Commercial real estate (CRE) can be a highly rewarding career, but it’s no secret that many brokers struggle to make it past the first two years. In fact, around 80% of new brokers leave the industry within that time frame. So, what makes CRE so challenging, and why do so many fall short of success?
The answer lies in a combination of high barriers to entry, financial pressures, intense competition, and the long, complex nature of real estate transactions. Let’s dive deeper into the factors that contribute to this high failure rate.
In commercial real estate, relationships are everything. To succeed, brokers need to build a strong network of property owners, buyers, investors, attorneys, lenders, and more. For a newcomer, this can feel like an overwhelming task. Unlike residential real estate, where the volume of smaller transactions is higher, CRE deals are larger, more complex, and less frequent. This means brokers need to be exceptionally good at building long-term relationships and nurturing leads, sometimes over the course of years.
New brokers often underestimate the time and effort it takes to break into these tight-knit circles. Without a robust network, they can find themselves sidelined and unable to compete.
One of the toughest aspects of a career in CRE is the commission-only pay structure. In a field where deals can take months or even years to close, new brokers can face extended periods without income. Financial stability during these “lean times” is crucial, but many brokers aren’t prepared for the reality of going without a paycheck for months.
For those just starting out, this can be a breaking point. The pressure to pay bills and maintain a living without guaranteed income often forces new brokers to leave the industry before they’ve had a chance to close their first major deal.
The commercial real estate sales cycle is notoriously long. A deal isn’t as simple as finding a buyer and signing a contract. Brokers must research properties, find and contact the right owners, and navigate the often-complicated web of financial and legal hurdles. Once a deal is in motion, there are property inspections, negotiations over contract terms, financing arrangements, and countless other moving parts.
On top of that, deals often face unexpected delays or fall apart at the last minute. New brokers, eager for that first paycheck, can become discouraged when deals take months to finalize—or, worse when they fall through entirely. The ability to endure these long cycles requires not only patience but also solid financial planning.
The commercial real estate market is fiercely competitive. Established brokers have a wealth of experience, large client bases, and brand recognition. They’ve built reputations and relationships over decades, making it tough for new brokers to break in. When competing for listings, clients often choose brokers with a proven track record, making it even harder for newcomers to win business.
Without a unique value proposition or specialized knowledge, new brokers can struggle to stand out in a crowded field. It takes creativity, persistence, and a willingness to put in the extra effort to differentiate yourself from the competition.
Success in commercial real estate requires a deep understanding of the market, financial analysis, contracts, negotiations, and much more. Unfortunately, many new brokers enter the field without receiving adequate training or mentorship. Without guidance, it’s easy to become overwhelmed by the sheer volume of knowledge required to close a deal successfully.
Experienced brokers often have access to mentors or teams that support their efforts, but new brokers may find themselves isolated and unsure of where to turn for help. This lack of direction can lead to mistakes that cost them deals and clients, pushing them out of the industry before they’ve had a chance to get their footing.
While the statistics may seem discouraging, those who persevere can build highly successful careers in commercial real estate. It takes a combination of persistence, patience, and adaptability to survive and thrive in this challenging industry. Here are a few strategies that can help new brokers avoid becoming part of the 80%:
The failure rate for new brokers in commercial real estate is high, but for those who are willing to invest the time, effort, and perseverance, the rewards can be significant. Understanding the challenges ahead and preparing for them with the right strategies can help new brokers beat the odds and build long-lasting careers in CRE.
The path may not be easy, but as the saying goes, if it were, everyone would be doing it.
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