Not everyone can make it as a commercial real estate broker. In fact, it’s common knowledge within the industry that at least half of recruits will leave within three years. Some brokers even report a new broker failure rate as high as 90 percent. In part, the perks of the job are what makes it challenging: autonomy, flexibility, a pure commission-based salary. Some people simply lack the skills and personality necessary to succeed—but other common pitfalls can be avoided.
While certain hurdles, such as lack of training, need to be addressed at an institutional level, other problems can be tackled by rookie brokers head-on. Let’s take a look at why brokers fail, and what can be done about it.
1. They don’t have a mentor
One of the most effective predictors of a new broker’s success is mentorship. If brokers align themselves with a seasoned veteran willing to share knowledge and contacts, they are more likely to survive in the business.
Mentors are important in most professions and are particularly vital to commercial real estate brokers who are expected to create their own leads and sometimes receive little formal training. Some brokers walk in day one with a “golden Rolodex” of country club relationships, but for most, determining an outreach methodology is challenging. Bringing in new brokers on deals helps them generate revenue, build their portfolio and rapport with prospective clients and learn the subtleties of their trade. Mentors also help mitigate missteps and provide real-world coaching to get brokers up to speed.
Junior brokers will have an easier time landing new clients if they have a portfolio of closed deals to share, and without that mentorship, it is incredibly challenging to gain momentum. The mentor-mentee dynamic should also be mutually beneficial. If young talent frees up time for the seasoned professional, that means more deals and experience.
2. They lack confidence, hustle or personality
Resiliency and drive are necessary in sales. Some people just aren’t cut out for the role, but in some cases, traits can be cultivated and skills improved. Brokers need to feel comfortable reaching out and interacting with C-level executives, business tycoons and real estate moguls. A mentor can help them “fake it ’til they make it,” but newcomers can also take matters into their own hands by strengthening their value proposition with research and preparation. If brokers have a deep understanding of a prospect’s region and industry, they will be able to provide unique value in the form of market intelligence. This will help new brokers establish credibility, improve their pitch and make prospects feel more confident in their services.
3. They are disorganized
Many brokers fail because they don’t make enough calls or get in front of enough potential clients. This deficit could be due to a poor work ethic, but it often springs from a lack of understanding and disorganization. Brokers don’t realize how hard they need to work to generate results.
Sometimes it seems rare that someone born with the easy charm of a salesperson also has organizational skills, but organization can be taught. We’ve all met someone who was so persuasive and likeable that they seemed to skate by and succeed, but for most, an organized approach to prospecting and executing deals will improve effectiveness, reputation, retention and referral rates.
Work ethic and organization can be approached systematically. Many firms provide their teams with a CRM and other technology that allows users to analyze key performance indicators and keep themselves on track. Brokers should take advantage of these resources and try to work backwards from their goals. For example, if they want three new client meetings a week, how many phone calls or emails does that require? Even brokers who are wired to work tirelessly and exude confidence will benefit from setting targets and approaching them in an organized way.
4. Their firm’s training program is insufficient
Individuals need to make sure they have the tools to succeed, but many commercial real estate professionals feel that more could be done at an institutional level to improve new brokers’ chances of success. Brokers I spoke with cited a lack of direction and insufficient support as obstacles they faced when trying to determine a prospecting game plan.
Firms should think of it this way: If they have recruited someone with the right mindset, work ethic and personality, they will get more from him or her by doing everything they can to help that person succeed. And it’s not just about onboarding a new employee. Seasoned professionals want to hone their skills, too. Firms should reward high performers not just financially, but with continued education programs to help brokers stay on top of changes and trends and improve their performance.
5. They can’t deal with the entry-level financial structure
Perhaps the only thing more valuable to a new broker than the golden Rolodex is the nest egg. Many successful brokers come from humble beginnings, but there seems to be a correlation between a new entrant’s ability to weather meager paychecks and their longevity in the industry. Sometimes, brokers can’t grasp the big picture and remember that although they are not grossing much yet, their potential earnings are uncapped. It’s not uncommon for brokers to work on deals for months, even years before making a commission. While it’s important that new brokers stay focused and understand the long game, some firms might want to revisit their entry-level packages and consider offering higher base salaries or draws to help young talent get through the early stages.
Stress and disappointment are inherent to the commercial real estate business. The unpredictable nature of the profession turns some people off. On the other hand, there is nothing quite like the excitement of sales. Seasoned brokers relish the promise of the next big deal, and they work hard to make it happen. With organization, strategy and some help from their peers and employers, young brokers can make the most of that potential.
About the author: Tanner McGraw is the CEO & founder of Apto Inc., provider of commercial real estate software helps you build better relationships, close deals faster, and manage your brokerage