Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 3.1% from December to a seasonally adjusted annual rate of 4.00 million in January.
Realtor.Com Study Identifies Challenges of New Agents and What it Takes to Succeed in Real Estate
SANTA CLARA, Calif., Nov. 7, 2022 /PRNewswire/ — A record number of Americans became real estate agents in recent years. It can be a challenging career for newcomers, and the early struggles to find success means only 4 in 10 new real estate professionals are confident about having a long-term career in real estate, according to Realtor.com®’s new #ThrivePastFive study.
Realtor.com® recently surveyed more than 2,000 agents to gain insights into their top challenges, what separates new and experienced agents, and what it takes to find success in those critical early years and is translating it into insights specifically to help new agents succeed. Having a great mentor and cash reserves, as well as spending money on marketing, and making a full-time commitment during those first few years in real estate are vital for an agent’s long-term success, according to the study results.
There are many different reasons why so many decided on a real estate career, from it being a flexible career option for those seeking balance and autonomy, to the clients, the lifestyle it provides, and the income potential. Despite it being a hot career choice for many, real estate is not easy, and every agent faces different challenges, from a lack of knowledge and training at the start of a career to growing a client base and understanding how to effectively convert leads, and too many agents don’t make it past year five.
“In a shifting and ultra-competitive marketplace, with twice as many real estate agents than listings, having insights from experienced agents – 80% of whom are confident about making it long term as an agent – about what works best to power business growth has never been more valuable,” said Donna August, vice president of B2B Marketing at Realtor.com®. “With 25 years experience helping agents succeed, Realtor.com® is committed to developing tools and insights to help agents who are just starting out, so they can thrive and find success in their early years.”
Lead generation a top pain point
With home inventories rising but still near four-decade lows, it’s no surprise that generating new client leads is hands down the top challenge today for agents of all experience levels. In fact, 60% of all agents cited finding new leads as a challenge, and the figure rose to 70% among new agents, those with less than two years experience.
One of the most effective real estate lead generation strategies is to build a strong client network, which can take years for a new agent to grow. Only one-quarter of new agents reported having a network of buyers and sellers that they feel confident about, and nearly half (45%) said they struggle with developing a new client each week; comparatively, 70% of the most experienced agents surveyed – or those with 11+ years in real estate – are creating between one to four new client relationships each week.
Other top lead generation challenges for agents of all experience levels are converting leads to clients, poor lead quality, competition from other local agents, high costs per lead, getting a lead too late, low connection rates and the time/effort in managing clients is too high. Beyond lead generation, new agents also struggle with non-serious buyers, whereas experienced agents struggle with big listings sites that compete with them as brokers.
Knowledge gaps that threaten success
Newer agents wish they had more knowledge of lead gen, transaction processes and marketing, whereas experienced agents wish they knew more about social media marketing, online ad campaigns that convert, and search engine optimization. When it comes to why many agents likely don’t succeed, new agents perceive their struggles are because of a lack of training and startup cash, while the most experienced agents responded it was likely because new agents underestimate the time commitment and the learning curve.
Contributing factors to a new agent’s success
With so many challenges facing new agents, finding success can seem daunting, but a portion of survey respondents are finding it’s absolutely possible. When looking at the characteristics of successful new agents – those who average more than 7 transactions a year – the majority, 9 in 10, work full-time. While most agents surveyed work full time (83%), as new agents work to establish themselves, they are three times more likely to work part time compared to their more experienced counterparts, 24% versus 8% for the most experienced agents. Nearly half (47%) spend more than $3,000 a year on marketing, and nearly 7 in 10 spend money on online leads every month. Two-thirds of successful new agents also had someone to mentor them, as well as had back up funds when they first started out in real estate.
How much to spend on marketing
The old adage “you’ve got to spend money to make money” rings true for agent success; 64% of experienced agents spent $3,000 or more annually, whereas 70% of new agents spend less than $3,000 annually. Nearly 9 in 10 agents pay for marketing costs themselves. New agents are most likely to receive marketing support from their brokerage, 15% versus 9% for experienced agents. Only about one third of new agents spend $50 or more a month on Internet leads, whereas experienced agents are most likely to spend between $50-499 a month on internet leads.
Top channels to find the most success
With a greater network of past clients, more experienced agents find online marketing success with calling on past clients via email marketing. Newer agents tend to have more social media experience, which is likely why 82% of new agents rely on social media and lean into creating their own content. Among the different social platforms, Facebook is the platform of choice among survey participants, with 63% of all agents using it to generate leads, and Instagram comes in at a distant second at 28%.
Despite the popularity of social media, new agents struggle to convert it into leads, and social media ranked No. 5 for lead gen after networking/referrals, email marketing, digital advertising, and internet leads. Among all agents, Twitter, YouTube, TikTok and Snapchat ranked among the social media sites for lowest lead gen (with less than 5% getting any leads from these sources).
While 6 in 10 agents of all experience levels ranked the tried and true method of networking and word of mouth the highest for offline marketing channels, newer agents also ranked open houses (44%) as a top channel. For the most experienced agents, more than half (55%) call on past contacts/leads as a secondary offline marketing tactic, followed by direct mail and open houses.
From May 2022 – Aug 2022, Realtor.com® surveyed agents of various years of experience online. More than 2,210 agents responded to the study. To find out more about the study and results, visit www.realtor.com/thrivepastfive/.