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The reason I'm curious about how realtors are planning for this downturn is because the numbers seem to be getting increasingly more grim. For example, the National Association of Realtors (NAR) lists that they had over 1.3 million members in October 2007. In addition, the NAR states that the sales pace of existing homes is at a rate of around 5 million homes a year. (http://www.realtor.org/press_room/news_releases/2007/ehs_dec07_ehs_rise_in_november.html - broken link)
That works out to less than four homes sales per realtor. But if you factor in that most home transactions involve two realtors, the homes per realtor drops even lower.
The median selling price of a resale home is around $210,200 (source from previous link). 3% of that (the typical commission for a realtor) is $6306. And that's before the brokerage takes their sizeable cut.
So it would be fairly generous to say that the average realtor earns more than $20,000.00 per year at the current sales rate. Sure, some people will earn a lot more than others, as always, but the numbers are very sobering.
Aaron, the downturn has, and will continue to eliminate the "riff raff" in the realtor business. This is a good thing. Many got into the business (during the peak), similarly like people who invested for the 1st time during the dot com era...they had no idea or no business getting into what they did.
Again, like any service industry w/challenges, the smart and hard working will survive.
So it would be fairly generous to say that the average realtor earns more than $20,000.00 per year at the current sales rate. Sure, some people will earn a lot more than others, as always, but the numbers are very sobering.
You are not taking into account are those REALTORS in property management, commercial real estate, new home sales, time share, international and so on -
Personally, I have had 4 new home sales within the last 12 months - with each netting in excess of 100K commission each
REALTORS are not only involved with selling a resale house
You are not taking into account are those REALTORS in property management, commercial real estate, new home sales, time share, international and so on -
No, I'm not... but judging from the news, those markets aren't in the best financial shape either.
Quote:
Originally Posted by Greatday
Personally, I have had 4 new home sales within the last 12 months - with each netting in excess of 100K commission each
Congrats on having a good year, but the average realtor seems to be doing far worse.
Quote:
One way to see that there are too many Realtors is to look at the breakdown of pay. While the top quarter or so is making good money, there’s a huge army of Realtors at the bottom who would make more money with a full-time job at McDonald’s. Nearly a third earned under $25,000, according to a National Association of Realtors study. Here’s the complete breakdown of the survey:
Less than $10,000: 18%
$10,000 to $25,000: 13%
$25,000 to $35,000: 9%
$35,000 to $50,000: 11%
$50,000 to $75,000: 13%
$75,000 to $100,000: 10%
$100,000 to $150,000: 12%
$150,000 to $200,000: 6%
$200,000 to $250,000: 3%
$250,000 to $500,000: 4%
$500,000 to $1 million: 1%
Over $1 million <1%
It seems to me you have taken a personal question to individuals, "Are you worried about your job's outlook?" and moved the conversation to a platform based on vague national statistics, to convince us agents have no future as a group, and that I am making $20,000/year.
A bust, slowdown, bubble-bursting, retrenchment, reduction, slowness, does not mean that NO properties will be conveyed anywhere.
All those terms mean is that the number of transactions will be less than the benchmark to which a market condition is compared.
To reply in more detail to the original question you posed:
FWIW, already I do not have a "job." No worries. I am a licensed agent, and am self-employed in a profession.
I am not worried about my future because I believe that I will be in business, that I will continue to help people with property sales and purchases.
I am not making, or planning on making, $20,000/year.
People will continue to sell and buy properties. Always. In any market condition. Many will want help from a caring professional agent.
I am here to serve them.
Regarding agent count, which I consider irrelevant to my business activities or personal success:
Many agents got into the business out of curiosity, and have been hugely surprised to learn how hard they will work to succeed. They drop like flies after a year or two. This is nothing new.
Many agents spend their money as fast as it comes in, as if their revenue will never dip. When they hit a year with 20% less revenue, they often go broke. Tough. Bad business and personal finance decisions, IMO.
Many agents have a license for the sole purpose of personally buying and selling investment property and do not turn great numbers and are satisfied with that. They may go a year with no transactions, and not be concerned.
Many have had a license for 10, 15, 20 years, have moved on, and decided not to let it expire. Or, they may offer referrals, training, home inspection, mortgages, etc, as their sole involvement in the industry.
A great many agents will drop out because they will make the mistake of reducing their marketing and outreach efforts in emotional response to market conditions, instead of working harder. They will think their way out of business instead of thinking their way to success.
Some agents will not make, or have not made, a transition to sensible technology to serve more clients, to make things easier for clients, to offer information and content, a la Web 2.0. They will see business shrink as today's cool stuff becomes tomorrow's basic expectations. This is happening now, and the impact will be identified in the near future, sort of like an economic recession is only recognized in arrears. And in all truth, technology is difficult territory. Many folks make bad decisions and throw big money away on tech they don't understand.
Actually, since our business is so dependent on personal relationships, many talented, gregarious people will always be around, very successfully building their businesses face to face. Always.
Some agents will quit, go dormant, retire, die, become preachers of the Gospel, relocate to Namibia, whatever, for whatever reasons.
Some will not.
Again, in response to the original question, I would position myself in the "will not" group.
Mike, sorry if my questions are coming off as a personal attack. It just seems to me that a lot of realtors reaped the fat years of the economy and ignored the writing on the wall. Now that the housing market is in a downward spiral, it seems like a lot of realtors and brokers were caught with their pants down.
And yet, if you ask someone in the industry how they're doing, they always say better than the year before. Which tells you three things:
* They've learned to market themselves better than their hundreds of local competitors who are in the same boat.
* Last year was terrible, and this year is only marginally better.
* Or, they're lying.
I realize as salesman that you're supposed to put on a rosy smile and tell people that everything is fine. But I simply want to know if people in the industry anticipated this drought, and if they did anything to prepare for it. Realtors have always worked in a highly competitive market, and now that the pool of buyers has nearly dried up, it must be downright cutthroat.
Mike, sorry if my questions are coming off as a personal attack. It just seems to me that a lot of realtors reaped the fat years of the economy and ignored the writing on the wall. Now that the housing market is in a downward spiral, it seems like a lot of realtors and brokers were caught with their pants down.
And yet, if you ask someone in the industry how they're doing, they always say better than the year before. Which tells you three things:
* They've learned to market themselves better than their hundreds of local competitors who are in the same boat.
* Last year was terrible, and this year is only marginally better.
* Or, they're lying.
I realize as salesman that you're supposed to put on a rosy smile and tell people that everything is fine. But I simply want to know if people in the industry anticipated this drought, and if they did anything to prepare for it. Realtors have always worked in a highly competitive market, and now that the pool of buyers has nearly dried up, it must be downright cutthroat.
I didn't take anything personally.
I just don't share your agenda which you express via negative inferences.
To clarify one point, though: I am not a salesman. That basic misperception and expression needs to be clear to have a productive conversation.
I think that it depends on where you are. Our community in Michigan had 400 homes for sale last year. 40 sold (plus 53 foreclosures). We have over 75 real estate brokers/agents in our community, plus some of the sales are with brokers from other communities. A few of our brokers get some listings in other communities, but nothing is selling in those places either. Do the math. Some of these people have little or no income.
Michigan is really bad. Nothing sells and some people are just waling away from their homes and leaving them for the bank to take. Even the best Realtors are having problems. There are just too few buyers for the number of good Realtors. Hopefully the rest of the country will not get this bad. Our Realtor/friend who was once making $80,000 to $120,000 per year, made $15,000 last year, and she is one of the really good ones.
So, according to the list, if I'm not making $250K or more I'm not making "good" money?
Oh, ok.
The study does not take into account what time of the year the agent started, who's been in business for more than a year, who works part time or just got their license to buy/sell their own home or relatives homes, etc. It also does not take into account what market area a Realtor is working in and what their own cost of living is. You certainly can not judge or guage a profession by a study like that. There are way too many variables.
As for am I worried? Sure I'm worried....but then again, I'm what I call a creative worrier. The time is ripe for buying. And people are buying. We have true investors and home buyers buying...not speculators. That's really what has changed IMO...the speculators are in the market less in my area.
I just don't share your agenda which you express via negative inferences.
To clarify one point, though: I am not a salesman. That basic misperception and expression needs to be clear to have a productive conversation.
Mike, no matter how you shape it, spin it, you are working on commission in the service industry. You are a salesman whether you like to be defined that way or not. You do not work behind a desk 8-5 balancing general ledgers or calling customers to pay on time. You interact w/people and the way they (CUSTOMERS) see you or how you present yourself has alot to do whether you get business or not.
I don't know or understand why you're ashamed as to describe your self that way? There's nothing shameful about it. I'm in ther service industry too on commission. Be proud of what you are.
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