The 80/20 concept in real estate states that 80% of the agents in the business are only making 20% of the money in real estate transactions, while the other 20% of agents are the “super agents” making 80% of the profits in real estate. Basically, it breaks down to the fact that you’ve got a small group of agents who are kicking butt and taking names to grow their business – and the result is they make most of the money, while the majority of agents (80%) are scrabbling to divide the rest of the 20% profit in yearly real estate transactions between themselves. Whether it’s because they’re too lazy to work hard, too scared to put themselves out there, or too stupid to know better, there is only a small percentage of agents having TRUE success with real estate.

80/20 is the typical view, but we believe for the past year or two the 97/3 ratio may be a little closer to the truth. Basically, with the boom in real estate from 2000-2005, a ton of new agents flooded the industry because it was so easy to make money with the way the market was. House values increased at record levels and more people were buying or selling then ever before so listings were practically falling into new agents’ laps. You didn’t have to spend a ton of time prospecting or marketing, basically, you barely had to do any work at all!

Now however, the market is back to normal. People claim it’s a bad market, but that’s really not true. It may be bad in some areas but overall the market has stabilized in 2007 – it just seems bad because you got so used to not having to work hard to get clients! Since the end of 2005, it has become harder to make it as an agent and those agents that got in during the boom found out that getting business now isn’t the cakewalk it was in 2003. So now there are MORE agents making the smaller portion of money and LESS agents making the majority of the money – hence 97/3.

As this normal to slow market weeds out the less serious and lazier agents, the rule will level back to 80/20. Both successful and unsuccessful agents dislike the same things: cold calls, prospecting, showing properties to buyers, etc. The only difference between the two is that top agents are willing to do the tasks they hate if it will grow their business. Successful agents see their career as their business and act accordingly, unsuccessful agents do the bare minimum to get by. Successful agents have a business plan for 5, 10 even 15 years down the road and stick to it and add to it as necessary – they know that those 10 door hangings they hung today wasn’t necessarily to get every person to call them right away, but rather to let every person know that they’re the one to go to with real estate needs. Agents with a passion for what they do are the ones who will be truly successful. So what would you rather be? One of the 3% or just lost in the crowd of the 97%?