I keep hearing some depressing stats in our industry. I am a big believer in the 80/20 rule, and I know that principle also applies to our business 20% of the agents make 80% of the sales. I also remember to hear that the turnover rate in real estate is 75% in two years.
Last week I was told that in this current market only 10% of the agents are making 90% of the transactions and that 40% of the agents in my area have only close ONE transaction in the last 12 months.
I was doing the numbers the average sales price is $200,000 and the average commission is 2.5% so the one sale a year only brings $5,000. most of the agents in my area are associated with traditional broker splits of 50/50 to 60/40 I will take the later. So that means that 40% of the agents in my area have only earn $3,000 in 12 months. I know the local board is $580, MRIS is $660, license $90, business cards $100, sentri card $175. Total investment is $1605. That leaves a profit of $1,395. divide that by 12 months and that is a $116 monthly income.
Well the problem with new agents and most agents in general is that they have the employee mentality. They think that they work for the broker or company and they usually call their broker or manager their boss. They expect the BOSS to give them the business, they usually do floor duty and become unpaid receptionist for the company waiting for leads. Then they will go out on a limb to show houses to the people who call without verifying finances or buyer's ability to purchase a home.
Some go to many trainings or classes to become better agents, and try all kinds of things to see what sticks and works for them. Also they do the open houses for the office top producers, etc.
So after several months of frustration the agents that feel they are wasting time, and sure they are, go out and look for hourly paying job, and become "dual career" agents. Usually they don't do a good service to their leads or clients and ended up losing business because they are part timers. And after a few years they will drop out of the business.
I understand that there has to be a level of apprenticeship, and mentorship, but also most important it has to be a business plan. When you open a new business and you have to go to a bank to get financing, or to leas a pod, you need to have a business plan. To be able to grow your business you need to know where you are going and you need a business plan to guide you.
I know most new agents don't know what that is, and most brokers don't spend time with their agents helping them develop a successful business plan and set goals. The only way you can be successful is to set goals and know how to achieve them. We can't drive without a map or destination.
In my opinion new agents fail because they don't have ownership of their business. They don't have goals, plans, they have the employee mentality.