New Agent Prospecting

I watched a video today from another real estate coach. He quoted statistics from NAR forecasting the failure rate of agents in the industry. According to NAR, 33% of agents will leave the business in the first year and 87% will leave within the first five years. Our industry has always experienced a high turnover rate, so this shouldn’t surprise anyone.

This coach said the reason for this failure rate is because agents don’t know how to generate enough leads (which I agree with). New agents struggle with keeping their pipeline full. But where I disagree with him is that he said lead generation is not a sales problem but a marketing problem. He talked about companies like Zillow who are brilliant marketers and that is why they can generate billions of dollars from real estate agents who are willing to buy leads. He said that most new agents can’t generate enough leads on their own because they are not brilliant marketers and therefore, they are not known in their communities.

First of all, individual agents can never compete in the marketing arena with large companies like Zillow. Second, most agents don’t have the money to be able to market right out of the gate, and even if they did, they don’t know enough about the business yet to know where to wisely invest their marketing dollars.

HERE IS MY TAKE ON WHY AGENTS FAIL:

I believe people struggle with living in a commission environment. Most people are used to having the security of a paycheck and they find it too stressful not knowing when or where their next meal is coming from. Over time this uncertainty grinds on them. They end up leaving in search of stability. Most people prefer a job where they get paid for just showing up, not based on their performance. And most people can’t handle the responsibility of having to generate their own income. They don’t mind doing the work, they just don’t want the risk.

I believe agents struggle with an having an entrepreneurial mindset – being willing to invest with no guarantee of a return. It takes courage when you don’t have money in the bank, to continue to invest in your business with the hopes that it will attract future business. It takes money to make money, but most new agents don’t have the money available to invest in their business while they aren’t earning a lot. Every cent they earn in the first few years is taken out of the business rather than reinvested back in. I understand this – it is a cash flow issue. You must be able to sustain your life and pay your mortgage while you grow your business. Most agents don’t have the luxury of having enough living expenses saved up before they enter the business.

I believe a significant portion of agents struggle with the lack of structure in our business. In a previous career, they got up, went to the office, put in 8 hours doing what the boss told them to do, and they got paid. In real estate you have freedom and flexibility to do whatever they want, but most agents do the wrong things and it doesn’t pay off. Our #1 job every day is to find someone to hire us.

If you spend money on marketing too soon in your career, you won’t have the skills to convert the leads. When you prospect every day, it puts in you one-to-one conversations with many people. Those intimate conversations are where we develop our conversion skills. Every day you have real-life conversations with real people with real problems. Learning how to navigate those difficult conversations is where we develop our communication skills.

Agents today are willing to spend money to generate leads in order to avoid these conversations. But there are two problems with this. 1) without being able to convert the leads you are wasting money and 2) the money you spend to generate the lead significantly cuts into your profits. Most times there is not enough left over at the end of the day to make sense of it all.

THREE STRATEGIES FOR NEW AGENT PROSPECTING:

1. Start every morning with a “high five” to your sphere to keep your pipeline full (5 emails, 5 texts, 5 handwritten notes, 5 social media posts/comments, 5 sly dials).
2. Give out 10 business cards every day to strangers. This would force you into 50 conversations a week, 200 a month, 2400 a year. If you close 2.5% of those, that would be 60 deals a year just from talking to strangers.
3. Circle prospect around competitors’ listings. Look for a new listing (from any company) in a nearby high-traffic area. Call the listing agent to preview the house. Door knock 50 neighbors around the subject property to let them know about the new listing. Explain that it will generate a lot of interested buyers for the neighborhood. Ask if they have thought about selling. Don’t make it more complicated than it needs to be.

Once business is rolling and you have extra money, you can invest in marketing to make your job easier but investing in marketing too soon is the kiss of death for many agents.

If you want to learn more about how to generate leads, check out https://leadersedgetraining.com/virtual-training.

Chris Leader
President
Leader’s Edge Training