The Biggest Threat to Real Estate Agents

87% of new licensees fail out
of the business within five years.

The Danger Report

The Swanepoel Group does massively in-depth studies and research. Their report developed a wide-ranging list of the threats and challenges facing the real estate industry in the next 3-5 years.

The report purposely does not provide any solutions but seeks to encourage an industry-wide conversation.

Marginal Agents Remain the Biggest Threat

With over 2 million licensed real estate agents in the US, you can safely say there is an oversupply of agents. The barriers to entry are so low that one can obtain a license within a few months.

However, veteran agents always outsell rookie brokers, which causes many new agents not to renew their license. There is an 87% churn rate in our industry, meaning 87% of new licensees fail out of the business within five years. Only 13% “make it.”

The majority of part-time, poorly trained, and incompetent agents are a threat to our credibility. How can this be solved?

  • Higher standards like provisional licenses with strict performance requirements could be one way. This could include a minimum number of transactions per year or a minimum standard of services.

  • Higher education requirements before licensing could be another angle.

  • The ease of entry into real estate is a double-edged sword. It’s easy to get started, but it allows the wrong people into our industry. We are saddled with a large number of part-time, untrained, unethical and/or incompetent agents.

  • Why is this a problem for our industry?

  • As more and more consumers deal with low caliber, poorly trained or unethical agents, their behavior may change in the long run. They will seek alternatives and choose not to deal with an agent.

  • Credibility and trust are at the core of every business relationship.

The Counselor Vs The Facilitator

Facilitators can process a sales transaction but are not in a position to offer as much in the way of real guidance to their clients. Facilitators also lack transaction experience and knowledge of the market.

Counselors handle unique problems, irregular negotiations, and last-second emergencies. Counselors easily identify value and “good” deals, have knowledge of off-market inventory, and spend their time educating their clients not “pitching” to them. They out value the facilitators in our business. However, facilitators heavily outnumber counselors.

The Deal Doctor

I’ll share a recent client story. My clients were purchasing an off-market property with a tenant in place, and we all knew from the get-go the tenant would be a potential issue. We involved a local attorney who specialized in rental ordinances.

We didn’t have a yellow brick road to follow. Instead, the buyer planned to shepherd the tenant’s through the eviction process once the transaction closed using the attorney.

Things got messy. The tenant hired an attorney of her own, the furnace died before closing, and everyone began to freak out.

First, we got everyone to calm down. The furnace was fixed, we got back on track with the tenant, and instead of paying to have them evicted we offered them a concession. Everyone walked away happy. The tenants even bought a house from me a year later.

Great Realtors are the people who make things work when everyone else wonders what happened to the smooth transaction that suddenly veered off the tracks.

The Best Agents are Invested

They have, on average, higher production, attend educational and motivational seminars. They invest in their business and are increasingly competitive.

The best have tech, marketing, and negotiating skills. They have systems and processes in place, which means they are able to manage a lot of transaction while providing the best service.

They are engaged in the 40-60 hour week routine required to produce high volumes. They have a marketing plan in place for their business and their listings.

The difference between a facilitator and counselor could mean thousands of dollars lost to the client. The best continue to grow, learn and improve.

I have a consumer first mindset. and as a 10+ year veteran in real estate, I am a strong believer in higher barriers to entry for our industry or a mandated minimum of sales transactions. This kind regulation protects the consumer from inexperienced facilitators and agents who truly aren’t invested in the success of their clients.

Do You need solutions to specific problems?
Do you have answers to specific questions?
Reach out to us first. We’re a karma first strategy team. No sales pitch, no scripts, no pressure,
just an intelligent conversation. Hope to hear from you soon.