The simplest path to a 6-figure year

By Jake Dixon

Odds are you got into real estate for freedom, flexibility and financial gain. And yet, if you are like most new agents, you have quickly realized this is a challenging business.

Roughly 87% of new licensees end up not renewing their license within the first two years. Combine that with the fact that more than 90% of agents sell 24 or fewer homes per year. Yet when asked, the majority claim they want to earn six figures per year.

So, what gives? Why is it so out of balance? What do the “successful” agents do to create a sustainable business compared to those who become a negative statistic?

Rookie agents often make things more complicated than they need to — then hide behind that manufactured complexity to justify failure. Agents end up finding evidence to support their beliefs, saying things like, “See, I told you so: This is hard.”

Other agents end up living in scarcity, thinking there is not enough opportunity available to achieve their own goals. They play the blame game, pointing the finger everywhere but themselves, eventually saying, “I’m going to go get a real job.” But they’re turning their back on an amazing opportunity.

Success is not easy, but it’s also not complicated. To build a sustainable, profitable, consistent business, you must get granular: Chunk things down into manageable pieces. It takes 90 days to create or lose momentum in business, so what we do today may show up three months later. A farmer doesn’t plant his crops and expect to see the fruits of his efforts tomorrow. It takes time. Cultivate the ground, plant the seeds, water them and then allow time to produce the fruits.

Similarly, for most agents, the question is not, “What are the 101 things I need to do?” Rather, the question becomes, “What are the simple things I need to do repeatedly to produce the fruits I am seeking?”

Success always happens by the slight edge. Errors in judgement, repeated over time, compound into failure and disappointment. But disciplines, repeated over time, can compound into massive results. Success can be boring, tedious and even mundane. Sometimes, though, we must accept that boredom is associated with success.

Consider this: Would you rather have $1 million cash upfront or a penny that doubles every day for a month? We know the temptation is to take the $1 million cash, but with time, patience and consistency, the penny will yield $5.3 million.

So, where am I going with all of this? Let’s do some math together.

After working with thousands of new agents over the years, I see a consistent conversion rate of 2% from contacts made to business opportunities. In other words, every 50 real estate conversations ultimately yield one new piece of business. Knowing this to be consistently true over time, there is a formula to building a sustainable, predictable real estate business that earns six figures per year.

What if you simply spoke to five people per day about real estate and you worked five days per week for 50 weeks out of the year? Five contacts x five days per week = 25 contacts per week. The compound effect totals 1,250 real estate conversations over the course of the year. If we take those 1,250 real estate conversations apply the 50:1 ratio, that gives you 25 sales. Simply put, five conversations per day for five days a week over 50 weeks of the year can yield you 25 sales: a six-figure income in real estate.

This is the true meaning of consistency. It’s having faith over fear, trusting that you are showing up every day doing the work. Although these results are not guaranteed for everyone, how many agents are really repeating this activity over time? As the statistics prove, not many.

In closing, what is easy to do is also easy not to do. This is deceptively simple. Many agents overcomplicate things because they are convinced it could not be this simple.

So, get out there! Have five conversations per day, five days a week, for a year — and report back to me in 12 months. Your future self is thanking you.

Jake Dixon is founder and CEO of The Locker Room Real Estate Coaching and Training.

2022 NAR Member Profile: Median Realtor income jumps in 2021

The median gross income of a Realtor jumped almost 25% in 2021, as a shortage of housing inventory was the biggest obstacle to homebuyers seeking to purchase homes, according the 2022 National Association of REALTORS® Member Profile

NAR membership rose from 1.48 million at the end of 2020 to 1.56 million at the end of 2021 as people sought to take advantage of the hot housing market. Amid the increase in membership, the typical Realtor saw their business increase, with transaction sides increasing to 12 from 10 in 2020 and sales volume increasing to $2.6 million from $2.1 million. 

“In the last year, Realtors continued to navigate a challenging housing market and cited the biggest factor holding back the housing market was tight inventory,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “As buyers relocated throughout the pandemic, housing affordability and lack of supply became a hurdle that agents and brokers found ways to overcome.” 

Median income for Realtors jumped to $54,330 from $43,330 in 2020. However, the amount earned varied widely by experience, as 57% of Realtors with two years or less experience earned less than $10,000, compared to 45% of members with 16 or more years’ experience, who made more than $100,000. 

Median experience was eight years, while 39% of respondents had 16 years or more in the business, and 25% had two years or less.  

Fifty-seven percent of respondents cited limited inventory as the main impediment to clients closing on home purchases, followed by 16% citing housing affordability and 12% citing difficulty finding the right property.  

Fifty-four percent of those surveyed were affiliated with an independent firm, and 87% were independent contractors at their firms. Thirty-six percent were compensated under a fixed commission split, 20% were compensated with a graduated split increasing with productivity and 18% with a capped commission split. 

By demographics, 66% of respondents were female, up from 65% in 2020, while the median age was 56, and 77% were white, 11% were Hispanic and 8% were Black. Ninety-three percent had some post-secondary education, and 31% completed their bachelor’s degrees. 

NAR conducted the 97-question survey in March, emailing it to a random sample of 176,494 Realtors and receiving a total of 9,220 responses.