21 Problems of being in the real estate industry [With solutions]

Navigating the problems in real estate world can feel like tackling a never-ending list —whether it’s a lack of listings, costly leads, or title issues that bring deals to a halt.

Real estate professionals face countless hurdles that can delay or derail success. According to the National Association of Realtors, appraisal issues cause 18% of transaction delays.

However, the right approach can address each of these challenges. From leveraging technology to managing client expectations, this guide will explore 21 common real estate problems and solutions.

Let’s dive in and transform the challenges in real estate industry into growth opportunities.

1. Not having enough listings 

How would you feel if you shopped at a store or an online website and found only 3-4 options? You would be disappointed, right?

Likewise, when buyers come looking for a house, they expect to receive plenty of options to find the property that exactly meets their criteria.

If a realtor runs low on inventory, the company suffers. An unappealing IDX website with only a few real estate assets will not help the business.

Therefore, you must ensure that your website has sufficient listings. This can directly affect the growth of the commercial real estate industry.

Property marketing is essential. It integrates traditional and digital techniques to build a robust online presence and effectively reach target audiences.

Solution:

Grow your network, connect with local businesses and real estate investors, and list local news & events on your website.

With such helpful resources on your retail real estate website, more people will be inclined toward your platform, resulting in increased traffic.

Moreover, by keeping your visitors updated, you collect more leads to convert them into customers eventually.

Leverage your current listing. Make an irresistible ad that showcases desirable and affordable neighborhood listings.

Below is a perfect real estate listing advertisement that shows affordable housing at the best price.

Why does it make the perfect ad? 

• Use of fresh copy “just listed – best-priced home”
• The image is clean and appealing 
• Use of sections that highlight unique aspects of the house 
• Not so wordy content – a crisp and clear message  
• Use of words like “quick” in the CTA  

2. Lead cost is high as compared to the conversion ratio 

Your conversion ratio will decrease when you focus only on capturing leads rather than nurturing them. 

Capturing and buying leads from various platforms, such as Google Ads, Zillow, and other paid campaigns, will skyrocket your lead cost. 

The below image shows the average cost per lead for various marketing channels. 

With high lead costs and lower conversion rates, keeping up with such a high cost per lead becomes impossible. 

Solution:  

The only way to break free of this vicious cycle is to improve your conversion rate. Once you achieve a higher conversion rate, your lead cost will decrease. 

Your business needs a streamlined sales process to convert more leads into customers. 

Once you capture the lead, segment them based on their preferences, interests, location, and behavioral patterns. 

This data will give you a gist of how likely the leads will get converted – gradually improving your conversion ratio. 

Moreover, you can implement various real estate lead generation strategies to streamline your entire process. 

3. Not having an established sales process 

The real estate sales process consists of many stages, from listing a house to closing the sale. Real estate firms face numerous challenges and complexities, making it essential for every realtor to establish a solid sales process to keep it organized.

Solution:

Build a solid real estate sales process that covers every aspect of your business and helps grow your customer base.

With a streamlined process, you can capture quality leads and nurture them to guide them through the top funnel.

4. Dealing with tons of rejections  

With the growing competition among real estate agents, rejection is inevitable. 

Not every client will accept your offer, so at some point, you will face rejections, and that’s part of the process. 

However, just because some clients rejected your offer doesn’t mean your services are substandard. 

Solution:  

Even when facing rejection, do not give up and keep nurturing clients. 

They might not be interested in the property you offered but may be interested in your future projects. 

So, you can keep sending personalized messages and emails to stay connected with cold leads. 

60% of customers say no four times before saying yes, whereas 48% of salespeople never even make a follow-up attempt. 

5. Failing to leverage technology 

Are you still following the traditional method of listing properties in magazines and newspapers?

As beneficial as that is, technology has grown by leaps and bounds in the past few decades.

If you’re not leveraging technology for your business’s growth, your competitors will gain an edge over you and attract more leads. Additionally, rising interest rates are reshaping market dynamics, making it crucial for investors to adapt their strategies in response to increased borrowing costs.

Solution:

Use social media, listing websites, and other platforms to build a solid customer base and capture leads.

Analyze and determine which platform most of your target audience uses, and strategize your marketing plan accordingly.

6. Failing to leverage on referrals 

If you were a customer looking to buy a property, would you instead ask your known one about their experience with a specific realtor or rely on a website? 

We’re assuming that most buyers would trust their friends or family more. 

Real estate markets mainly run on referrals; 25% of agents generate more than 50% of their revenue through only referrals! Shocking, right? 

It becomes challenging to get more leads when a realtor doesn’t have clients backing his work and referring to others. 

Solution:  

The sales process does not end when a person closes a deal. Even after you’ve sold something, staying connected with clients and nurturing them is vital. 

Building a solid relationship with your customers makes you more likely to get referred to others. So, nurture your clients by sending personalized messages, providing a solution, and consulting when required. 

7. Abiding with real estate agent’s laws

Managing properties, selling them, or renting them comes with many responsibilities. Buying and selling land involves numerous government-determined rules. 

As a real estate agent, you must abide by the laws of confidentiality, making the buyer aware of any fault in the property, and so on.  

Real estate transactions between realtors and buyers must be transparent to benefit both parties. 

Solution:  

Use a real estate CRM to eliminate manual paperwork and improve management. Prepare a checklist and ensure you’ve covered everything before making any sale. 

Moreover, you can also log conversations in your CRM to use them in the future as a reference. 

8. Managing the back-office task 

Keeping track of all your back-office tasks can be a hassle. 

If you recently started a real estate business and think you have plenty of time, you might want to reconsider your decision. 

The real estate industry is hectic, and you must stay on your toes to capture more leads. 

So, you can’t stay relaxed, thinking the leads will come straight to you just because you have a website. 

Solution:  

Hire a real estate agent skilled enough to manage your administration tasks easily. See if they map your requirements exactly. 

Some of the top skills required of a real estate administration agent are managing paperwork, dealing with clients, keeping the listings organized, and handling legal documents. 

This practice can help resolve the most crucial real estate problems and help realtors manage their tasks effortlessly. 

9. Increasing presence of online estate agents 

With the increasing number of millennials and Gen Z investing in real estate, realtors have considered their preferences. 

This generation wants everything online; everything is just a click away, from shopping to acquiring services. 

Therefore, an increase in online real estate agents has boosted the competition. And if you want to keep growing your business, you must stay on level with others.  

Solution:  

Build an online presence and share resources as well as information. It would help if you had top-of-the-funnel traffic when you want to drive more visitors to your website. 

Therefore, stay active on various social media platforms and leverage them to build a community that trusts your business. 

10. Dealing with unrealistic sellers 

You must have come across sellers with highly unrealistic expectations from their properties. 

Whether it’s the price they’re quoting or the time frame they have given to sell the property, if it doesn’t match your calculation, keep it clear from the first day. 

Many sellers compare their houses to those in the neighborhood and want to sell them as quickly as others. 

It’s your responsibility to make them understand the actual scenario. This is one of the most common problems that real estate markets face. 

Solution:  

Understand the seller’s requirements and think from their perspective to gain insight. 

If you believe the property is overpriced or underpriced, communicate the same. 

Moreover, inform your seller of the closing cost before you share the final amount so they won’t be shocked and your deal won’t fall through. 

11. Managing paperwork in real estate transactions

You must form a proper workflow if you don’t want to get lost in paperwork. 

Managing the paperwork of every property and client can take a toll on you and consume most of your time. This can also hamper your overall productivity at work. 

Solution:  

Get a CRM that eliminates the dependency on manual paperwork and digitizes your documents.  

Have access to all your documents within your CRM and exchange e-signed documents to speed up the documentation process. 

Moreover, you can also implement real estate marketing automation into your business process for lead generation, outreach, etc. 

This way, you can access all the essential information even when you’re on the way to meet your client. 

12. Calculating taxes and other deductibles 

This is one of the essential stages of selling any real estate property. 

Many realtors find determining certain taxes or deductibles challenging before quoting a price. 

The difference between the offered price and the final cost creates trust issues between the client and the real estate agent. 

Solution:  

Before finalizing the price of any of your listings, you need to consider property tax, escrow charges, application fees, and warranty. 

You can create a chart explaining all the taxes so the seller or buyer knows them.  

13. Not knowing where the deal is in the sales process 

Not knowing where the agreement stands in the real estate sector can affect your bottom line.

If the deal takes too long to close, you must act upon it immediately and push it towards closure.

Likewise, when you have a hot lead, you must put more effort into turning them into customers.

Solution:

A sales pipeline gives you a visual representation of where your prospects are in your sales cycle. By identifying the leads in the pipeline, you can take the necessary steps to motivate the prospect to close the deals.

14. Real estate appraisal issue  

Real estate agents face appraisal issues regularly. 

According to the National Association of Realtors, appraisal issues cause 18% of real estate contract delays. 

A professional appraises a property after the deal is closed. 

Therefore, property appraisals cause clashes between parties. A professional assesses the property and determines its fair value to the seller. 

Solution:  

Price the property fairly, so there isn’t a vast difference even when the appraisal comes in. Educate your clients about the appraisal process and always keep them in the loop when making any important decision or modification.   

15. The home isn’t insurable  

Sometimes, real estate agents take up properties that can’t be insured. 

It’s possible that the house is at high risk and cannot be insured, and that drawback puts your deal on hold. 

In the case of such property, FHA denies insurance based on the house’s condition. 

Solution:  

You can communicate with your client and convey the situation in such a scenario. 

If FHA doesn’t insure the property, you can always approach private insurance agencies; just keep in mind that their premiums will be comparatively higher based on the risk. 

16. One of the parties has cold feet 

Since purchasing a house is one of the most significant decisions anyone makes, it’s natural for the client to have a cold foot. 

This usually happens when you’re just about to close the deal, and if it’s not handled properly, it may put all your efforts at risk. 

Solution:  

Put forward a compelling proposition that communicates clearly with your client. 

See it from their perspective and approach accordingly so you can close the deal without hassle. 

17. No certainty of payout for brokers  

Real estate brokers put all their effort into preparing the listing, staging the property, and approaching interested clients to gain the brokerage that sometimes doesn’t go through. 

Brokers’ payouts are not sure, which puts their jobs at risk. 

Solution:  

Ensure you convey the brokerage fee to your client before closing the deal. 

You should include the brokerage in closing costs so that when you explain all the expenses, the client knows the broker’s fees. 

18. Title issues 

Another common real estate problem is title issues, which make title transfer difficult. 

This could be due to anything from illegal deeds, forgeries, unknown liens, and undiscovered wills to errors in public records. 

Solution:  

To avoid this problem, you can thoroughly research the property beforehand. 

Moreover, to ensure your client’s safety, it’s best to protect the property with title insurance. 

Title issues are covered in the ”owner policy ” when you have the title insurance. 

19. Effective client communication

Effective client communication is the backbone of any successful real estate business. Building strong client relationships requires understanding their needs, concerns, and expectations.

Real estate agents must proactively provide updates and information to clients, listen actively to their inquiries, and respond promptly to their problems.

By doing so, agents can foster a sense of trust and loyalty, which can lead to long-term relationships and repeat business.

Solutions:

To build strong client relationships, real estate agents should:

1. Be transparent and honest in their communication.
2. Be proactive in providing updates and information to clients.
3. Listen actively to client inquiries and respond promptly to their concerns.
4. Be empathetic and understanding of client concerns and needs.
5. Use technology to streamline communication and provide virtual property tours.

By following these strategies, real estate agents can build strong client relationships, overcome challenges in client communication, and ultimately drive business success.

20. Pricing properties accurately

Pricing properties accurately is a critical aspect of the real estate industry. Setting realistic client expectations is essential to ensure a smooth and successful transaction.

Real estate agents must use data and market analysis to determine the optimal price for a property, considering factors such as location, property characteristics, and current economic conditions.

Solutions:

To price properties accurately, real estate agents should:

1. Use data and market analysis to determine the optimal price for a property.
2. Consider factors such as location, property characteristics, and current economic conditions.
3. Be transparent and honest with clients about the pricing process.
4. Use technology to provide virtual property tours and showcase the property’s features.
5. Stay attuned to market trends and adjust pricing strategies accordingly.

By following these strategies, real estate agents can price properties accurately, set realistic expectations for clients, and overcome challenges in the pricing process.

21. Navigating market trends and economic factors

Navigating market trends and economic factors is essential for real estate agents to stay ahead of the curve.

Adapting strategies to current conditions requires a deep understanding of the market and its fluctuations.

Agents must stay informed about market trends, economic conditions, and regulatory changes to provide the best possible service to their clients.

Solutions:

To navigate market trends and economic factors, real estate agents should:

1. Stay informed about market trends, economic conditions, and regulatory changes.
2. Use data and market analysis to understand the current market conditions.
3. Adapt pricing strategies to current market conditions.
4. Use technology to provide virtual property tours and showcase the property’s features.
5. Be proactive in providing updates and information to clients about market trends and economic factors.

By following these strategies, real estate agents can navigate market trends and economic factors, adapt their approach to current conditions, and overcome challenges in the real estate industry.

Preparing your real estate business for the future

In real estate, companies must be progressive-minded – capable of simultaneously glancing at the future and seeing the present.

Issues affecting real estate span multiple categories, including technology and economics. Let’s identify strategies you can apply to prepare your business for tomorrow’s environment.

1. Adapting to urbanization and local government policies

Due to a densely increasing population in urban areas, the demand for houses is continually rising. UN estimates that by 2050, over two-thirds of the global population will reside in urban centers.

Such a change will force local governments to develop policies that address the sustainable nature of housing, thus transforming how real estate organizations work locally.

Those policies are significant for obtaining permits, avoiding legal problems, and maintaining good community relationships.

2. Managing rising costs and labor market challenges

One of the most significant impacts is the increase in the price of various materials used in construction and the lack of workforce.

Unemployment and a skills shortage have made it difficult for the labor market to meet demand, raising construction costs by 5.7% annually.

Real estate businesses can reduce these rising costs by identifying efficient construction methods, developing good working relationships with contractors, and establishing a good financial position in their projects.

3. Technology and AI

Artificial intelligence is revolutionizing the real estate business. From assessing property values to forecasting future market trends, AI automates complicated processes and generates information.

For example, AI solutions in the industry can help with property valuation, pricing, and other related tasks to enable faster and more efficient transactions.

Adopting these technologies can help real estate businesses remain relevant and make informed decisions that are key to sustainability.

4. Cap rates and economic growth trends

Cap rates are relative to economic growth; instability in the real estate market and the economy will result in unstable returns on investment.

This way, the individuals keep a good eye on the existing local and global economic trends, both positive and negative, which helps in risk assessment.

According to analysts, we may observe an increase in cap rates due to the impact of inflation on properties. By monitoring these trends, you can adapt the required techniques to remain profitable.

Final thoughts 

The real estate industry has unique challenges, including handling high lead costs and complex client needs.

However, as noted, every real estate problem has a practical remedy. The real estate challenges can be combated by accepting technology, improving the sales process, and being organized.

Thus, Salesmate provides you with a robust tool that may enhance your processes, organize the leads, and provide you with automation to work successfully and aim at deals to become closer to successful business development.

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