Tremendous Turnover: Why are so many drawn to an industry with an 80% failure rate?

Dated: March 4 2022

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With upwards of 60 thousand realtors currently registered with TRREB, and growing, it begs further investigation as to why so many sign up, and to what we can attribute their success and/or, non-successes? First, let's explore why so many are drawn to an industry that fails at an 80% clip.

     

In baseball, failing at an 80% rate would send you to the minor leagues. They call this the Mendoza line. This is widely recognized baseball jargon referring to the absolute minimal standard of competence at the major league level. In an industry/business where a 300 batting average is Hall-of-Fame level, then according to baseball, having a batting average at or below 200 means that you are part of the 80% and belong in the minors leagues where you ought to work on your game.

     

During the interview process  or at the application level, the “why” of going into real estate is often answered with: “it suits my lifestyle” or, “I want to be my own boss!”. From those words alone, it is clear that the industry has some built-in traps for the prospective realtor/business owner.

     

To put this in perspective, a coffee shop owner would never make comments like “it suits my lifestyle” or “I want flex hours.” Instead, one would hear something along the lines of “I want to make the perfect cup of coffee”, or, "I want to deliver service that is above and beyond the industry standard".

       

Curiously, whether a coffee shop owner or any other retail operation, it is common practice that the owner opens and closes the shop, brews the coffee, serves the coffee, and even washes the dishes. In real estate, this translates to the top producers, which constitute 20% of realtors, working 10 to 12 hour days, most evenings, and weekends. This quickly dispels any notion that one can succeed in this industry, working so-called “flex” hours.

        

Be a fly on the wall and watch the top producers at work and you will quickly notice the effort, focus and determination, customer care and service that sets them apart from 80% of the industry. Though some might argue so, this is not luck.  It is consistent hard work, focus and dedication to their business that will ultimately produce predictably consistent results, year after year.

         

With 120,000 sales in 2021, and 60,000 realtors, it is easy to conclude that many many many realtors struggle with adapting to being self-employed and working flex hours, despite it being one of the top reasons they get into the industry in the first place. Having little accountability and relying mostly on self-motivation, having no goals or even a business plan, quickly demotivates the newcomer to the business, leading them to gravitate towards other sources of income, and eventually leaving the industry within the first two or three years altogether, only to clear the path for others. The turnover is tremendous, but curiously, as many leave, the same number and more join, and membership flourishes.

        

Let’s not forget the A,B,C, and D's of real estate or self employment: Attitude, Business mindset, Commitment, and, my favourite, Distractions and Discipline.

       

As Tom Hanks said In the movie, A League of Their Own, “there’s no crying in baseball!” 

Blog author image

Manuel Andrade

I commenced my Real Estate career in 1987, with Local Real Estate Ltd, Toronto. Joined our current office location in December 1....

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