Jun 18, 2018 by - Pat Hiban

Why Three Fourths of New Real Estate Agents Will Fail

Are you a new real estate agent, eager to earn some huge commissions so that you can start living the high life? I hate to break it to you, but chances are that’s not going to happen. 

Here’s what’s more likely: you’ll fail, give up, and leave the industry for good. 

Lab Coat Agents, Nick Baldwin, Tristan Ahumada, labcoatagents.com, Real Estate, Pat Hiban

I don’t mean to discourage you, but the statistics just aren’t in your favor. 75-85 percent of agents fail in their first five years. In other words, less than one fourth of new agents will survive in this industry – even fewer will thrive. 

Why is such a large percentage of new agents failing at such a rapid rate? 

That’s the question that drove my discussion with broker Katherine Scarim on episode 649 of the Real Estate Rockstars podcast. 

Lab Coat Agents, Nick Baldwin, Tristan Ahumada, labcoatagents.com, Real Estate, Pat Hiban

According to Katherine, there are several deep-rooted problems within the real estate industry regarding the training of agents. More specifically, the severe lack of training afforded to the average agent is largely responsible for the industry’s ridiculously high failure rate. 

The Current System Is Broken

Katherine Scarim became a real estate agent in 2011. Very quickly, she realized that the training and the answers new agents needed to succeed weren’t readily available, that the system was broken. 

With that realization came the determination to make a change; it lit a fire in her to become a broker who gave agents the tools needed to succeed, not just someone cashing in on their hard-earned commissions. 

Katherine doesn’t just want to be a better broker for the sake of her agents, she wants to do it because it’s what the industry needs if it’s going to last. 

Sure, that last statement sounds extreme, but so are the issues that the industry is currently facing. Public opinion of agents has deteriorated to an almost irreparable level. As Katherine explains in the following clip from my podcast67 percent of the public doesn’t trust real estate agents. 

If the growing distrust in our industry is left unchecked, many experienced agents, not just new licensees, could easily find themselves looking for another line of work. 

Brokerages Are a Big Part of the Problem 

Unfortunately, many brokerages don’t seem to realize how damaging a lackadaisical approach to agent training can be. 

What’s worse is that some brokerages just don’t seem to care. 

Instead of treating agents as an extension of their business and representatives of the greater real estate community, an alarming number of brokerages is simply using agents to boost their bottom line. 

Under the assumption that more agents equate to more money for the brokerage, they send undertrained, underqualified agents out into communities around the country. Not only are the brokerages that do this setting their agents up for failure, they’re contributing to the public’s growing distrust of our industry as a whole. 

Licensure Requirements Are Way Too Lax 

But brokerages aren’t the only ones to blame for the poorly trained agents plaguing the industry. During the critical pre-licensure period, future agents are required to receive only minimal amounts of training – that’s on the state commissions. 

Some states require as little as 40 hours of training to become a licensed real estate agent. That’s insanely low. If you don’t think so, consider this: cosmetologists need a total of 1,200 hours to get their licenses. 

Yes, you read that right. Cosmetologists – the people coloring hair and applying facial treatments – are far better trained than the average real estate agent. 

If they need 1,200 hours of training before they’re allowed to practice, why are agents receiving as little as 40 hours of training before they’re able to guide clients through some of the largest financial transactions of their entire life? 

Even in states with stricter licensure requirements, like Texas (180 hours), the number of hours needed to get licensed is nowhere near where it needs to be; it’s simply not enough. 

A Two-Part Solution to the Problem with Agent Training 

Obviously, there’s no quick, easy fix for a problem this big, but the solution itself really isn’t that complicated. In all honesty, solving the agent-training problem could be done, in time, with two industry-wide adjustments.

1) Increased Licensure Requirements

According to the “Danger Report” commissioned by the NAR, untrained, unethical agents are the single greatest threat to the real estate industry. 

So, why are we still inducting droves of incompetent agents into an already oversaturated industry? 

State commissions need to take a hard look at their licensure requirements and coursework. Not only that, they need to monitor the failure rates of the agents they’re producing. With failure rates as high as they are today, it should be clear to them that changes are absolutely necessary.  

2) Better Brokerage Accountability

Everyone loves to talk about ways for brokerages to hold agents accountable. Sales, appointments, and even calls are tracked to ensure that agents are putting in the work. 

But the relationship between agents and brokers should be a two-way street. 

It’s not unfair for agents to expect more from brokerages. At the very least, quality training and mentorship should be a part of the package. When brokerages fail to deliver on these two essential offerings, their agents, and the industry as a whole, will suffer. 

Take Control of Your Career

With the way things seem to be headed, I can’t say that I’m optimistic about the situation. My best guess is that problems within the real estate industry will get worse before getting better. 

Now, I’m not saying that you new agents out there are doomed to fail, but there’s a long, hard road ahead of you. In order to make it down that road successfully, you must take control of your career – the sooner, the better. 

Lab Coat Agents, Nick Baldwin, Tristan Ahumada, labcoatagents.com, Real Estate, Pat Hiban

If you’re struggling, be proactive and seek out additional training to turn things around. If not for the sake of the industry, do it for your own. Believe it or not, your career actually does depend on it.


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