Why do New Sales Associates Fail?

Four common sense keys can help you unlock the door to success for that new hire and make your office more productive.

August 1, 2001

Each year thousands of hopefuls answer the call of the real estate sales business. They leave behind less-than-fulfilling jobs, unemployment lines, boring retirements, or children old enough to care for themselves.

Unfortunately, the majority of these aspiring multimillion-dollar producers will find themselves out of the real estate business even before the time comes to renew their license. Many won’t even have made enough money to cover the cost of their training.

Why do so many hardworking and intelligent people wash out of the real estate sales business so quickly? Why do some talented individuals, successful in other ventures, find themselves sliding out of the real estate sales business before their career has begun?

With more than 14 year’s experience in selling real estate and managing a 50-person office, I’ve witnessed the careers of hundreds of salespeople. Although every situation is different, the overwhelming majority of sales associates who fail do so for one of four reasons:

  1. They don’t belong in the real estate sales business in the first place.
  2. They belong in real estate sales but don’t understand what the real estate business is about.
  3. They start their career with the wrong broker or company.
  4. They simply don’t work hard enough.

Let’s examine each reason to find out what’s wrong and how to avoid these problems or correct them. After all, your new sales associates really want to be cashing more commission checks, and you want to slow the revolving door in your office:

Reason 1: They don’t belong in the business.

This problem needs to be addressed before business cards are ever ordered. Fortunately, this is a problem that most of the time can be discovered even before the prospective salesperson enrolls in pre-licensing school. The key is to understand that there are some realities of the real estate business that can’t be ignored or altered. The prospective salesperson who doesn’t accept the realities of our business can be encouraged to pursue a career elsewhere.

One big reality is that this is a business about people, not houses. I do quite a bit of interviewing of new sales associates, and one of the first questions I always ask is, Why real estate? Why not automobiles or insurance or something else if you want to pursue a sales career? I cringe when the excited answer is "I love houses"

Real estate is a people business. You have to like and understand people if you want to succeed in real estate. Ten times out of 10, I’ll take a salesperson who can’t tell a roof from a basement--but likes people and understands what they want-- over a salesperson who can build a house by hand but has marginal "people" skills.

Another reality is that real estate business is often conducted on weekends. People in real estate sales are expected to work some weekends. If you’re against working weekends, you’re off to a bad start in real estate sales.

I’m reminded of a time when my weekend newspaper wasn’t being delivered until 11 a.m. When I complained to the father of the young girl who delivered papers on my street, he explained that his daughter liked to sleep in on weekends. Well, I thought, perhaps your daughter shouldn’t be delivering a morning newspaper.

Real estate is a weekend business. If you don’t want to work weekends, don’t become a real estate salesperson.

Handling the no

Still another reality of our business is that it requires a person with thicker-than-average skin. Any commission sales job offers its share of disappointment and rejection; but with real estate, where a single commission can sometimes be a substantial portion of a salesperson’s yearly income, that disappointment is magnified.

Brokers have a responsibility to lay out for the prospective salesperson not only the glamorous side of a career in real estate but also the dark side. Many a broker has had high hopes in hiring a new sales associate, only to have that salesperson run from the office in tears on first hearing no.

A lot of problems for both the broker and the associate can be avoided if it’s determined right from the start that the candidate is right for a career in real estate sales.

Let’s assume everyone agrees that the prospect has what it takes for success in real estate sales. Many people are "people" people, with thick skins, and willing to work weekends. If that’s all it takes, all those people should be real estate success stories. Why, then, do so many who seem to have the right stuff find themselves searching the want ads within a year after getting their license?

One big reason is probably that no one ever explained that real estate sales is a business.

Reason 2: They don’t understand what the real estate business is all about.

First, it needs to be understood that the real estate business is just that--a business. And the purpose of any business is to make a profit. If more new associates understood that, there would be a lot more successful sales associates.

Many new people come into the business thinking that real estate is all about selling houses. Many come into the business just after buying a house. What the sales associate did looked pretty easy, so they think, "Why don’t I try this?"

New salespeople should remember that they’re really in business for themselves. They’ll be associated with a broker, but, in fact, they’re really Jane Doe Inc. or John Smith Inc. They must have goals and a business plan to achieve those goals, just as they would in any business.

Real estate salespeople must invest their money and their time. I’ve known many sales associates who think nothing of dropping everything they’re doing so that they can spend $20 in gas driving a stranger--whom they met on an ad call--around to houses, but then balk at spending the same amount on a farming program, a book, a seminar, or a tape that can improve their business and give them a return 100 times the cost of the farming program, book, seminar, or tape.

Many salespeople never think to refer one of their sellers to a broker in another part of the country. They don’t realize that referrals that pay off represent an infinite return on their investment, since they invested no money to begin with.

Money is a resource and must be invested and budgeted wisely.

So is time. Many sales associates think it’s better to go out with a single buyer on a Sunday afternoon for three hours than spend that same three hours at an open house and meeting 10 buyers, half of whom probably have a house to sell and three-quarters of whom will buy a house in the next six months.

Many salespeople fail to grasp the concept of "list to last" They chase after buyers, who are largely disloyal, and fail to prospect for sellers, who sign contracts binding them to the salesperson for six months or more. Go into nearly any real estate office in North America during any kind of market, ask to meet the top producer, and the odds are you’ll soon be shaking the hand of someone whose income comes mostly from listing.

Values, focus, and priorities

And even when the new sales associates realize that listing is the key to long-term success, many fail to evaluate listings intelligently. I’ve known many new salespeople who look down on the three-bedroom, one-bath ranch house on a quarter-acre lot but practically salivate over the six-bedroom, five-bath Tudor on 12 acres--never considering the offering price of each. If the ranch house is offered at 90 percent of appraised value and the Tudor at 125 percent, the former is the more salable listing and the one more likely to result in a sale and commission.

Another mistake new sales associates make is being reactive rather than proactive in developing relationships with new clients. They grab all the floor time they can, waiting for that cash customer, when what they should be doing is setting aside time each day to call prospective sellers in an attempt to develop new business relationships.

Maybe the biggest mistake new sales associates make is thinking they can start their real estate career while working full-time in another job. Today’s real estate business is fiercely competitive, and the sales associates who can’t respond to client’s needs in a timely manner will soon find themselves without any clients.

I equate beginning a real estate career to trying to push a car to get it rolling. It takes a lot of work to get the car rolling, but once it’s moving, it’s much easier to push. To get a new real estate career rolling, you have to expend a great deal of energy, too. But if you’re working 40û50 hours a week somewhere else, you most likely won’t have the energy left to push your career forward.

Real estate is a business, and it needs to be run like one. Let’s say the new sales associate does understand that. What else lurks around the corner that might derail a successful career? Maybe it’s joining the wrong company.

Reason 3: They join the wrong company.

For long-term success, it’s essential that new sales associates who have the right stuff and understand at least the basics of the real estate business join the right company. What constitutes the right company? Here are four questions you as the owner/manager should ask yourself about whether your company is ready to further the career of your new hires:

  1. Is your company a leader in the marketplace? When sales associates are new and unknown, they can’t afford to be with an unknown company, too. One of the best ways to attract and hold onto them is to make your company one they’ll be proud of. Take the steps necessary to make your company one of the tops in your marketplace, enhance your reputation, and increase your name recognition. Besides that, you should also provide all the services a leader offers, such as in-house mortgage and insurance. Today’s customers demand those services from a real estate company. Your new associates will, too. They want to go with a leader.As a top company, you also have many successful veterans whose example can assist the new associate. In fact, many professionals believe the best mix for a successful real estate office is one that matches a stable of long-time professionals with new blood brought in each month. The newcomers benefit from the experience and great example of the veterans each day, and the veterans gain from the energy and new ideas the newcomers bring.
  2. Do you have a comprehensive training program? The new sales associate may know a lot of things, but how to list and sell real estate is probably not one of them. Selling real estate is a skill that can be learned. Your company should offer a thorough training program--one that focuses on prospecting and listing activities.
  3. Do you have a mentor program? Training isn’t enough. New sales associates need someone at their side during the difficult first months to help with the things that a year later will seem as natural as breathing. Early on, some of those things may seem strange, and the new sales associate often has no clue what to do. A mentor can be extremely valuable for the new associate during that time.
  4. Does the manager actively sell? This is an easily overlooked question. One of the reasons a new associate wants to work with you as a market leader is the environment of success and opportunity your company cultivates. Not everyone will agree with this but if the manager is out actively listing and selling--in fact, competing with the salespeople--and not in the office handling the details, problems, and issues that are part of every real estate office, that office can’t work at peak performance. The new associate expects to be part of a well-run organization, one in which the manager manages.

So let’s say we have sales associates who have the right stuff, know the basics of the real estate business, and join the right company. It’s a sure thing they’ll succeed, right?

Wrong. Now comes the hard part. They have to work hard.

Reason 4: They don’t work hard enough.

Ask any managers whether they prefer a sales associate with all the tools but no desire to work hard or a sales associate without the tools but with the desire to work hard, most managers will take the hard worker hands down. It’s not enough to be talented. To be successful, new associates must put together the skills and talents they have. You can have the most beautiful, shiny, polished locomotive in the world, but if all it does is sit still on the track, you have nothing.

To succeed, salespeople must work and work hard. There’s no other way. Thomas Edison said the formula for his success was "1 percent inspiration, 99 percent perspiration." The new salespeople must understand that their success is up to them. They must live by the motto "If it’s going to be, it’s up to me." They must put one foot in front of the other every day and advance and not give up. And they must avoid at all costs those influences that may lead them to believe that work isn’t necessary to excel in sales.

Every real estate office has its share of longtime salespeople who’ve reached their level of comfort or incompetence. They’re content to drift in at 10:30 a.m., plan lunch, eat lunch, make a few calls, talk about last night’s game show winner, and then head home at 3:30 p.m. Those salespeople make far below what they’re capable of but enough to fund their life, as they’ve learned to live it on a meager income.

Ideally, they’re hustled out the door because they set a poor example. But often, if they cover their desk cost, many of them are kept on the roster. It’s important that new sales associates realize that those salespeople are unproductive and poor examples. The successful sales associates should be encouraged to develop good work habits and recognize the underproducing salespeople as underutilized talent.

Working "smart"

The successful new sales associates will refer to the plan they’ve developed, with the assistance of their manager, and implement that plan with gusto. They’ll work a solid day, spending their time on activities that have consistently proved to be successful with others. They’ll set their sights on their goals, and they’ll achieve their goals if they heed the advice of those who’ve gone before them.

No one ever said getting started in a real estate sales career was easy. There are many pitfalls to avoid, but careful planning before taking the first step can help the new associate avoid most if not all of them.

New associates should give their real estate career the same consideration they’d give any important decision--where to buy a house, whom to marry, which car to buy, etc.--and the odds are that when license renewal time comes around, they’ll not only still be in the business but also have more than enough money to pay the renewal fee. And they’ll be well on the way to a rich and rewarding career.

It’s not enough just to work hard; the new sales associate must also work smart. New sales associates must learn not to confuse activity with productivity. Many of them are busy all day long, but they’re not productive. In a seller’s market, they’re driving buyers around every day, arriving a day late and a dollar short. At the end of the day, they’re exhausted--and poor. Those salespeople work hard but not smart.

Matt Williams, CRS®, is regional director for Realty Executives in New York and owner of Realty Executives–Williams Sykes Realty, Wappingers Falls, N.Y. He can be reached at 845/223-9960.

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