New agents are still a long way from receiving the support and training they need to thrive in real estate. That’s what we learned from 482 agents, brokers and other industry professionals who took our survey. Two pieces of advice stand out in our research.
New agents are still a long way from receiving the support and training they need to thrive in real estate.
That’s what we learned from 482 agents, brokers and other industry professionals who took our survey between Wednesday, April 13, and Tuesday, April 19, 2016.
Even the most highly rated training-centric franchises are too busy or don’t feel it’s in their best interests to give rookies the one-on-one hand-holding experience that these beginners really need in the first year.
In order to help new agents thrive, brokers need to step up and give their new agents more help with lead generation, our research found, with 37.55 percent of respondents believing this was the most important area to work on for ongoing training and 47 percent believing it was a priority in initial training.
For their part, newcomers to the industry have to switch off the real estate reality television and be ready to hit the ground running with a wide sphere of influence. Before entering the industry, they should do their research on the brokerages in the local area that suit them best and make sure those brokerages can substantiate their training claims, said respondents.
According to experienced agents in the survey, real estate newbies should also make sure they have a barrelful of money at the ready for the first year in the business, when their focus should be on education, learning the ropes of every part of the transaction and getting to know their market in-depth rather than making their first million.
Two pieces of advice stand out in our research. The best thing a new agent can do is find an excellent and generous agent mentor or coach to whom they should make themselves indispensable (if they are wise).
As one successful second year agent put it: “Find an experienced agent and cling to their ankles and don’t let them shake you off. Learn everything they will teach you.”
And if agents are to survive after two years — and only 10 to 20 percent will, according to Jay Niblick of WizeHire — these beginner agents need to get on top of lead generation as soon as they can. This can be done in a variety of ways, whether it is by joining an inclusive team, buying a book of business or just grinding out the work and making calls every day.
Lead generation ranked ‘most challenging’ part of business for new agents
A broker of more than 10 years whose annual production is more than $10 million expressed it well: “We are in the lead-generation business. We get to sell real estate when we have clients. Develop a healthy lead gen system and stick with it. If you can do that, you’ll always fall forward when you stumble.
“Take every educational opportunity thrown your way and seek them out if they’re not immediately available. Never stop lead generating and never stop learning.”
Many respondents suggested an industry apprenticeship/internship program — asking younger agents to “earn their wings” before being trusted with a transaction of their own.
“New agents need to be treated as new agents and they need to earn their wings in the business by working as sub-agents to larger agents or be trained and under supervision for more than a couple transactions,” said one senior broker. “Real estate is a business that needs to be learned by experience and time, it takes more than a few months to master real estate sales and clients.”
Another experienced agent said new agents underestimate the wide scope of the business, which is unlike any other.
“With all the different aspects, it’s almost a foreign language in its complexity. Dealing with personality issues of the client and the other agent, legal issues of the contract, paperwork for the broker, time management, money management, marketing myself as well as the property, finding new business — all of it was new or tweaked or different from nearly any other job I’d had.”
Why do new real estate agents leave the business?
More than three-quarters of respondents (77.39 percent) said that new agents fail at least in part because they are unprepared for the realities of working as an independent contractor.
The next most-popular reasons cited for new agent failure were unrealistic job expectations (73.65 percent) and insufficient brokerage training (58.09 percent.) Insufficient brokerage supervision (48.34 percent) and low barriers to entry (47.10 percent) round out the top 5 reasons respondents gave for agents leaving the business.
Newcomers to the industry are not doing their homework before they plunge in. Suggested one seasoned broker: “Before actually becoming an agent, find someone or a broker that can outline what it takes to succeed in this business before spending money on pre-license and licensing to become an agent.”
One rookie agent — who is already making good numbers — said the early training on the industry had plenty of room for improvement.
“The pre-licensing education is solely designed to help students pass a test. Training needs to focus on the job of being a real estate agent. Pre-licensing training should be in the form of tech school training so that the student is prepared to sell real estate when they graduate.
“It is shocking how much there is to learn after students leave school. It seems that pre-licensing training was a complete waste of time and didn’t prepare students at all for the actual job itself.”
Another successful agent agreed: “They come out of licensing class with no knowledge of the day-to-day workings of real estate. Most have never even seen a contract, much less how to explain the legalities to their clients. That training falls on the brokerage, and suffice to say many are missing the boat on training.”
Meanwhile, new agents should not expect their early training to prepare them for the first tough years, said respondents.
“I don’t think the initial training prepares agents for the real job and costs associated with being an agent. There needs to be an orientation class that shows the real skills, time, quality of life, fiscal costs and other resource costs required to be successful,” said one agent.
Balancing budgets can be a real problem for agents who aren’t used to the costs associated with their new job. When respondents ranked different failure-rate factors in order of importance (1 being most important and 5 being least), “agents don’t understand how to manage their finances” was ranked the fifth most-important failure-rate factor.
The public’s perception of real estate erroneously drives a new agent’s expectations, added a marketing and tech executive in the industry.
“Many see real estate as a way to have a part-time job with big pay. They do not understand the complexities of the business. Let alone understand that it is a business.”
The CEO of a local Realtor association said he regularly meets new agents who need a reality check.
“New agents I see have stars in their eyes about making a lot of money. Many do not understand the time commitment involved to succeed, and many do not have good sales skills.”
He was not happy with the current broker training or supervision on offer in the industry.
“Brokers are falling down on the job by not training and supervising new agents enough,” he added. “When a broker hires a new IC [independent contractor], he or she should take a ‘hands on’ approach to the training and supervision to ensure the opportunity for the new hire to become successful.”
Real estate reality TV is not doing the industry any favors, added a number of participants.
Said one agent of three years: “I think most people getting into real estate see reality TV shows that show these superstar agents making huge amounts of money. They think it is easy based on that. Actually, it takes a lot of self-discipline that most people do not have.”
The low barriers to entry remain part of the equation — and the new agents agree with this.
“It takes 30 hours and a GED in Kansas to license. I could do it on a whim. I am entrusted with my clients’ most expensive asset — I should have more than a coffeeshop education,” said one.
Added another new agent with a business background: “More extensive business training, including prospecting training, and mentoring will allow agents to truly learn the business before being thrown to the wolves. Too many new agents don’t have any business training and don’t know the transaction details and legal ramifications.
“Those with little formal education can seriously falter. It’s like being thrown into the deep end without the slightest notion of how to swim, or even float!”
How are the franchises faring?
Agents and brokers participating in the survey had strong opinions about which real estate franchises were doing a good job on training newcomers to the industry and which were not.
“It’s not the brand; it’s broker expectations and support,” said an experienced broker.
Keller Williams came in with a solid reputation for training new agents, with an even 50 percent of respondents stating that the franchise has a good reputation for new agent support. In survey comments, however, many respondents stated that the support an individual agent receives from his or her broker is in the lap of the gods at Keller Williams — as it is anywhere else.
Coldwell Banker was also noted to have a good reputation for new agent success, followed by Re/Max, Century 21, Better Homes & Gardens and Weichert Real Estate.
Other brokerages mentioned in a good light were Berkshire Hathaway HomeServices, Long & Foster, Windermere Homes & Estates, Reece and Nichols and Engel & Volkers. A number of boutique independent brokerages also surfaced in survey comments.
Those doing well had systems in place, said one junior agent who recommended Sotheby’s International Realty and Keller Williams for their training systems.
“The new agents I have met that are excelling within one to two years are doing so as a result of following a system and being held accountable,” he added.
At times, the brokerage training can be too general. There needs to be more local knowledge transferred, said respondents.
“Training is about processes and systems, but each community, city or state has different demographics, requirements and ordinances, and no one teaches new agents how to navigate this,” said one rookie agent.
And the onboarding experience can vary widely, many agreed.
“I don’t know of one franchise group that I would say, across the board, has great training,” said one agent of three years.
The argument for joining a smaller office for better training came through in the comments.
An active Engel & Volkers agent liked the way it was done at their company: “They are selective in their agent recruiting. They care about quality of agents, not just recruiting the masses to win the ‘who has the largest brokerage’ award. Brokerages with fewer and higher-quality agents will be able to train new agents more easily.”
An industry veteran and independent broker has set things up having learned how not to do it from the large brokerages.
“I’ve found the franchises offer tons of training but no follow-through or one-on-one help,” the broker said. “Agents need immediate assistance when they are trying to write an offer and I’ve consistently found that managers at large franchises wait too long to help their agents out.”
She added: “I’ve set up a mentoring program within my brokerage, and my new agents never wait more than an hour for an answer to a question.”
Real estate firms can be given some leeway for not investing too heavily in new agents, added some realists.
“There is no loyalty with new agents,” said one industry veteran. “I’m sure brokerage firms count the cost of educating new agents as they enter the real estate industry. However, they can pack up and leave and go to the competitor at any time.”
Another long-term player said the era of the franchise real estate firm dominating the new agent market may be coming to an end.
“Other than homogenized initial training, none of the national brands have anything of value to offer new agents. The era of franchise brand value has passed. The franchises have fallen behind the sweeping tide of technology, lead generation, and customer visibility. The customer becomes distrustful of brand promises when delivered by an incompetent, less knowledgeable agent.”
What does quality onboarding look like?
Survey respondents felt that brokers who want to provide good training should focus on helping agents first with lead generation, then transaction management, time management and customer service.
There is more work to be done, said an agent of four years: “There is lots of excellent information — it is just not well coordinated to what we need most when we start.
“We need context and hands-on training, not reading books, watching videos and discussing philosophical issues. Right now I need to know how to write a good contract for my client, make sure everything is legal and be able to negotiate in their best interest.”
What resources should brokers provide to help agents thrive? A majority of respondents listed the following as their top six:
- Giving new agents a mentor (87.34 percent)
- Providing new agents with coaching (84.23 percent)
- Equipping new agents with technology training (60.79 percent)
- Providing customer-service training (59.54 percent)
- Providing marketing/social media training (58.71 percent)
- Placing new agents on teams (50.62 percent)
A successful new agent from one of the big firms had no doubts of the value in mentoring: “Training and support — the companies that do this well also have very high splits. I honestly feel that if you had a successful mentor that this would be as good, if not better.”
Of course, mentoring can be done badly. Agents should choose their mentor with great care, warned a number of respondents in this “dog-eat-dog business,” as one described it.
Said one newbie: “The mentor program needs to be a true mentor program with qualified mentors who can assist in starting and growing the business and the mentor receives a percentage of the first two to four deals.”
And most are not true mentors — often, they are seasoned agents who have never had any training on how to be a mentor. As a result, they are ineffective, respondents said.
One new agent has already developed a healthy cynicism about mentors.
“As a new agent myself, I see firsthand how my supposed ‘mentor’ and team leader doesn’t have any time to spend with me,” said the agent. “I’m learning by trial and error, and finding my own way through everything.”
In some cases a coach can be better than a mentor, said one respondent who has had multiple mentors: “You cannot reach them, and when you get a return call, they all have a different response. Totally ineffective and frustrating. If you cannot mentor, including holding one accountable, it’s better to remove mentoring from real estate and move to coaching, which includes accountability.”
Social media training, meanwhile, has to be part of today’s onboarding package, said participants.
“I’m a 20-year CPA, so the numbers side is easy, but I’m hunting all over for coaching, marketing, CRM and social media solutions,” said one new agent.
A more selective screening process was put forward by a senior regional manager:
“I think that we need fewer agents but more qualified agents. The system currently encourages anyone to get in because brokers see it as a way to an individual’s sphere of influence, and therefore to more commission dollars. Proper screening of applicants based on temperament and aptitude, as well as creating a mechanism for sustaining them financially — a draw system — would lower the fallout rate.”
And a highly practical suggestion from a senior agent: “New agents need a ‘bone’ upon which to chew. Get them a piece of business, whether self- or company-generated, as soon as possible so that they feel busy. Otherwise, they languish in self-doubt and pity.”
Teams can be a good fit — if it’s the right fit
Inman’s research found that teams can work well for new agents, but joining a team might not be a positive experience, depending on the team and the agent.
Being on a team gives new agents real life experience with the assistance of a knowledgeable agent, said one respondent. It provides agents with a structure while still allowing them a level of independence, said another.
Added one newbie: “Working on a team takes away some of the fear and mistakes that come with inexperience. Providing leads will give a new agent a starting base and purpose so that they don’t give up.”
One agent who had limited success with his franchise’s training said he would have preferred a team.
“Personally, I need to see a transaction from start to finish. Had I been placed on a team I think I would have had better success. I kept going with brokerages that said they had great training. But in actuality their training did not teach me the things I needed to know. Giving me a ‘script’ to learn was useless unless I had learned the nuts and bolts of the business.”
Teams can just use new agents and spit them out, however, said some.
A successful new agent had heard horror stories in his market: “From what I heard from agents leaving these brokerages, these companies have the new agents work for their team leaders, making money from the new agents’ labors and taking most of the cut from the commission. The new agent is left with peanuts and the team leader walks away with a chunk of money they hardly had anything to do with. These team leaders don’t give very good advice, nor do they want to give accurate tutorage to the new agent.”
Teams can provide new agents with false hope, added a chief administrator.
“Very few teams are structured in a way to fully support a new agent with sufficient leads to earn an income. Good brokerages are helping teams structure themselves in ways similar to a business which could be beneficial to new agents, but many teams are still a loose collaboration of agents.”
The biggest challenges in the first few years
The most challenging business area for new agent, according to the survey, was overwhelmingly lead generation (61.62 percent), followed by:
- Managing transactions (11.62 percent)
- Marketing (6.43 percent)
- Managing clients (5.81 percent)
The concern expressed by one established agent is worth considering for all new agents still getting used to the financial ebbs and flows of the real estate market.
“We are in a bull real estate market, and my dog could sell a house right now. New agents are not bracing for the next dip and don’t know how to market and save accordingly.”
The concern for many rookie agents in the current market is low inventory.
Said one agent with feeling: “The hardest part is building your book. And it’s hard to convince anyone in your sphere to hire you when you’ve never completed a transaction.”
The plethora of information coming to a new agent can be overwhelming — and some of it is useless.
“The challenge is filtering out all the ‘noise’ that we are bombarded with on what to do. I’ve been in learning mode for more than a year. There are so many sources for training with such varied and contradictory information,” said one agent just past the first year.
And some of the new agents coming into the market in their 20s and 30s have not had the life experience of their older colleagues.
Said one wise brand newbie: “Many new agents have not lived through the process of buying or selling a house, and training to get certified does not cover that.”
Where new agents spend too much (and too little) time
New agents are spending too much time on marketing and managing transactions and too little time on lead generation and continuing education, said our respondents.
Lead generation can never be underdone.
“Go to a good brokerage that offers good training and learn how to lead generate. Spend two to three hours a day generating leads,” said an experienced broker.
A number of senior respondents said new agents were spending too much time on social media — especially Facebook.
“Social media is good to a point, but it can be a time distraction,” said one experienced player.
Is the industry setting up new agents for failure?
Even if new agents do everything right, is the industry wishing them success or setting them up for failure? Surely, with the numbers of new agents signing up every year, there has to be a natural attrition rate.
Some frank words from an experienced agent: “The real estate agency industry and affiliated industries do not revolve around agent success like many rookies believe. They revolve around taking fees and commission cuts from all, rookie and experienced alike. The entire system is set up for agent failure because agent failure is what creates success for all the others.”
An agent and general manager thinks brokers should take more responsibility and put unsuccessful agents out of their misery.
“New agents come into the industry because real estate is ‘sexy.’ When they aren’t given proper training, guidance and advice, they float around in the wind for a while and then they either get it or they don’t. I believe it’s imperative for the industry managers, leaders and brokers to shape and guide agents. If a new agent doesn’t have the skill set to succeed, it’s better to have the uncomfortable conversation early on rather than let them burn out.”
Parting words of wisdom
Respondents left some last pieces of advice for the new agent wondering what to do next.
“Plan to spend the first year getting an education rather than making a living. Line yourself up with a mentor or team that will help you develop the skills needed to be successful,” advised an experienced top producer.
And wise words from an agent just two years in: “Track your business. It’s easy to spend time and money trying to build your business, but if you lose track of what pays off — and more importantly, what doesn’t — it’s going to hurt you and possibly push you out of the business.”
From a high flyer: “Forget what you’ve seen on TV. Limit your time on social media. Lead generate and concentrate your time on income generating activities only.
And align yourself with the best people you can find — brokers, agents, title/escrow officers and lenders.”
And the last word from one forthright team leader and COO: “The truly successful real estate professionals treat this ‘job’ as a business — and real businesses take work. Mountains of work, of sweat, of tears, of failure. Once new agents get a sip of the bitter cup that truly professional real estate agents drink from on a daily basis, they’re aghast, disheartened and sometimes crushed.
“Why does this not happen in other industries? Because people know. They know the standards and the expectations. The path to getting to a certain point in any other profession is succinctly laid out for anyone interested. Becoming a doctor is hard, becoming a lawyer is hard, being an entrepreneur is hard.
“Resetting expectations of what is required in this industry to achieve a high level of success will single-handedly lower the turnover rate.”
Inman conducted the survey between April 13 and 19, 2016. It received 482 completed responses, 272 from agents, 130 from brokers and 80 from respondents who identified themselves as “other.” Of the respondents, 15.98 percent have worked in real estate for less than 1 year, and 45.85 percent have worked in real estate for more than 10 years.