When Todd Murphy started his non-commission-based brokerage firm in Birmingham, Ala., in early 2007, business was good. He quickly rose as the sixth-ranked listing agent in the metro area and was making a good living on his fees. But by November of that year, he realized the business wasn’t going to make him the kind of money he would like to live on.
"There were a lot of people in the real estate industry and maybe I wasn’t bright enough to make it through some of the tougher times," Murphy says. Despite having spent 12 years in the real estate industry working in everything from mortgage lending to title insurance to homebuilding, he decided to get out of the business late in 2008 and has spent 2009 as an insurance agent for State Farm Insurance.
"Honestly, I don’t miss it one bit," Murphy says of the real estate industry. "I love the relationship I have with my clients here. I love the loyalty."
Murphy is just one of thousands of Realtors who have let their licenses expire this year. According to National Association of Realtors statistics, there are 1.12 million Realtors in the country as of March 31, down from 1.34 million in 2007 and a peak of 1.36 million in 2006.
Iverson Moore, a spokesman for NAR, says the biggest losses in Realtor membership have been in states where subprime problems hit the hardest — like California, Nevada, Arizona and Florida (see Realtor membership statistics).
Murphy says it was a lack of loyalty from his clients that finally put him over the edge. Realtors, he said, work so hard on deals that it’s hard when a client bails on them at the last minute or fails to come back after a successful transaction.
Murphy was working on a particularly high-profile deal for an athletics coach at the University of Alabama and was just days from closing when the client reneged on the offer, causing him to lose out on what would have been a $22,000 commission, he recalled.
"That just capped it off for me — that was the last straw," he said. "I’ve always thought I’d like to work in a business that provides something people will always need, and I have that here in insurance."
Murphy says he still talks to his former partner in the real estate business, and while he’s "holding his own," he’d like to be doing a little better. Murphy also likes that he is still somewhat involved in real estate through selling homeowner’s insurance as well as making loans through State Farm Bank.
"I’ll stay in insurance even when the (real estate) market comes back," Murphy says. "I’m doing what I’ve always wanted to do now." …CONTINUED
Some real estate professionals, though, are leaving more of their own volition than because they were pushed out by the market.
Vince Padilla, who used to sell homes in the Madison, Wis., metropolitan area, left the business last summer to start his own photography studio. About 50 percent of his photography business is taking pictures of homes for Realtors’ marketing materials.
Padilla spent four years (2003-07) as a Realtor at Keller Williams after working in policy evaluation for a university. He said he started working in real estate because he wanted to work more closely with clients and people.
"I miss working with people, getting to know people (through real estate). I still get to do that now in the photography business, but its different," Padilla says. "This was also a good opportunity for me to do something that I’ve really enjoyed."
Padilla says his friends in the real estate industry who took the time to invest in marketing their business by creating good Web sites or brochures are doing well. And he credits the enhanced marketing by some Realtors for propelling his photography business.
"I have had a few friends leave the industry, but most weren’t doing it full time," he says. "Those who are really dedicated to creating marketing that jumps off the page or jumps off the screen are the ones still doing well."
Padilla says one thing he doesn’t miss about the jobs is the unpredictable hours. Like Murphy, he’s found something he enjoys doing more and won’t return to real estate.
"My hunch is that some of the people who left will come back, but I don’t think you’ll ever see the overgrowth of the industry that we saw this time around again."
Maureen Wilkey is a freelance writer in Chicago.
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