Real Estate agents have long been at the center of a real estate transaction. However, it has also long been determined that, like many other industries, the 80/20 rule applies to these agent. What this means is 20 percent of the agents do 80 percent of the business. In a $100 Billion+ industry, this is no small amount of revenue difference. In this Personal and Professional Growth blog, we will dive into why the 20 percent consistently close the overwhelming majority of the business.
What keeps 80% of agents broke… Or looking for a new line of work?
The turnover rate among real estate agents is very high. Some statistics have shown that over 85 percent of real estate agents leave the business within 5 years. Obviously, if these agents had built highly profitable businesses, they probably wouldn’t be leaving. So the question is, why are so many stuck making very little or no profit in this industry, while others thrive? Some may say that it is caused by lazy agents, or agents that don’t take this career seriously, or even that some don’t make it a career at all. While all of these would be valid and accurate reasons why many agents fail to build highly profitable businesses, I think one all encompassing reason comes down to this… Accountability, or a lack of it. Any highly successful person has to be held accountable. Maybe by holding themselves accountable, maybe by having a coach or mentor hold them accountable, or maybe simply through finding an accountability partner in a friend. Athletes have coaches, CEO’s and business leaders have Business Coaches, and even successful Real Estate sales agents have coaches. The reason for this is, without taking responsibility for our own success, it generally can’t be obtained.
What is accountability, and what does it look like in the Real Estate industry?
ac·count·a·bil·i·ty – the fact or condition of being accountable; responsibility. One of my now favorite books, The Miracle Morning, makes some shocking observations about accountability. In the book, the author identifies the problem humans have with being accountable to anyone, including ourselves. “Here’s the problem: accountability was never something you and I asked for, but rather something we endured as children, teens, and young adults. As it was forced upon us by adults, most of us unconsciously grew to resist and resent accountability altogether.” The author goes on to say that once we found freedom in our adult years, we did everything we could to avoid being held accountable.
For many agents, they probably held down some other job before getting into real estate. This switch from an employee/employer relationship that by default had accountability built in, to now an independent contractor role where “you are your own boss” becomes an immediate opportunity to again avoid accountability. The real estate industry is the perfect storm to create ill prepared, unmotivated, and unsuccessful agents. While many states have laws that require managing/designated brokers and Brokers-in-Charge to “supervise” their associated licensees, the independent contractor relationship allows for very little to no mandatory accountability. What I find this leads to often is an environment where brokerages just allow agents to flounder their way to failure. While some well intentioned brokers offer opportunities for agents to learn and grow, they haven’t developed a culture or environment within the firm that fosters voluntary attendance from their agents.
This lack of accountability in the Real Estate industry unfortunately leads to many failed business startups by new agents. It also leads to some general lack of professionalism and skill among some that stay in the industry and are happy remaining in the 80 percent of agents that only do 20% of the business.
So what is the solution?
With its low barrier to entry, deeply rooted history of allowing mediocrity and failure, and Federal tax laws that prohibit too much control in the day to day activities of an independent contractor, how do we fix the problem? Well, for starters the low barrier to entry… But that is a blog topic for another day. For today’s topic, tackling the lack of accountability starts with building a culture within your brokerage that promotes a higher level of success and professionalism. And this doesn’t have to start with the Managing Broker! It doesn’t matter if you are an agent with 2 hours on the job, or the Broker-in-Charge, you can begin changing the environment you are in. Start by finding an accountability partner, or creating an office Book Club that reads personal growth and development books. By creating environments where mediocrity isn’t tolerated, it will cause those in that environment to rise to the occasion, or leave to stay in their sea of sameness. To become the 20 percent, you have to separate yourself from the 80 percent.
As a broker, owner, and manager in a real estate brokerage, my greatest desire is to see more agents succeed in their careers. Duncan Group Properties is filled with new, “green” agents. However, they are finding their own levels of success and achievement by accepting accountability and responsibility for their own success. My hope for these Personal & Professional Growth topical blogs is that they reach more agents looking to grow, and be the best agents and people they can be. Thank you for reading, and leave a comment if you have more to add on this topic!