Top Pitfalls to Watch Out For During Your First Year in Real Estate
Jacqueline Kyo Thomas
You started the process of becoming an agent with bright-eyed optimism, ready to kill it, and make millions. Then, you were confronted with reality: selling real estate is hard work! And it'll be even harder if you don't avoid the most common pitfalls that we'll cover in this post.
Below, we point out the top mistakes that most new agents make during their first year in business. Navigate around these mistakes to chart a successful and profitable career in real estate.
Let’s get started.
You hear unbelievable success stories of new agents who’ve made over a million dollars in their first year in real estate. Those stores are unbelievable for a reason: while it's possible, it’s pretty improbable to make a million when you’re first starting out.
That’s not to say that you can’t make a comfortable, liveable income from your real estate business, and to benefit from running your own business and calling the shots, but it is important to set your expecations accordingly.
Approximately 10% of agents nationwide make six figures annually. Most of them are located in high price markets. And while we're lucky to have a lot of high price markets in Massachusetts, the average full-time real estate agent in Massachusetts earned $84,180 in 2020 according to Forbes. Nationwide it's a bit lower, in the mid-five figures.
Set your expectations for how much you’re likely to make in the beginning of your career, and in your local market, accordingly. You need to build your network first and that takes time. Have savings to support yourself for at least three months as you work towards your first sale, plan on working in rentals for better cash flow at the start of your career, or plan to work part time (but more on that below).
As mentioned above, it’s a good idea to put away enough money to cover your living expenses for a few months while you get your real estate business off the ground.
But, let’s be honest, that’s pretty tough to do. We’re talking about saving thousands of dollars in addition to your regular savings and emergency funds. And, not to peek into your bank account, but studies show that the majority of Americans live paycheck to paycheck. If you’re an average American, you probably don’t have a comfortable amount of savings.
This is the reason why many new real estate agents choose to stick with their current job full-time and work on their real estate business part-time. This allows them to continue to make money while building their business.
While the rationale makes sense, be mindful of your expecations and your own time. Many new agents have traveled this road and it often leads to burnout and compromise.
In order to be really successful in real estate (aka making six figures or more), you’ve got to give it your all. That means answering the phone whenever it rings. Cold calling relentlessly. Following up. Marketing properties in any way that you can. You can’t do all of that on your lunch break from your other job. You’ll need to work nights and long days to build your real estate business.
So can you be a part-time real estate agent? Yes and no. It depends on your expecations.
Yes, if you are happy with maintaining your license as a side job, and making a few sales here or there as additional income.
No, if you want to build a full real estate business, and make real estate your full time job.
Don’t get discouraged if you must get started in real estate as a part-time agent. Just remember that your success depends on your ability to hustle. That often translates to working two full-time jobs. If you want a successful first year and beyond, be ready to do what it takes.
Check out this post for more tips: The Part-Time Real Estate Agent's Guide to Avoiding Burnout.
No one gets into real estate because they love cold calling. Cold calling can be annoying or terrifying, depending on who you ask. It rarely produces immediate results and usually ends abruptly with a hang up— if anyone answers at all. So, why do it?
While the efficacy of cold calling is controversial for seasoned agents, cold calling can definitely be useful for new agents who are just building their professional networks. Be sure to honor the “do not call” list.
We discuss that and all of the ground rules on cold calling here: Cold Calling for Beginner Real Estate Agents.
Here are 6 more pitfalls to avoid in your first year as a real estate agent.
Speaking of calling, are you keeping in touch with your former clients?
Never think of your real estate clients as “one and done.” The average American moves 11 times, which means that your former client may be your future client. But even if they’ve moved into their forever home, your former clients may turn into a referral source for your real estate business. It benefits you to keep in touch with them.
How often should you stay in touch with your former clients?
At least once a year. Whether you’re sending season’s greetings, wishing them happy birthday, or celebrating the anniversary of their move, you have several legitimate excuses to renew acquaintances.
Staying in touch is as simple as picking up the phone and reaching out to your former client personally. You can also check in over email or snail mail. Avoid text because it’s hard to strike a personal tone through text message.
Don’t wait for former clients to reach out to you. If you haven’t kept in touch with them, they may have forgotten about you. It’s up to you to keep that business relationship going.
When trying to win over a prospective seller client, resist the urge to overprice their home in your listing presentation.
Sure, you want them to be happy and excited about working with you. You definitely don’t want to hurt their feelings. Plus, you may be a teensy bit afraid that if you suggest a lower listing price, the seller will choose to work with another agent.
But here’s the thing: If you overprice the home, you set yourself and your client up for failure. While it may be uncomfortable to burst their hopes and give them a realistic listing price, it will be even more uncomfortable when their home doesn’t sell and you have to ask them to reduce their asking price.
Be upfront with your clients. They may not like it but they will respect your honesty.
Whether you’re working part-time or full-time, you need to manage every minute of your day. Otherwise, your day will get away from you and you’ll wonder where all the time has gone.
One of the best ways to organize your day is through time blocking. In this time management method, you divide your day into blocks. Within each block, you assign a specific task or group of related tasks. For example:
Block 1 - Cold calls / lead generation Block 2 - Follow ups Block 3 - Lunch / Break Block 4 - Online marketing (write emails, design social media posts) Block 5 - Meet clients / listing appointments Block 6 - Paperwork
When compared to working off of a list, blocking your schedule gives you better control over your day. You can focus on the task at hand and forget about the rest until you’ve completed that block. This also allows you to set office hours and prevent burnout. While you’re always on-call as a real estate agent, scheduling the tasks that you can control will increase your productivity and peace of mind.
Your client may never acknowledge this, but it’s highly likely that they know nothing about real estate. While they may have anecdotal information from friends, co-workers, or HGTV, they probably don’t have any hard numbers about your local market.
Clients come to you because you’re an expert in real estate. It’s your job to shepherd them through the buying and selling process. Provide them with educational resources in the form of blog posts, ebooks, checklists, emails, Q&A videos, etc.
Don’t automatically expect your client to know what you do. That’ll backfire on you. There are horror stories of clients backing out of deals at the last minute because of unexpected closing costs. That doesn’t just affect the buyer and the seller, but it also affects you. Simplify the process and take away surprises so that your clients know what to expect every step of the way.
We believe that you can succeed and have a great career in real estate. After all, by earning a license to sell real estate, you've proven that you have tenacity, smarts, and stick-to-it-ness. Just be sure to side-step the common mistakes listed above.