5 Mistakes We Made As New Agents

We did 79 deals our first year—and still screwed up. Today we rip open the playbook and tell you exactly what we’d do differently so you can scale faster, cleaner, and with way more profit.

You’ll learn:

• Paid Leads Trap: why leaning too hard on ads without skills/systems nukes cash flow—and the smarter 50/50 mix (PPC + sphere/open houses).
• PCSOI Neglect: the cost of not systematizing past clients & sphere—birthdays, home anniversaries, monthly market videos, quarterly mailers, small-but-mighty client events.
• Hiring Too Late: how delaying an assistant stalls production; when to hire (1–2 deals/month trend + 6 months salary saved) and what to offload first.
• Team Mirage: big headcount, tiny profit. The “micro-team” model (assistant, showing partner, listing coordinator) that can net 7-figures without the chaos.
• No Financial Controls: the silent killer. QuickBooks, chart of accounts, daily 10-minute cost-coding, tax buckets (35–40%), true cost per closing, subscription audits.

This isn’t theory. It’s scar tissue.
 Steal the systems, skip the pain, and build a business that actually pays you.

Listen. Implement. Level up.

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Transcript

Mike Novak:
agents.
[0:33] Welcome back today. We're talking about five mistakes that we made as new real estate
Rachael Novak:
[0:42] It's true. When you first get into the industry, you get so excited about helping clients and
getting clients and servicing them that it's really easy to not think about the business side or
systems inside the business at first.
Mike Novak:
[0:59] Yeah, for sure. And now we've got the benefit of 1500 plus transactions. And we can look
back and say, hey, these are mistakes in retrospect that we maybe made. And hopefully, if you're a
newer agent, you can learn from this, right? And avoid some of these same things that, you know,
we kind of struggled with.
Rachael Novak:
[1:20] Exactly. So I'll also say, like, obviously, we've talked a lot about getting coaches and having a
coaching business. But it's very possible that your coach isn't even coaching on the actual
business because a lot of coaching companies will focus on just client acquisition and servicing. So
these are some of the five mistakes that we made. And maybe if you are listening to this and you're
new into the industry or you've been in the industry for a minute and haven't done any of these or
have done these you can learn from our mistakes as well.
Mike Novak:
[1:48] Yeah and and our first year was actually a really good year in real estate just to give context
looking back on it we did 79 transactions just the two of us with like a, assistant tc that kind of
jumped in like the last couple months of the year so for most of it was just you and i and you know
we pushed it really hard so a lot of things went well i think one of of the things that went really,
really well, like one of the best decisions we made is we did have a coach from day one. You know,
that was something that definitely paid off. And we've talked about some other things in the past
that worked really well for us as well. But today we're going to focus on the things that we could
have done differently, you know, having the hindsight that we have now. So first one, leaning too
heavily on paid leads. Why is this a mistake?
Rachael Novak:
[2:28] Well, I think that if you get into a rhythm of putting all of your eggs in one basket and having
one big pillar of business that may pay off for a little while. I'm thinking also agents who maybe lean
on just Zilla leads and don't nurture other pillars. It can... Bite you in the butt really quick.
Mike Novak:
[2:50] It'd be super expensive, right? I mean, we were spending a lot of money and a lot of times
you're not going to get that money back for an extended period of time. You know, there's
something that I call a cash conversion cycle. And what that refers to is how long it's going to take
me to get back the money I just invested in this lead source. And some lead sources can be nine
months to two years, right? So you need to make sure you've got plenty of money to fund
something that long, you know, if you're going to do paid leads. But I think that the balancing act is
to do some paid leads and do some sphere, right? I see agents also making the mistake of doing
no paid leads, and they end up selling like three houses their first year. So I think that's also a huge
mistake. Totally. You know, this is kind of a balancing act of the economy.
Rachael Novak:
[3:30] Totally. Yeah. I mean, again, like you said, you know, if you're leaning too heavily on paid
leads, but you haven't set up, you know, systems within your CRM or you're not script like role
playing and scripting and learning language patterns, then you're going to burn a lot of those
opportunities without knowing it. So, you know, relying heavily on paid leads, because, you know,
to be fair, our first year, 95% of our closings were paid leads. So we proved that, yes, you can work
them. But then what happened was, we hadn't built any other pillars or invested any other time in
any other areas of client acquisition that we probably should have at the time.
Mike Novak:
[4:04] Right. So I think a good mix would be like 50-50 if you can your first year. You know, have half
your business come from paid lead sources like pay-per-click. I'd not try to recommend Zillow to
newer agents because it's so expensive. But I think pay-per-click is a really, really good option. The
other half come from open houses and Sphere.
Rachael Novak:
[4:21] Exactly. Yep, totally.
Mike Novak:
[4:23] Number two is not systematizing our PCSOI, which is past clients in sphere of influence. I
think that we felt like, hey, we're new to real estate, so no one's going to want to use us, so why
even spend any time on this? And that's a huge mistake. You need to make sure people know that
you're in real estate and not wait to be uber successful to get the word out.
Rachael Novak:
[4:41] I agree. And I think this is kind of a double-edged sword, I will say, because, and I just had
this conversation with a new agent. she'd been in the industry for six months just the other day and
she called me you know Because it's a tough year for a lot of agents. A lot of agents are really
hurting in this market.
Mike Novak:
[4:57] We're getting a lot of these kind of calls right now.
Rachael Novak:
[4:58] Yes, I'm talking to a lot of agents right now. But her biggest thing was, you know, I got into real
estate and I know so many people. I'm from here. I grew up here. I have I know tons of people. I
went to high school here. But none of my friends want to use me or none of them, you know, like
want to buy or sell right now. And so there is kind of this initial initiation period in real estate where
for the first year or two, because real estate agents are so, like there's so many of us who are a
dime a dozen, totally honestly, people who have their real estate license, that your sphere kind of
needs to see proof. They kind of need to see track record. So I understand the side of like, let's
look at other lead sources like pay-per-click in the first little while. But what we didn't do was start
systematizing the past clients that we were servicing right away. And that's kind of what we're
referring to, right? Like, yes, open houses. Yes, letting people know you're in real estate, utilizing
social media, going to any and all family, friend events that you can kind of be like, oh, this is what
I'm doing. This is how I'm doing it. And people ask you how the market is, know what you're going
to answer. That's a part of it. But it's okay. Now that we've closed these clients over this year, how
are we now continuing to keep in touch with them on a regular basis. That's what we didn't set up
right away.
Mike Novak:
[6:12] Right. With the goal ultimately being that this person's going to send me other referrals.
Rachael Novak:
[6:16] Exactly.
Mike Novak:
[6:16] Right. Like if you can get one referral per closed deal and then also five to seven years later,
get that person as a seller that was a buyer, that's a huge win. That's now three transactions out of
one.
Rachael Novak:
[6:25] Yeah. Your business will explode.
Mike Novak:
[6:27] Yeah. And so some of those things include like home anniversary process, like a card and a
gift card or something. Birthdays, make sure you're collecting birthdays and reaching out on those
days and sending them something. a quarterly mailed gift we like to do. I think even doing client
events, even when you've only done like 10 or 15 past clients, still makes sense to start the habit
like really early on.
Rachael Novak:
[6:48] And it's okay if it's small. It's okay if you have like six people come. Like that can still be an
event for people that you're providing a service or you're providing something for them to enjoy, get
a touch base with you. Again, like these things, you can start small and then scale up as your past
client list grows.
Mike Novak:
[7:03] Right. I also like doing a video marker report monthly to past clients. I like having a home
valuation set up on them. We use RealScout for this or Ylopo. Either one's great. But being like the
source of information for your past clients in real estate is really, really important. And then just
having like, you know, a couple handfuls of touches each year as well.
Rachael Novak:
[7:19] That's exactly right.
Mike Novak:
[7:20] The next one, waiting too long to hire an assistant. Why is this a mistake? And how can this
come back to bite you in the boat?
Rachael Novak:
[7:27] We've talked about this on the podcast before, but. And you very, very quickly in real estate
will start having to spend your time on non-dollar producing activities, the admin work, the
marketing work, the computer work, the organization, the communication with escrow and lenders
and all these things. You're going to have to quickly start doing that once you start producing, that
it's going to take you out of the lane of sales. So the sooner that you hire an assistant and start
delegating the communication, the behind the scenes work, the printing, the filing, the creating of
the folders and all these things, the sooner you can offload that kind of stuff, the more you can stay
in the revenue generation mode and therefore continue to drive business upward.
Mike Novak:
[8:12] Right. You know, what I've seen people do is like they get a surge of business and they end
up frantic and then kind of like in survival mode to get those transactions across the closing table.
And then they completely stopped doing what they were doing to get those transactions. And
they're playing like transaction coordinator and assistant and, you know, task manager. So that
that's that trap that people fall into. So, you know, we always tell people like, you know, when
you've got six months of the person's salary saved up, go ahead and hire an assistant. When
you're trending like one and a half to two deals a month consistently, hire an assistant. Don't wait
until you're like, you know, just barely breathing and like drowning, you know?
Rachael Novak:
[8:48] Yeah. Well, and you know, I want to encourage you, like if it's something that you've kind of
been thinking about or pondering, you know, what we've found in these instances is when you're
trending that one, one and a half deals per month, and then you have that money saved up, you
bring that person in, you start training, then they start shadowing you and understanding the pieces
that they're gonna take off of your plate, puts a lot of pressure on you to continue to produce. It
brings built-in accountability to your business to continue to do the things to generate money. So
this is a built-in accountability tool for you to build your business. Hire that assistant. Like when
you've got that money, when you've got one and a half deals trending, bring them in. It will force
you to level up your business.
Mike Novak:
[9:33] Totally. Number four, this is a big one and this is one that people think about believing that a
team is the best place to make money in real estate. Like that's what we were told. And like, I think
there's just kind of an assumption, like if you're a high volume agent, you need to have a team. And
that's, that's what I believe for sure. Cause that's what I was told. Uh, and in retrospect, you don't
need a team, right? You can go really, really far as a high producing agent with leverage around
you. So you can build a team in a different way. Like we call it the micro team where you have an
assistant, a showing partner, a listing coordinator, and you could do 120 transactions a year with
those three people and work 40 to 50 hours a week and make seven figures. Like you're talking
massive money, right? Without a lot of headaches. But instead, we jumped into building a team
really, really quickly. And we had 20 agents at one point.
Rachael Novak:
[10:18] 27.
Mike Novak:
[10:18] I think it was like two years into the process. One day we looked around like, what the hell
are we doing here? Like, we're not really making any money off this team. All of our money is made
from our personal production. So some teams do make money. It's true. And our team has made
money certain years, but most teams don't. Like we have the benefit of being in certain
masterminds and groups where there is transparency and most of those teams don't make money.
Even some of the big ones that are out there selling at 1,500 houses a year.
Rachael Novak:
[10:44] That's exactly right. The hidden myth behind being a team leader is that there is nothing
glamorous or sexy about running a team. And a lot of teams that you see who are really high dollar
producing or have tons of agents and you see these team leaders kind of boasting about all these
huge transaction counts and all these agents they have, they don't. Most of them, we know we
have the benefit of being on the inside of a lot of these masterminds, like Mike said, they're not
actually making money on them. They are generating leads. They're having to take care of people.
They're having to pay out all this money. And the profit margin is less than it would be on a small
team with leverage. So are you in it to bring on a ton of agents and not make a lot of money? Or
would you rather live a very simple life and make a lot of money with a little bit of leverage? It's your
call. But for... For us, we thought that having a team was what we wanted. We wanted a big team.
That was what we're going to do. That's how you make a lot of money. And we just found that to not
be the case.
Mike Novak:
[11:51] Right. Even on the best year of the team, our personal commissions accounted for 500%
more take-home money.
Rachael Novak:
[11:58] To us, exactly.
Mike Novak:
sellers.
[11:59] Right. Because it's not what you sell, it's what you net. Exactly. Just like we always do
Rachael Novak:
[12:03] Exactly right.
Mike Novak:
[12:04] Number five, not setting up solid expense controls and bookkeeping. Why is this
problematic? And no agents think about this for some reason.
Rachael Novak:
[12:11] This is the biggest blind spot in the real estate industry, hands down. And this is what we
didn't do that first year. It was so chaotic. And we were honestly like slinging so many houses, just
the two of us, that we almost didn't, we didn't even think about it. We didn't have time to like book
this commission and then break out what we're making and break out the taxes.
Mike Novak:
[12:29] I'll tell a very transparent story. In May of 2017, we broke $100,000 in GCI for our first month.
We didn't know that until October. And we didn't even deposit the checks until October. It took that
long. We were just in survival mode because we were running so hard trying to build a business
that we would get a closing check and just get slammed in a file drawer or in a closet and we'd go
back to the phones, right? It's just like, there's not even time to deposit this check, much less go to
the bathroom or get a drink of water. Back on the phone, right?
Rachael Novak:
[12:58] Yeah. Yeah, no, it was it was crazy talk. And I remember there was one time I went to the
bank and I opened my backpack with my folder with all the checks in it. And I think I had 16 checks
that I had to deposit. Like it was just $200,000. Yeah, it just that was it was ridiculous. Like it and
so. Obviously, maybe you're not dealing with that situation. That was, you know, that was a good
problem to have. It was a great problem. But but maybe you are struggling with where to spend the
money or when you get a commission check in, you're not necessarily breaking out like in your
books, whether you're using QuickBooks or mentor or if you even have like something set up that
start there. Like it's something set up for financial tracking.
Rachael Novak:
[13:36] Are you putting away 35 to 40% for taxes and not touching it? Are you making sure that
you're actually calculating your cost per closing? Like what was the lead acquisition cost? Did I get
this from Zillow? Did I have to pay a referral fee? Like you're not, you're getting the net, of course,
from the brokerage from after playing all of these things. But there's still other things that you're
paying. There's the gas, there's the automobile, you know, your oil changes, there's the, Like I said,
the cost acquisition for the lead, there's all these other things that you have to pay. Are you actually
tracking those to actually look at what your profit is in those checks? And expense controls, are you
making sure that your Zillow overhead isn't going wild? Are you making sure that any little tiny
subscriptions for stupid little real estate tools or AI tools, that you're not subscribed to 14 of them?
All these little things, are you checking your books every single month and making sure that these
little tiny expenses aren't getting out of control? Because that's what happens really, really quickly.
And that's how agents end up not making it through these lower times. Like in 2025, there's a lot of
agents hurting because there were a lot of agents that were kind of living commission check to
commission check and did not have expense controls in place and did not put away money for
rainy days and raise their standard of living and their cost of living to a certain income that they are
not making anymore. it makes it very difficult.
Mike Novak:
[14:54] Right yeah no it so best thing get a quickbook subscription connected to your make account
spend 10 minutes a day and they're just cost coding transactions you can go on upwork or have
your cpa go in there and create a chart of accounts which just gives you a pnl format for real estate
and you're off to the races we also we are partnered with simple numbers now so like if somebody
wants just like a done for you system simple numbers should be a good contact you can always
reach out to us do an introduction for you to simple numbers they run all of ours now and it's just
like i'm done for your service.
Rachael Novak:
[15:23] And they have the most like it's so simple per their name it's so simple and yet so
comprehensive for your business that it will actually break down like what percentage of your
income you are spending in each area when you do the quarterly call with them so they're very
transparent they're very good about like hey like this one right here is out of line like you probably
should watch the expense here you probably should try to look at your lead source expenses or
whatever so yeah Another shout out for Simple Numbers. They're great.
Mike Novak:
[15:52] Yeah. So those are five things that we would probably do differently if we were to do this all
over again. And they're things that if you're a newer agent, you could definitely think about. If you've
got questions on these, you can, of course, DM us on Instagram. I'm at TheRealMikeNovak.
Rachael Novak:
[16:04] And I am at RachelNovak with the extra A.
Mike Novak:
[16:07] And of course, you know, we're at Real Brokerage. If you're looking at a brokerage that is
really built on technology and is the future of real estate, reach out to us to discuss mentorship and
partnership with Real. we are sponsoring agents across the country up in Canada as well see you
next week see.
Rachael Novak:
[16:24] You then guys.