You’ve heard the stat forever: 87 percent of real estate agents fail in the first three to five years. Tom Ferry cites it, and it’s generally attributed to the National Association of Realtors’ 2014 Agent Profile. But what’s the cause of the exodus and what can be done to improve new agent outcomes?
Training and coaching seem to be some of the largest lag metrics that we have right now. When an agent enters the industry, they most often describe their experience as being “thrown to the wolves.” So what is the issue? Let’s dive in.
The traditional agent model is the problem
A traditional real estate model is designed when a new agent comes in and now the company has access to their sphere. This means they are given scripts, some training and told to start reaching out.
For the bigger brokerages, this means that if the agent succeeds, they can make money. If the agent fails, there is minimal cost for that failure. So how do you effectively train a new agent or mentor someone?
First, let’s leave the traditional model behind. To become a real estate agent, you can go through an online module and pass a test. There is an hour requirement, but it is one of the lowest barriers of entry for something with such a significant financial impact on both the agent and the client.
Real estate is typically the most expensive purchase for the average person, but the bar of entry is extremely low to be able to assist. So mentoring and coaching takes on an incredible amount of work and importance.
The goal is to ensure that any new agent — or frankly, any experienced agent — becomes an expert. The mentorship model right now allows any agent of over two years to “coach.” Limit coaching and mentoring to those who are true experts in the field.
Instead of scripts, focus on training every agent to fully understand the market
Whether they are speaking to a buyer, seller or investor, at a family event or even at the local bar, all agents should be able to answer three vital questions.
- How is the market?
- How did the market get this way?
- Most importantly, what does that mean for the person they are talking to?
These cannot be just talking points. There has to be a fundamental understanding of what is happening in real estate. This starts any agent off on the right foot as when they advise, they have clear eyes and understand the implications. It is easy to help someone buy a house but that doesn’t mean it is a great decision for them.
Making sure that we are experts allows the agent to give the full service that any client deserves. Set up a full training schedule peppering in numerous topics, including the following:
- Understanding a home
- Knowing when to walk away
- Understanding how the process works fully
- Making sure that the agent is competent to conduct a walkthrough
- Utilizing shadowing and roleplay
Hands-on training is vital. This isn’t an abstract topic, this is one of the largest purchases in a person’s life, and the real estate agent has to understand each part of the process fully.
Set weekly, monthly and quarterly check-ins with an agenda for each meeting
Whether you are discussing how your business looks today, what issues are you and your clients are going through, a true business plan, negotiations, or what have you, the agent needs to be there. The agent also needs to fully understand the tools that are available to them.
The MLS is not just a search tool. It allows an agent to run a comparative market analysis (CMA) so that they can understand values. In a shifting market, this is vital. The agent has to understand what prices mean, not just what an appraisal can come in at. The goal for any coach/mentor is to see the person they are assisting become an expert.
The minimal approach we have seen leads to an extremely high burnout rate. Be an advocate, be a teacher and create an expert for whom you are truly there. The most important question any coach/mentor can ask themselves is if they are ready to be the expert and impart their knowledge to a new agent in a way that will create and foster success.
If they cannot do that, pass on coaching. The goal is to raise the bar within this industry. We know we start at the bottom, so help anyone you are working with reach the top.
Not everyone can or should do this job, so know when to take a step back and let that person know that this may not be the right fit. Be a guide in this industry and know when to call it quits, either as a teacher or in advising the student.