As a new agent, chances are you have grand ideas about how you’re going to market yourself, spend your money and conduct business to absolutely crush it in your career! All good things, if done well.
Now, there’s no one right path to achieving your goals, but there are some pitfalls you’ll want to avoid. From unnecessary advertising costs to simple contract gaffes, here are 10 expensive mistakes new agents make.
1. Wasted marketing dollars
You’ve probably heard the saying “flushing money down the toilet.” Well, in a sense, that is a situation you can find yourself in by wasting money on marketing that isn’t actually bringing you business.
From ZIP codes miraculously opening up in your area to high-budget, low-return commercials, unnecessary postcard mailings to random neighborhoods and much more, there are easy traps to fall into with your marketing dollars.
Instead of throwing money at everything, try focusing on a few things that really reach the target area you intend to work. Things like sending out market statistics and neighborhood updates and happenings, as well as being a source of valuable information to a particular niche, will pay itself back tenfold.
2. Rushing the deal
Early on in my career as a new agent, I made a number of mistakes that cost me portions of my commission and extra fees. It was simply because I was moving too fast through the deal which caused me to overlook simple line items.
This includes mistakes like miscalculating the total commission amounts due from the seller on their proceeds worksheet and failing to inform the co-op buyer’s agent of HOA transfer fees. They ultimately landed back on me, and I had to take responsibility for them.
One of the best ways to avoid expensive mistakes is to slow down and understand what it is that you’re doing. In hindsight, those errors were very easy to avoid, but rushing through to get it done caused a great deal of unnecessary expense.
3. Lavish closing gifts (Keep them simple!)
While I love a good closing gift as much as the next person, when you’re just starting out, you should be mindful of just how lavish a gift you’re giving someone. You want to show your appreciation without overdoing it.
Putting together a simple gift basket with many necessities someone may need when making a move goes much further than a $350 bottle of wine. Actually, thinking through your gift and what its practicality may be will not only prove useful to your client but may be the lasting impression needed to be referred more business from them.
4. Looking the part
Looking the part is certainly important, depending on whom you’d like to do business with. Unfortunately, in some ways, this business can be superficial. From the way you dress, to the car you drive and even where you live, it’s easy to feel like you have to fit a certain mold to make it in this business.
While I certainly believe you should present yourself with your best foot forward, I don’t think you should overextend yourself just to appear successful. Ultimately, you want to do business with people who want to do business with you because of who you are and the skill set you bring to a transaction — not because of your material things or appearance.
5. Overextending yourself
As a real estate agent, you’re essentially running your own business — and that includes everything that comes with it. Think: marketing, accounting, lead generation, contract management and all areas of business in between.
My philosophy is that it’s important to know these things and have the ability to execute them yourself, as it allows you to develop expertise and an understanding of what needs to be done in your day-to-day business.
That said, at some point you should be able to hand certain tasks off to an assistant or office manager. Solo agents have a tendency to do everything and delegate nothing. Truth be told, there’s only so much one person can do and by overextending yourself, some area of your business will ultimately suffer.
6. Focusing on one deal
Have you ever just had that one deal that takes up all of your time? It can bog you down so much that it’s all you focus on.
One of the hurdles many agents face that are not on teams is this very thing. You can get so inundated with small minutiae that the bigger picture is completely missed.
This is the classic case of working in your business and not on your business. Nurturing your relationships for future business is essentially to longevity and getting caught up in a single deal for too long can be detrimental.
7. Fussing over commission
Commission negotiations is one area where you’ve got to pick and choose your battles. Fortunately in my career as the years accumulated, a majority of the clients I’ve worked with have had no concerns with the commission being requested because they understood the professional value I brought to the table. However, earlier on it wasn’t so easy.
That said, you’ve got to read the room. What ultimately do you want to get out of this working relationship? What leverage do you really have as a new agent?
If you’re so fixated on making an “x” commission on one deal and not showing flexibility, the chances of that client wanting to do future business with you let alone refer you to others may diminish. Be a team player, provide excellent service, and show why your value is top tier.
8. Mismanaging funds
Financial literacy is key in life, and being in a traditionally commission-based industry makes it all the more important. Ultimately, many agents don’t know where their next closing or piece of business will come from.
When the only thing we can do is manage our time and activities, it can be quite nerve-racking from a monetary standpoint. It’s crucial to have a game plan that you can stick to.
Whether that’s setting aside a portion of each commission check into a rainy day fund or making that money work for you in another investment opportunity, mismanaging finances can be a big newbie mistake.
9. Neglecting your knowledge bank
One of the best lessons that I learned from my broker is to go to the knowledge bank first. Before you even start to think about commissions, you need to have a grasp on what it is you’re actually doing.
Real estate is one of the largest financial investments most people make, and if you’re subpar at the profession, the chances of you lasting long and having a substantial career are slim to none.
One of my favorite quotes is: “Give a man a fish and he’ll eat for the day, but teach a man to fish and he’ll eat for life.” In short, knowledge is power, and it will take you far.
10. Constantly being on the go
The holidays are my favorite time of the year, not only because everyone is generally in a happy mood but because the market slows just a bit and allows you to slow down with it, too.
We’re constantly on the go, and hitting that reset button is a necessity for a good work-life balance. Going seven days a week for months on end can burn you out and ultimately diminish your productivity.
To be at your best and perform at a high level, you’ve got to take care of yourself. Mistakes are bound to be made in life and in business, but taking time to regroup and align your mind, body and soul will renew your spirit and energy — and bring you back stronger than ever.
In the end, these are common rabbit holes to go down but easy to avoid. As tempting as it is to throw money at everything, skim through contractual details, spoil your favorite clients or lease that luxury car, as a new agent, you’ve got to be mindful of making mistakes that can lead to expensive consequences and instead focus on growing your business and yourself.