Home » Inman Blog

Commentary: Too many Realtors? Say it isn't so

By Jessica Swesey, Thursday, March 13, 2008.

In case you missed it, there was a "what did he say?" moment in a recent commentary at Realtor.org in which National Association of Realtors Chief Economist Lawrence Yun wrote, "NAR membership figures have finally begun to fall.  Whew!!!"

NAR membership grew 83 percent in seven years to 1.37 million Realtors, and is now turning sharply lower, according to Yun.

Most everyone agrees that too many Realtors in the market isn't a great thing for Realtors. It creates so much competition that many agents still struggle for commissions during booming markets. And many complain of lax standards, which contribute to an overall bad image for Realtors.

However, many brokerage models rely on high numbers of agents for profits. And NAR definitely benefits from having more agents. More agents = more members = more dues = more powerful trade group. NAR's swelling membership of recent years certainly has helped the group maintain one of the largest political contributions in the country and the political clout that goes along with that.

NAR's declining membership doesn't come as a surprise, but Yun's statements sound odd coming from a guy who works for NAR.

Also interesting are his comments about newbie agents and sloppiness.

"Given that about ½ million Realtors have less than 5 years of experience, sloppiness in some transactions no doubt exists. A complaint I hear quite frequently from Realtors is about the second-rate conduct of some of their fellow new members."

I've heard that one too. But given the speed of technological change in the industry right now, I'm not convinced that it's all newer members who are creating the "sloppiness" he's talking about. An inexperienced agent with savvy Web skills could build quite a business for himself. And it's quite possible that older members who may not be as savvy with new communications devices and Internet are viewed as sloppy by younger consumers.

I believe that the ranks of Realtors will continue to decline in the next few years, but I'm betting that it's the older agents who will leave the business. It makes more sense. Why stay and fight out another downturn when you can call it quits and retire or semi-retire into something that's not as challenging?

I may be going out on a limb here, but my forecast is that the average age of Realtors will decline as NAR's membership falls.

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.

You must login or register to post a comment.

 
Submitted by on March 13, 2008 - 4:22pm.

"However, many brokerage models rely on high numbers of agents for profits."

True, and sad. Many brokerages will hire anyone with a license and a pulse, collecting desk fees and hoping just a few will make a transaction or two.

The fact that too many agents increases the amount of competition doesn't bother me. I say "bring 'em on!" It would be nice though to reduce the number of conversations that begin with, "but my wife's cousin's husband has a friend that is an agent"...

The real problem I have with the volume of agents is the amount of incompetence it creates (and the incompetence is compounded by the above referenced brokerage model).

Every transaction requires another agent on the other side. Sometimes an incompetent agent is a plus for my client, but sadly that is at the expense of the other agent's client. It can also mean additional uncompensated work to mop up the other agents mess. But such is life in the current system.

I was actually pleasantly surprised at Mr. Yun's candor. He's been doing that a lot lately. I find it refreshing.

Jay Thompson
Broker / Owner
Thompson's Realty

Blog: www.PhoenixRealEstateGuy.com

.

 
Submitted by Wade Young on March 13, 2008 - 6:58pm.

There were too many mortgage brokers too. The thinning of the real estate herd will be good for everyone -- for real estate professionals as well as consumers.

 
Submitted by Patrick Veling on March 13, 2008 - 8:33pm.

This is not news. In the 16 years we have analyzed industry data from now more than 300 MLSs throughout the US, there have ALWAYS been too many agents. In the best of times, only 62% closed one or more seller or buyer transactions in a calendar year. Currently, the number is 48%, which means the majority of MLS member agents had NO INCOME from their real estate "career."

As MLS dues, E & O premiums and other costs become payable, the raw numbers of agents should fall further and the percentage of those earning income should climb.

Those brands or companies with business models that encourage part-time agents, who are uncommitted to real estate as a career choice and primary source of income, will certainly see their ranks decline much further than those for which Per-License Production is a management metric to which attention is paid.

These are interesting times to watch market realities being forced onto our industry. Let's hope we begin to look more like the employee-model industry channels. The independent contractor agreement model we have worked so hard to protect has become our industry's biggest weakness.

 
Submitted by on March 14, 2008 - 5:50am.

Patrick -

You're right, it isn't news that there are too many agents.

But to have the NARs Chief Economist say so is news. The guy has been carrying on the Pollyanna forecasts of his predecessor since day one. I think it's nice to see some semblance of reality coming out of that office.

Jay Thompson
Broker / Owner
Thompson's Realty

Blog: www.PhoenixRealEstateGuy.com

.

 
Submitted by Kevin Schmidtchen on March 14, 2008 - 8:41am.

Jessica,

We saw a huge increase in Realtors here in the Santa Barbara CA area in the "boom years"...so much that sometimes when I walked into our office I was under the impression that these new agents were clients of someone. From 2003 to 2005 it seemed that new faces were popping up everywhere.

Now as the market has cooled I have noticed that many of these new faces are gone and I predict that this will continue...along with older agents wanting/willing to retire. This is a good thing on the local level.

People in the business understand how tough it is to be a GOOD Realtor and money is not simply thrown at you...as has been shown by the amount of agents that have come and gone in the last 3-4 years.

Blog: www.SantaBarbaraRealEstateVoice.com

Kevin Schmidtchen
Sotheby's Int'l Realty

 
Submitted by Damien Hall on March 14, 2008 - 12:37pm.

I agree that there are a lot of Realtors in the industry. I'm just joining the profession myself. But like Jessica said, I too believe there will be an exodus of older agents. As technology advances and other changes in the marketplace come about, less agents will enter the market.

 
Submitted by Tony Arko on March 14, 2008 - 2:04pm.

Here is an idea that the states should implement - Charge Brokers an inactivity fee for any agent that sells 0 or 1 house per year. The fee should be significant ($1000) so that they stop hiring every idiot that walks through the door. And I would be more than happy to pay twice as much as I do now to the associations if I could pick one other agent to throw out of the business.

 
Submitted by on March 14, 2008 - 2:05pm.

In Silicon Valley, a huge number of folks who'd lost their high tech jobs with the dot com bust flooded into real estate sales and lending. Many of them viewed this as fast, easy money and did not approach their new careers with professionalism in mind. As the tech jobs have returned to the valley, and as the real estate market has made it more challenging to make a living, these people moved back into high tech. It's for the best.

I agree that older agents will want to retire now. First of all, that's true because of market conditions, but also it's true because they may not be comfortable with web marketing, the importance of email and what is technologically necessary now (and will be more and more in the future). It's a lot of work to shift into this new gear.

Whether new or seasoned, I hope the deadbeat agents who were just in it for a quick buck "exit stage right". These are the folks who give minimal effort in every market and put their best interests, rather than the clients', first. When I hear that our ranks are thinning, I think "good" too, because I'm hoping that these type of agents are on their way out.

Mary Pope-Handy
Keller Williams

 
Submitted by Ki Gray on March 14, 2008 - 2:08pm.

First off I agree with Jay. NAR getting back in touch with reality is very refreshing. I also think that many young realtors will leave the profession not because they are lazy but hopefully because they will find greener pastures. I wrote a blog about this a few months ago here http://activerain.com/blogsview/226682/Quitting-Real-Estate. Basically a lot of people will leave because the business is tough and they are lazy. But, on the other hand, a lot of smart people will leave because they will find more lucrative opportunities.

Site Austin Tx real estate.
Search Austin Homes
Blog Austin Real Estate Blog

 
Submitted by on March 14, 2008 - 3:40pm.

"...given the speed of technological change in the industry right now, I'm not convinced that it's all newer members who are creating the "sloppiness"... With a bit of experience one would know "sloppiness" is a problem the industry has dealt with forever.

"An inexperienced agent with savvy Web skills"? They bring no real estate knowledge or experience to the transaction. How much value does that have?

"And it's quite possible that older members who may not be as savvy with new communications devices and Internet are viewed as sloppy by younger consumers." Younger consumers may view older members as "sloppy" because lack of technological skills, and if the older agent does not develop technological skills they will be gone.

I believe just as many inexperienced, impatient, younger agents will leave as will older agents. 'Why stay and fight another downturn?' Jessica, downturns happen, the cycle will continue, the market will pick up again. You don't fight it. Experience and patience will prevail.

Older agents will retire, older teachers will retire, older CEOs will retire, older writers will retire, older lawyers will retire, older doctors will retire... It is not because of advances in their industry that older workers retire, it's because they can. I look forward to the day I can retire.

You will learn this as you get older.

 
Submitted by Fred Carver on March 14, 2008 - 4:35pm.

Sorry us Old Guys will still be her, plus we know how to mutlti task, so when the new wantabee's dump their dream teams and high priced help, they'll be lost trying juggle their business and not know how it's done...sorry the young will be more likley to get sloppy with lack of experience and knowledge. We are good teachers for a small fee of course.
Have a great day, it a good time for Buyers as the US is having a Huge Real Estate Sale out there...Be sure to get some of those bargains before they are all gone.

 
Submitted by on March 14, 2008 - 5:09pm.

We could solve a lot of problems in the real estate industry by raising standards (I know the limited service brokers will be all over this one) for both entrance into the real estate field and raising standards for the services that must be provided.

If it took more than four 30 hour classes to get a license in Texas and agents had to provide a greater amount of services we'd see the thinning of the herd. Part time agents who view this as a side job would drop. Brokers who provide limited services would either start providing a more professional suite of service or leave the industry.

In short, the herd would thin and the weak would be gone with the strong remaining and perhaps bring some good to the public and the profession.

Joe

Shepherd Mountain Real Estate in Austin Texas | Sonoma Round Rock

 
Submitted by Missy Caulk on March 14, 2008 - 5:49pm.

Jessica,
It is already happening here, we lost 100 this year and 100 last year and yes some were Realtors who just retired. Too tired to fight the market anymore. Some of them had husbands that were professors at U.M. and when it quit becoming fun, they called it quits.

Missy Caulk
Ann Arbor, MI
Missy@MissyCaulk.com

www.AnnArborRealEstateTalk.com
www.SearchAnnArborHouses.com

 
Submitted by on March 15, 2008 - 10:03am.

As a 'newbie' I can tell you that I intentionally set aside my first year to take extra classes, attend all of the conventions, and most importantly, build my blogging website. I'm not new to real estate, as I was a real estate paralegal in a prior life, as well as a controller, among other things. It was very apparent to me after earning my license in NC a year ago that I was by no means ready for much. However, the trick is to find a mentor, and to find a brokerage, that puts the interest of the CLIENTS first. Only then will you be surrounded by people, or a BIC, who will be available to spend time with you, reviewing things, to ensure that the CLIENTS are properly represented. Not too many firms have that attitude - - it is 'take our training' and get out there, and it doesn't occur to them to say "Hey, let's see where you are and make sure everything is in order for your transaction and your CLIENT." Which is exactly why I am now with COLDWELL BANKER. Doing what is right for my clients is MOST important to me. The market and technology will weed many out... it is already happening.

Susie Blackmon
http://www.BuckingtheRealEstateTrend.com

 
Submitted by Carroll Straus on March 15, 2008 - 1:41pm.

I am not a commissioned professional. So I will speak heresy.

Real estate work needs to be less commission based and more value based.

I bought a home in a period of falling values in the early 90s (in California.) I have slowly realized over the years I’d have paid FAR LESS for it if higher prices were not the goal of BOTH agents. Mine (as buyer) and the sellers', as well.

Oh-- and those incomprehensible contracts? Gotta go!!! I have an IQ above 140 and a law degree--and I still can't decipher them when I am NOT signing the scariest thing I have ever signed, a debt for many times my yearly income. They are deliberately imcomprehensible-- so people will need... realtors.

Blaming consumers for not understanding the documents they signed-- very popular with the "Liar loan" blame crowd-- is bogus. I just crossed my fingers, shut my eyes and trusted my realtor. None of which was, probably, smart.

I survived-- and lost $30,000 when I sold.

O joy. Yeah, I just LOVE the commission model.

 
Submitted by Michael Gilbert on March 16, 2008 - 4:58am.

I am a Real Estate agent that has been licensed since 1987. I am a little surprised by the one-sided response to this article. Saying there are more Real Estate agents than needed is like saying there are more lawyers than we need. True as it may be. It would be great if none of us had any competition. We could all sit back and watch the money roll in. That is not reality. I think you will find very few successful people complaining about competition. I think it is very easy to set yourself apart from the competition and if worrying about the competition is weighing on your mind this may be a good time to contemplate a career change. Just to be fair I too would like less competition but seriously, is anybody really worried about the other 80% that shares 20% of the business.

Thats just my two cents.

 
Submitted by Walter Boomsma on March 17, 2008 - 3:16am.

Ask me what are the two biggest factors making the real estate business tough.

1. Growing government regulation - not simply of the industy, but of just about every area affecting property rights.

2. A continuing lack of professionalism and ability within the profession. It's not about competition or age - it's about opportunistic agents.

I won't complain about second rate conduct. In many cases it's third and fourth rate. In some cases it's non-existent.

The good news is the situation makes it "easy" to succeed over the long haul. All you have to do is take your fiduciary duties seriously and you can pretty much own the business. The bad news is that you are going to do ALL the work. The "more bad news" is that you are going to be a bit embarrased by your profession and spend a lot of time apologizing for others in the business.

Declining membership may be great news, but it depends who's leaving.

 
Submitted by on March 17, 2008 - 6:39am.

In my market some of the most successful agents and agencies are the 'old timers', not all of whom are internet savvy. I believe they succeed despite their technological abilbities because of two important reasons we all need to remember:

1. Personal relationships -
When it comes down to it, selling real estate is still a people driven business. The old timers have build trust over years of living in the community and developing day to day relationships with potential customers which engenders TRUST.

2. Know the product -
Again, by having been in the neighborhood for years, they've seen the product (properties) over and over and know them inside and out.

Regardless of ones years in the business and adeptness at blogging or creating a website, without these two, no realtor is going to succeed in the long run. Now, imagine and agent who has mastered the technology, built and nurtured the human relationships AND keeps his or her finger on the pulse of the market . . . that's the agent I would want to hire.

Lori Turoff
Realtor
http://hobokenrealestatenews.com

 
Submitted by on March 17, 2008 - 1:36pm.

We do need tougher entry standards for Realtors. It's too easy for people to get a real estate license and not take the real estate profession seriously.

Quantity is not the issue, Michael, quality is. The need for higher standards and higher entry requirements is paramount in the real estate industry.

 
Submitted by MARK LAMBERT on March 19, 2008 - 1:56pm.

I agree with alot of the submissions.I've been in the real estate business for three years now and had some ups and downs.Thanks to God,I have learned alot.Being a realtor is a great profession and every day that passes,I thank God and my wife Elaine for the encouragement and support they have given me.Go out there and be the very best you can be.We should use every tool that we have available to us in this business and treat everyone the way we would like to be treated.Our goals in this business is to help people realize theirs.Be GOOD and ENJOY what your doing.All else will follow.Mark Lambert...RE/MAX Huntsville,Alabama

 
Submitted by Sol Sek on March 21, 2008 - 1:43pm.

>>>>>>>>
Carroll Straus
I am not a commissioned professional. So I will speak heresy.
Real estate work needs to be less commission based and more value based. >>>>

Finally! A statement of truth.

As agents discuss QUALITY, STANDARD, and EXPERIENCE they tend to confuse EFFORT with VALUE BASED RESULT.

I've met some very bright young Realtors that can put the older experienced ones to shame. I've also met some highly experienced agents that can diagnose potential problems before the newbies even understand.

Raising entry fees into the profession isn't the solution to the current problem any more than raising business registration fees to prevent future entrepreneurs.

What we really need is a result based model.
Realtors unable to deliver result will voluntarily exit the market. Isn't that what free market is all about?

 
Submitted by Walter James on April 18, 2008 - 6:36am.

Many of the realtors that jumped on the bandwagon are now off to the next thing and are you experiencing Financial Struggles due the fact the market has slowed down. It is now time to diversify and find something else while things turn around. A growing number realtors
are doing so andexperiencing financial freedom! Movie Reveals all: www.diligentearnings.com

 
Submitted by Spencer Mason on January 7, 2009 - 11:45am.

I think this is an issue that will really play out in 2009. Even before the New Year, Realtor associations were losing members in large numbers. In November, the Illinois Association of Realtors showed a 9% drop in membership from the year before and the Chicago Association of Realtors shrank 25% since 2006. But no matter how many agents are out there, competition is always a factor (as many of you mentioned). And it seems there is no better time for those who plan to stay in the field to make an impression with buyers and sellers.

Identify your target market and let them know who you are. If the area is small enough, perhaps we should revisit the concept of good old-fashioned cold calling or door-to-door flyers. An online presence is essential in today’s industry, but there is something to be said for old school real estate. Today’s Realtors do need to be technologically savvy, however we also need to remember how important a personal touch can be.

Chicago Real Estate | Chicago Condos