also is the education to get licensed does not teach you how to "be" a Real Estate Agent

Jan 09, 2017 07:23 AM
Rainmaker
325,735
Maria Sapio
Berkshire Hathaway Homesale Realty - Carlisle, PA
Real Estate Agent- Carlisle, PA. Mariasapio.com

Lack of steady/predictable income

Jan 09, 2017 07:14 AM
Rainmaker
230,551
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

They are independent contractors who have to work their own schedule to create business. And if they have no closing, they have no income.  This can be a challenge for many.

Jan 09, 2017 07:05 AM
Ambassador
1,235,560
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Any service or sales business would have this as true.

Jan 09, 2017 06:40 AM
Rainmaker
689,657
Jennifer Mackay
Keller Williams Success Realty - Panama City, FL
Your Bay County Florida Realtor 850.774.6582

They have visions of grandeur of becoming a millionaire over night

Jan 09, 2017 06:40 AM
Rainmaker
2,191,393
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Death by lack of experience....#1 killer

Jan 09, 2017 06:36 AM
Rainmaker
798,607
Marco Giancola
Beachfront Realty - Miami Beach, FL
Realtor (305)608-1922, Miami Beach Florida

Unfulfilled expectations.

Jan 09, 2017 06:19 AM
Rainmaker
882,677
Corinne Guest, Managing Broker
Barrington Realty Company - Barrington, IL
The Choice of Professionals

Financial inability to stand the test of the time it takes to make a sound business operation. Also lack of understanding they are now running a business and the buck stops here.

Jan 09, 2017 06:13 AM
Rainmaker
2,449,903
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

They are not ready, dont have a built up savings to get through the the learning curve and time it takes to close a deal. Learned to take a test but not sell homes. Chosen a company that does not provide mentoring to teach the agent how to succeed.

Jan 09, 2017 05:42 AM
Rainmaker
4,272,283
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Many are not prepared for the challenges.

Jan 09, 2017 05:16 AM
Rainmaker
600,520
Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

Why? Because Brokers are irresponsible and greedy folks.

They suffer NO CONSEQUENCE when their process creates the long enduring failure system. Trump University has the same success rate and that did not turn out well.

The solution is SIMPLE. Unfortunately, way too much new money is being harvested through the existing failure system. 

But, first, one must define, "What is success?"

That is an important question because a great many agents who have not failed do not make a living income.

Jan 09, 2017 04:41 AM
Rainmaker
112,151
Julie Larson Realtor® Sarasota FL 941-882-0322
PalmerHouse Properties Florida - 941-882-0322 | Serving Sarasota, Manatee & Charlotte Counties - Sarasota, FL
When you're thinking of moving...ThinkSuncoast.com

I don't think they realize all the work that is involved to become successful. Plus, you definitely need to have a financial cushion to keep you going until you start making money.

Jan 09, 2017 04:19 AM
Rainmaker
611,590
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

What exactly is failing? Did they not make any money? Not enough money? Not represent any buyers or tenants? No listings first year? Just decide that real estate wasn't for them after getting a couple listings and representing a couple buyers? Did they get a job but kept their license active?

Jan 09, 2017 02:51 AM