The First of Six Reasons Most Commercial Real Estate Agents Fail and How to Ensure That You, or Your Agents, Avoid These Mistakes.
Commercial real estate agents have varied levels of success. Some have brilliant careers and happy, abundant lives. Unfortunately, many fail miserably. In fact, more than half of the people who begin a career in commercial real estate brokerage quit the business in less than three years! Many more plod through their days in quiet desperation, hoping to someday succeed. We've worked with thousands of agents over the last 20 years and we've spent many, many hours working to figure out what makes the difference between those who succeed and those who fail.
We've come to the conclusion that, while there are certainly some genetic and environmental influences, skills necessary for success in this industry are like any other skills; they can be learned. Success as a commercial real estate agent is largely the product of learned habits. Failure in this business is the product of errors in judgment that are repeated over and over again. We've identified six mistakes we find are committed repeatedly by most new agents. Besides these mistakes, there are, of course, many reasons agents fail. But, for this report we've chosen to focus on the most prevalent. These are the mistakes we've found that are being made across the country and in every type of firm. These six errors in judgment lead to failure for many agents and the frustration of under-achievement for many more. These errors are easily corrected if an agent is able to identify the mistakes and then pursue a course of action meant to develop new habits and skills. In fact, the best agents are the ones that have been able to avoid, or overcome, these mistakes.
Mistake #1: Agents often take too long to develop expertise.
The biggest reason agents fail to make it in commercial real estate brokerage is that they take too long to develop the expertise they need to be hired consistently by clients. Most people who enter the business have a limit on the amount of time they can spend earning little or nothing. The goal for most is to get into the business and learn what is necessary to begin earning a good income before that time runs out. Unfortunately, the clock runs out on many.
There are two reasons for this: The first is that many agents never specifically set the goal of developing expertise. They have a general idea that knowledge is needed for success, but they never really decide to become an expert in one segment of the market. Make no mistake about it, commercial real estate agents and brokers are hired for their expertise. Clients want to know that their agent knows what he or she is doing. To succeed, agents need to develop this expertise as quickly as possible. To do so they must start by specifically setting the goal to master the information as quickly as possible, and most never do.
While most of the blame for this rests on the individual agents, firms are often culpable of not setting the proper expectations or presenting new agents with the tools to learn. In fact, many of the methods for training new agents currently in use actually discourage the kind of learning that will lead to expertise. In many firms the attitude presented to new recruits is one of "fake it till you make it" while your out in the field learning from trial and error. This attitude usually adds years to the process of developing expertise. Other firms match new recruits up with veterans and tell them to rely on the veteran agent for the expertise they need. Again, in most cases, the new agent adds years to their own development process by learning to rely on someone else like this. Both of these scenarios actually postpone the learning process and dissuade agents from becoming experts.
The second reason that most new agents do not learn in time is they don't have a system and the tools necessary to learn quickly. Until recently, it was very difficult to learn quickly because there were no courses or materials set up to lead agents down the path to expertise quickly. The path to expertise in commercial real estate is no different from most high-paying professions, namely, obtaining a good general expertise in the industry and then specializing by building a practice in one segment of the industry. For instance, a doctor attends medical school for the general expertise and then specializes thereafter. A lawyer attends law school and then builds a practice focused on one specialty. And so on. Unfortunately, there has not been a good way to follow this same path in commercial real estate, starting with the general knowledge of the industry. Most courses have been expensive, time consuming and not very comprehensive. There's been no way to quickly learn the fundamentals of the business.
A few firms are part of networks or franchises that offer some training for new agents, but the training is usually delivered through scheduled regional or even national classes. This means that new agents need to wait until the next time the course is being offered. When they do attend, many of the courses are not very comprehensive, offering too little, too late. Besides, there is always a sunburn effect to this type of training: It wears off after a short time. Fortunately, there's now a way to quickly develop the kind of expertise needed. The Top Dogs course, "How to Fast-Track Your Expertise in Commercial Real Estate Brokerage" is a three to four-week intensive course designed to give new agents the broad understanding of the industry they need. It is delivered on-site and can be started immediately after a new agent is hired. Before its release, it often took years to acquire the knowledge that is acquired now in just three to four weeks.
Once professionals, like doctors, have a broad understanding of the industry in which they work, they must specialize in one aspect of the market and spend time devoted to learning everything there is to learn about that segment of the market. Much of this learning needs to be in-the field, as hands-on learning, accompanied by classroom study, as they build a practice in one specialty. Commercial real estate agents are no different. They must develop expertise in one segment of the market to begin with, because it's almost impossible to become an expert at every aspect of the business in the first couple of years. Unfortunately, most new agents and most firms don't think about or even promote this kind of specialization. Instead, new agents are often left to their own devices, which means they grasp at anything that comes along that they think might result in a commission.
A new agent might see someone in the office earn a large commission from an industrial lease and begin dabbling in industrial properties. Meanwhile, their manager hands them a couple of very tired listings that no one else wants that are office space. Upon inspecting the office listings, the new agent finds that the ground floor has retail that is unoccupied and dreams of commissions to be earned from retail leasing. Then a friend calls and says he would like to invest in some apartment buildings and before you know it, the new agent is dabbling in every segment of the market, usually running all over town, and quickly becoming the "jack of all trades, master of none." Serious clients want agents who are experts at what they do.
The owner of a large office building wants an office specialist to handle the building. At minimum, he wants someone who knows everything about office space. The real rub is not so much that new agents are working hard and not earning enough money. It's that there is no end in sight to the situation. Agents begin to realize that under the current way they're going about it, it will take years of struggle before they have the expertise that the top brokers have. Usually this leads to frustration and disillusion and the agent eventually quits.
But it can be very different. Agents need to start their career by gaining the general expertise they need with the Top Dogs Course: "How to Fast-Track Your Expertise in Commercial Real Estate Brokerage." Once they've completed the course, with their knowledge and their confidence high, they need to complete the Top Dogs course entitled "How to Run With the Big Dogs in Commercial Real Estate." It's a three-month course that teaches them how to build a practice in one segment of the market. Agents who follow this route, completing all of the assignments given in the courses, develop the expertise they need within the first four to six months in the business. Simultaneously, they're building their practice. The average new agent who follows this system, earns between $60,000.00 and $120,000.00 in personal income from commissions in their first full year in the business (depending on the area of the country in which they're working). They generally earn twice that amount in their second year. For most, this is more than enough to stick it out and continue growing their career in commercial real estate.
Click here if you would like to read more on Six Reasons Most CommercialReal Estate Agents Fail… And How to Ensure That You, or Your Agents, Avoid These Mistakes
The above article was re-posted with permission from the author, Bob McComb.