The United States now has 972,000 Realtors. Commission percentages are under pressure from competition, price-cutting and discount brokerage. Costs are on the rise, due in part to the lure of Internet marketing and advertising.
From airplane altitude, the future of today’s real estate salesperson looks worrisome indeed. But should the individual Realtor on the ground be worried? Perhaps not.
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Consider the story of one Brad Slabaugh, a Realtor with Prudential California Realty in Livermore, Calif., who obtained his real estate license nearly two years ago after a 13-year career as a paint and wallpaper contractor. His first deal, a $320,000 house, was under contract in just two weeks from a floor call.
Slabaugh intended to join his mother, who had been a Realtor for 28 years, in the business, but she became ill and soon died. His inheritance included a couple of pending deals and a private front-window office at Prudential that he’s since earned in his own right.
“I didn’t have to start in a cubicle. You bring a client into the office and close that door and it gives you confidence–or fear because you don’t want to lose it,” he said Thursday during a flight from Oakland, Calif., to Los Angeles International Airport.
Slabaugh doesn’t have Realtor population figures at his fingertips, but he knows the number has been increasing in northern California and the nation as a whole. More competition hasn’t hurt his business, however. He thinks missteps by his competitors even help him get more listings, and he became so busy early last year that he took on a partner, Prudential Realtor Tom Sinclair, in June 2003. The double-team effort allows Slabaugh to spend some personal time each week with his wife Diane, a longtime mortgage broker, and their two school-aged children.
Worried? Not this Realtor.
Slabaugh knows sellers are intrigued by 3.9 percent commission brokers who operate in his marketplace. But he doesn’t shy away from head-to-head competition for those listings, and he has been victorious more than once, although he has had to negotiate his own prices. He’s also represented a few buyers who purchased discount-commission listings, despite the small compensation for his effort.
Pressure on the cost side is on Slabaugh’s radar screen along with commission discounters. He recently dropped his Homes & Land account (perhaps temporarily) when the price of a large display ad escalated. He’s aware that newspaper real estate ads have become more expensive too.
Slabaugh admits he isn’t knowledgeable about real estate on the Internet, although he cites the statistic that 80 percent of home buyers now use the Internet to begin their home search. He and his partner already have a nice Web site, complete with for-sale homes information, and a new fancier model is in the works. But they haven’t spent a lot of money marketing on the Internet, and Slabaugh doesn’t credit it as a significant source of business. He said prospects “appear out of nowhere and sign up on the Web site,” but he rarely pursues those leads because he suspects they aren’t as well-qualified as prospects he obtains through other means.
Slabaugh isn’t happy about the effect of those 3.9 percent discount commissions on the real estate industry, but he’s decidedly optimistic–in true Realtor fashion–about the overall outlook for the future of his business.
Trade association forecasters expect nearly 6 million resale and more than 1 million new-home sales in the U.S. this year. Whether that level of transactions can sustain 1 million Realtors in the business is questionable, even though not all Realtors are full-time working salespeople. Competition, downward pressure on commission percentages and higher costs will force some people out of the business.
But Slabaugh isn’t worried about all that. He and his wife aren’t getting wealthy, but they make a decent living, and the same can be said for hundreds of thousands of other hard-working Realtors throughout the country.
Slabaugh exudes a quiet self confidence as he attributes his success to the softest of sales techniques and excellent customer service.
“I treat each transaction as if it’s my only one,” he said.
That sort of philosophy is why Realtors haven’t been disintermediated from the real estate transaction, and why their individual futures in the business aren’t as bleak as the big-picture analysis might suggest.
So here’s to you, Realtors. Go get ’em!
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