Why Real Estate Agents Go Broke

It was December 2012 and I remember it well because it ended up changing my life forever.? I was a busy real estate agent in Denver, CO and had a booming business. In fact I was so successful that I had full-time administrative help and 3 buyer’s agents on the team.? I had office space in a beautiful building and was spending around $7,000 a month in advertising.? 2012 had been a record year of sales for myself and the team heading into November and I was feeling good about my numbers.

In early November I had 6 pending sales that were supposed to close within the next 60 days and I had several good clients that I was working with that were certain to be under contract soon. But during the month of November for various reasons that I can’t remember, 5 of the 6 deals fell apart. None of the potential clients ended up going under contract.? I ended up having one closing in mid-December but it was a small commission of around 5K and that was it.? By the end of December, I had to let my staff and buyer’s agents go, cancel the office lease and use credit cards to feed my family and pay the mortgage.

I could waste your time explaining all of the mistakes that I made and why they seemed like the right decisions at the time but rehashing the facts doesn’t help anyone.? I’d rather spend our time telling you the steps I took to recover both my business and my life in hopes that something I share resonates with you.

The first thing I did was take inventory of what I was spending and made ruthless decisions about what actually made me money and what had the potential to make me money. If it didn’t make me money I cut it out.? I renegotiated prices with the business that I wanted to work with and paused several advertising campaigns until I could get back on my feet.? My admin at the time ended up starting a transaction coordination company after I let her go and I was her first customer. I only paid for her services based on closings that I had. I set up a home office and changed brokerages to a $89 per month and $99 per transaction model.

It was difficult at first and humbling for sure.? But there was this exhilarating feeling of freedom and empowerment that came along with living within my means. I found that I was wasting something more valuable than money. I was wasting my time. When I really took inventory on what I spent my time doing, I found a lot of waste.? When your back is pushed up against the wall, you realize that you don’t have the luxury of doing things that are basically a waste of time. I began making more and more phone calls to my clients ( which cost me nothing but time ).? I needed sales and everything in my being was focussed on activities that would lead to sales.

In 2013 I ended up selling as many homes by myself as I had done with a team in 2012!? The big difference was that I was able to keep most of the money that I made from commissions.? I ran a very lean and focused business that paid off its debts and saved up for the winter that was invariably going to happen again. I used to listen to CD’s of Dave Ramsey’s Financial Peace class over and over again on my way between showings.? Most of all I was happy.

I share this story because I know that winter is here.? I’m sure that there are more than a few of my fellow real estate agents who have been killing it for the past few years but 2023 has been a sucker punch to the gut.? They keep spending money looking for the “Easy Button” but keep going deeper and deeper into debt. To those agents, I want to share that there’s hope.? Don’t quit!? Just get really honest about your business and start making the changes that you need to make in order to thrive again. Those who can make it through the darkest of times will thrive on the other side.

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