7 Reasons Why Real Estate Agents Fail In Their First Year

Many agents don’t make it - be one of the ones that does. (Updated for 2024)

Jacqueline Kyo Thomas

Jacqueline Kyo Thomas

No one goes into real estate to fail. In fact, most agents start off with the goal of turning their new real estate business into a lifelong career. But the reality is that many new agents call it quits within their first year.

Real estate has a very high churn rate. But we’re not sharing this to scare you. Instead, we want to share the most common reasons why agents fail so that you can succeed. Most agents don't adequately plan for their first year in real estate, which is why they don't succeed. Use this post as a guide on what not to do in your first year of selling real estate, so that you can be successful.

Let’s dive in:

Reason #1: Not Having a Business Plan


You know what they say: When you fail to plan, you plan to fail.

Many new agents jump into the business without creating a road map to their desired destination. It’s not enough to want to get rich. You must develop a list of directions to get you there. This is where a business plan comes in. This is especially important when the industry is competitive, like it is now. You need to have a plan!

Your business plan shows you the specific steps, marketing strategies, and budget needed to reach your goals. Plus, if you’re hoping to get a bank loan to fund your business, you’ll be asked to produce a business plan.

Check out our guide on how to create a simple business plan from scratch here.

Reason #2: Running Out of Money

This might seem like a weird one. After all, I'm in real estate to make money. How could I run out?

Well, it may take a while before you close your first deal. How will you support yourself until your first commission check clears?

Industry experts suggest that you need at least 6 months of savings to carry you until you make your first sale, or work part time until you start to make the minimum income you need to transition to full time. Therefore, it’s crucial that you have enough in savings to keep yourself afloat. Getting a bank loan may be an option, but it’s definitely not the best one. Plan to bootstrap your real estate business with your own cash instead.

To determine 6 months’ worth of savings, add up all of your current monthly bills, including food, utilities, car loan, and projected business expenses (dry cleaning, gas, software, etc.). Then, multiply by 6 to get a rough estimate of how much you’ll need to save before launching your real estate business.

Since you have the calculator out, figure out how many houses you’ll need to sell in order to hit your salary goal. Let’s say your salary goal is $75,000.

In Massachusetts, the average home price is $385,000. Commissions are negotiated for every deal with every client, but they tend to range anywhere between 3-5%. If you sold a $385,000 house, an example 5% commission would be $19,250. But hold on. Oftentimes you will split that amount with another agent (listing or buying, depending on your role). Now you have $9,625. Ok, that's pretty good. Not so fast. You’ll need to split that with your broker. The most common split is 50/50. So, you’ll earn $4,812.50. Divide that into $75,000, and you’ll need to sell a little over 15 houses a year to reach the $75,000 salary goal.

Choose a salary goal so that you know where you’re headed. This also ties back into your aforementioned business plan.

Reason #3: Not Being Suited for a Career in Real Estate

Not everyone is cut out to be a real estate agent. That's OK! It takes a certain kind of goal-driven people-person to succeed in real estate.

So many people are sucked into real estate because it offers a lot of benefits. You have a flexible schedule. You’re respected in the community. You have unlimited earning potential. You’re the boss.

But selling real estate also takes hard work and and entrepreneurial spirit. You’re tied to your phone. You’ve got to work on your clients’ schedules. You have to be passionate, enthusiastic, and doggedly determined if you want to build a solid client list.

To learn more about what it takes to succeed in real estate, check out these 12 essential qualities.

Reason #4: Having Unrealistic Expectations


Million Dollar Listing, Selling Sunset, and other reality TV shows like it are made for TV entertainment – they are not a realistic portrayal of life for the average agent. Most won’t make million-dollar transactions during their first year in the biz.

Up to 25% of agents earn $10,000 or less per year. Up to 25% of agents earn over $100,000. And then there’s the middle. Most real estate agents earn between $25,000 and $104,000 each year, with the average salesperson in Boston earning $79,060 a year, and the average broker in Boston earning $117,024 a year. It’s important to adjust your earning expectations as a new agent, so that you’re not disillusioned 6 months from now. Don’t worry: If you’re persistent, you will get there, but probably not in your first month. It takes time to build up your clientele and become a power seller.

Reason #5: Never Transitioning to Full-Time

Let’s start off by acknowledging that it is possible to work part-time as a real estate agent. But if your goal is to fully replace your income, and not just to make extra money on the side, you can’t just work part-time. It's common sense: if your goal is to make real estate your full time job, then at some point it actually has to become your full time job!

Many agents start off part-time because they need the financial support of their full-time day job. That’s understandable, and often a good choice. However, real estate is going to be demanding if it's going to pay you a full time income. A big part of the job is to be available whenever the client calls. You can’t do that if you’re only devoting part-time hours to your business.

To learn more about how to succeed as a part-time real estate agent, check out this post.

Reason #6: Not Marketing Effectively

Having a solid marketing plan is essential. At the very least, you need a website, a presence on social media, and a profile on both Zillow and Trulia (both are owned by the Zillow Group, FYI). Use these platforms to promote your services and your listings.

Having your own website is important because it’s the one place online that you “own.” You “rent” space everywhere else (including Facebook, Instagram, YouTube, etc.). If those sites go down, or they decide to close your account, you have nowhere to turn. However, if you own a website, you’ll always have a home on the Internet. This is especially important as marketing changes come to MLS: You can still market properties on your property, but there are restrictions on how properties can be marketed on MLS, making your own website even more important.

It's also still a good idea to be on social media because your prospective clients hang out there, so don't neglect social media in favor of your own websit exclusively!

Zillow is a must because it gets over 160 million visits every month. You need an active profile there to be competitive. Being on Trulia is also a good idea. Although it only gets around 64 million monthly visitors, that's still a substantial amount of prospective clients that you could miss if you weren't there.

Here’s a quick overview of how to market at each of these places:

Looking for more ways to market your business? Check out this post for low-cost real estate marketing strategies.

Reason #7: Being Afraid to Make Mistakes

You will make mistakes. Everyone does. It’s impossible not to. Making mistakes doesn’t mean that you’re a failure. It means that you’re learning what not to do. Embrace every error as a teachable moment, not an embarrassment.

Along that same vein, remember to try new things. Test everything to see what works and what doesn’t.

Final Thoughts

While many real estate agents fail within the first five years, that doesn’t have to be your story. We all know successful real estate agents, and you could be one of them. Use the above tips as an action plan to prevent failure.

Before you go, check out these related resources:

Interested in getting your real estate license online?

Start your real estate classes today!