Market Slowdown Causing Steep Slowdown in Real Estate Agents
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The peak of new real estate agent probably was in 2005 according to the National Association of Realtors as membership has stopped increasing for all intents and purposes. Since the year 2000 membership in the NAR has grown from 803,803 to the present count of 1,369,411 as of July 31st. With a growth rate in 6 1/2 years of nearly 70 percent the dilution of the Realtor brand must be occurring as people raced into the real estate field to capitalize on the growing boom.
As we reported in May, 1 in 50 Californian’s is a real estate agent. With the oversupply of bodies in the field it is no wonder why the top agents are looking for a designation to act as a differentiator. The other surprise for me is the downturn has been going for 18 plus months now and the number of Realtors is still increasing, albeit at a much lower rate. Counting in the length of membership I am expecting these numbers to drop in the near future.
Indeed, membership in the National Association of Realtors, the national trade group and lobbying organization for the sales side of the housing industry, increased by 163,000 in 2005, to almost 1.3 million members, but grew by only 6,000 in the first six months of this year.
When an entry-level middle-class home in major markets on either coast lists at $500,000 and pays out a 6 percent sales commission, it is easy to see how an agent could get excited. In reality, the agent’s commission, after splits with other agents and the brokerage company, is closer to about 1.5 percent. Even so, sell 10 homes a year, and you are making a fine living.
The problem is that when everyone else jumps into the field, few new agents can hope to sell more than one or two homes a year. According to the National Association of Realtors, agents earn an average of $49,000 a year. via the New York Times.
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Pingback by You can use the No-Hassle iPhone to hang up on the NAR, but first attend to those Odysseus Medal nominations | BloodhoundBlog: Real estate marketing and technology blog | Realtors and real estate, mortgages, lending, investments on 7 September 2007:
[…] Green and Tom Royce are all over the idea, but, among other things, I’ve been busy selling a Russell Shaw […]
Comment by Gene Molloy on 7 September 2007:
When you are out in the trenches and you take a good hard look it’s pretty clear that The NAR is counting people coming into the business but they aren’t really watching the people leaving. Just because someone paid their dues does not mean they are actually working. When they have used up their first 100 temporary business cards and have to choose between buying 1000 more or eating, many of them opt for “EARLY” retirement. Sure two or three more come in, but do they last?
Pingback by The Feed Bag - What Works? on 7 September 2007:
[…] Tom at The Real Estate Bloggers is still trying to count grains of sand on the beach the number of realtors. […]
Comment by John A. Michailidis, GRI, CRS, JD on 8 September 2007:
As a licensing instructor (one of the many hats I wear) it never ceases to amaze me how little thought most of my students give to their decision to get into real estate. As a typical exercise for the first night of class I ask each of the students to tell us a little bit about themselves and why they decided to get into real estate. I get answers like, “I like architecture,” or “My cousin told me I’d be good at it,” or “I like helping people.” Never has anyone told me something like, “I analyzed various possible career paths and compared them with my own strengths and interests, and having found that I am very good at prospecting, marketing, sales and negotiations, decided to craft a business plan that would allow me to generate X# of sales and listings in my first year of business.” Truth be told, in my experience, most people entering into our business are absolutely clueless as to what it takes to make a success of a career in real estate and are doomed to failure before they ever get started.
Comment by Totally Virtual Realty on 18 February 2008:
As a Broker and real estate instructor I hear alot of students dreaming about the money they can make in real estate with a marketing plan! I hear millions of ideas on how they will spend their money but never a plan on how they will make a some type of marketing or business plan to get there. Real estate is a business not just a job where you show up and give tours of homes.
Real estate is a career with great income but only if you are serious and have a business or marketing plan to lead you through the maze of real estate. This field is great and should be taken serious! There are thousands of ways realtors can help consumers with the process. Real estate is a passion and not just a hobby …….
Real estate is a serious business when it comes down to writing contracts, law suits and so on…….
Leave real estate to the pros that respect it as career.
http://www.TotallyVirtualRealty.com