Realtor income continues to drop
Survey: Experienced agents fare better than newcomers
By Inman News, Monday, May 19, 2008.Bookmarking Sites
Realtor income declined in 2007 compared to the previous year, and those with two years of experience or less had an annual median income near the poverty line, according to the latest membership profile released by the National Association of Realtors.
Overall median Realtor income was $42,600 in 2007, down 10.7 percent from $47,700 in 2006, according to the member survey data. Realtors' median income had also fallen 3.2 percent in 2006 compared to 2004, and fell 5.6 percent in 2004 compared to 2002.
A rush of newcomers joining the profession has contributed to this drop in median income, the association reported -- NAR membership grew 89.6 percent from 1998-2006, reaching a record 1.36 million in 2006 before falling 1.5 percent to 1.34 million last year. Membership was 1.24 million as of April 30, 2008.
The membership profile report is based on a survey that generated 9,997 responses, with income and transaction data based on 2007 statistics and other survey findings representing member characteristics in early 2008.
The typical member is 52 years old, female, works 40 hours per week and specializes in residential brokerage, according to the survey results.
Six percent of respondents said they are not certain whether they will remain active as Realtors, while 77 percent said they are confident they will remain in the business over the next two years, according to the report.
While Realtors who have spent two or less years in the business had a median income of $10,500 in 2007, those with three to five years of experience had an income of $34,600, those with six to 15 years of experienced earned $52,000, and those with 16 or more years of experience earned $69,500.
Federal guidelines established this year provide that the federal poverty threshold is $10,400 for a single person living in most U.S. states.
Realtors who are licensed as sales agents earned $31,000 in 2007, while those licensed as real estate brokers earned more than twice as much, with a median income of $65,200. About 61 percent of Realtors are licensed as sales agents, while 24 percent hold a broker's license, 16 percent are broker associates, 3 percent have an appraiser license, and 1 percent maintain another type of license.
The previous NAR membership survey (see Inman News) found that those Realtors with two or less years of experience had an annual median income of $15,300 per year in 2006, those with three to five years of experience earned $44,200, those with six to 15 years of experience earned $64,600, and those who worked as Realtors for 16 or more years earned $76,200.
In 2006, the median income for sales agents was $34,600 and the median income for brokers was $73,700.
In the latest survey, about 77 percent of respondents said that real estate is their only occupation.
About 60 percent of respondents have a personal Web site, which they have maintained for a median of four years; 89 percent report their company has a Web site, and 73 percent have a home office.
About 92 percent of Realtors report that they use e-mail daily or almost every day, while 88 percent use computers and 82 percent own cell phones.
About 34 percent of respondents use "smart" phones with wireless e-mail and Internet features; 27 percent use digital cameras; 19 percent use GPS devices; 18 percent use instant messaging; and 15 percent use handheld portable digital assistant (PDA) devices 19 that do not have a phone capability.
Women account for 52 percent of brokers and 71 percent of full-time sales agents. About 14 percent of Realtors are 65 and older, 6 percent are 30-34, and 5 percent are under 30, according to the report.
About 87 percent are white, 5 percent are Hispanic, 4 percent are African American, 3 percent are Asian, and 1 percent are Native American.
Thirty percent of Realtors work 20 to 39 hours per week, while 20 percent work fewer than 20 hours per week, and 15 percent work at least 60 hours per week, according to the survey report.
Real estate is the first career for about 5 percent of Realtor members, and about 18 percent of respondents report prior careers in management, business and financial companies; 16 percent formerly worked in sales or retail; 10 percent worked in office or administrative support; 6 percent worked in education, and 5 percent reported that they were previously homemakers.
Survey respondents reported that they had worked at their current real estate company for four years, on average.
Respondents report that about 30 percent of their business is from referrals or repeat business from past clients, and that rises to 47 percent for Realtors with 16 or more years of experience.
About one-third of respondents reported that they had clients who are foreign nationals and 15 percent are fluent in multiple languages.
According to the survey, 76 percent of respondents specialize in residential real estate. Also, 27 percent of respondents report a secondary specialty in relocation; 19 percent in commercial brokerage, 16 percent in land development, and 15 percent in counseling.
About 5 percent of NAR members report that they also offer mortgage brokerage services, while 4 percent offer relocation services. Respondents also cited title insurance or processing, real estate instruction, and home warranty services as among the ancillary services that they offer.
Sales agents handled a median eight transaction sides last year, compared with 10 in the 2006 survey. There are two sides in every transaction -- the seller's side of the transaction and the buyer's side.
The typical residential sales member was involved in selling five homes listed by other agents last year, and in selling "one of his or her own listings" in 2007, with other agents selling three of that member's listings.
The median sales or leasing volume declined from $1.6 million in 2007, down from $1.9 million in 2006, according to the report. About 43 percent of Realtors offer both buyer and seller agency to buyers, with 9 percent offering exclusive buyer agency services.
About half of respondents are affiliated with an independent company that does not offer franchises; 33 percent are with an independent franchised company; 9 percent work for a franchised subsidiary of a national or regional company; and 5 percent are with a nonfranchised subsidiary of a national or regional corporation, according to the report.
The median firm has 25 licensees and two offices, and 10 percent of respondents reported that their firm was bought by or merged with another during the past year.
About 14 percent of Realtors have a personal assistant, 4 percent have two or more, and 27 percent of those with 16 or more years of experience have at least one personal assistant.
Realtors are largely politically active, with 95 percent of respondents reporting that they are registered to vote and 91 percent voting in the latest national election.
About 44 percent hold at least a bachelor's degree. Forty-one percent own at least one investment home, 17 percent own at least one vacation home, and 13 percent own at least one commercial property.
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Submitted by Drew & Christine Morgan on May 19, 2008 - 2:47pm.
At least the DOJ can stop worrying about competition in the industry. Now who solves the poverty issue?
Submitted by Michael Espiritu on May 19, 2008 - 3:23pm.
At least this NAR survey paints a true picture of the industry. I think that a purge was necessary because there were a lot of very flaky agents and companies ( at least in SoCal) that thought they could make an easy living.
Our current market in SoCal dictates a meaner, leaner mode of operation in order to survive. Our company has an accounting firm, financial advising, residential and commercial real estate, business aquisitions and mergers, and property management with specialists in each division. I am thankful for our affiliated services. I see the drop off in the ranks and I feel the pain of my former real estate, mortgage, title, escrow and affiliated fields losing their jobs and their homes.
The foreclosure market is another example of opportunity for the few who can weather this cycle. There is a lot of money to be made and many customers looking for the best deals are out there. Taking care of a client will never go out of style and the agents that emphasize this in their business can still thrive.
Submitted by Terry Shortt on May 19, 2008 - 6:23pm.
I talk to consumer every day that still feel that real estate agents make too much money (what they really mean is the commission that they paid was excessive).
Unless the real estate industry comes up with some way in the near future to price their services more realistically, (something other than a percentage of the selling price)a lot more of them are going to be moving on.
Flat Fee Business models and other models that offer consumers more options will gain momentum.
I know the "traditionalist" hate to hear this but they are still at a loss for words on how to justify the current pricing system as they struggle to keep their bloated business models from sinking. Good Luck...
Terry Shortt, CRS, GRI
Broker, Instructor
TW Shortt and Associates
Fl. Real Estate School
And Training Company
Key West,Florida, USA
Submitted by Terry Shortt on May 19, 2008 - 6:36pm.
The real estate office of the future will offer a menu of services rather than a "One size fits all" model.
The consumers of today are not the ones of yesteryear that watched passively as the real estate industry evolved into the giant that it is today.
Today’s sellers and buyers are more educated and more knowledgeable thanks almost entirely to the growth of the internet. This of course is not news to the agents and brokers in the daily practice of the real estate business. Before even making the initial contact with a broker today a seller is more likely to have done his homework and can spot an inept practitioner quickly.
Nearly everyone interested in selling a house gives at least initial consideration to going it alone without a broker. A relatively small percentage (industry experts say between 15% to 20%) actually takes the plunge and an even smaller number are actually successful.
That final number of successful sellers is, however, getting larger by the day thanks to companies like Help-U-Sell, Assist 2 Sell, ForSaleByOwner.com, byowner.com , BrokerDirectMLS.com, FlatFeeDirect.com and others.
The successful real estate brokers/owners going into the next evolution of the real estate business will be the ones that align the service that they offer with what consumers are demanding: more choices, more control and lower fees in exchange for a higher level of teamwork and seller participation in the marketing effort.
There remains no question that the day of the full service high commission broker (aka Traditional broker) is far from over. There will probably always be a demand for residential brokers in certain specialties such as the luxury home market, international brokerage and circumstances where sellers can’t or don’t want to be involved in the process. However, most markets in the United States are nothing like that.
Most market areas are towns and communities where brokers compete hard for the market share that they have.
The reality is that there has been very little change in the real estate industry even during a time when practically every other industry has adapted to changing consumer demands and today all real estate agents still look about the same to the consumers.
Being in an industry that is so resistant to change offers some incredible opportunity for brokers with insight, courage and the acumen to capitalize on it by reinventing his business and his processes to better serve a changing customer base and gain tremendous market advantage.
Terry Shortt, CRS, GRI
Broker, Instructor
TW Shortt and Associates
Fl. Real Estate School
And Training Company
Key West,Florida, USA
Submitted by Walter Boomsma on May 20, 2008 - 2:27pm.
One thing I find particularly interesting is that NAR heads an article (press release) based on the same survey:
REALTORS INCREASING PROFESSIONALISM
I'm not sure from their version what the basis is for that claim. Perhaps someone should do a study of how increasing professionalism relates to decreasing income.
As with most statistics, most of these raise more questions than answers. I'm less convinced this is about "business models" and other etheral concepts and more about disparity in levels of service and ability on the part of agents and agencies.
As one poster notes there "were" a lot of flaky agents and agencies. Unfortunately there still are a lot... and many of those are opportunists looking for the chance to make a sale with little effort. Sorta like keeping one's doctor's license on the outside chance someone might ask for brain surgery.
Others are simply getting flakier and more desparate. They're running around offering discount frontal lobotomies.
Simply stated there are plenty of agents who SHOULD be earning less.
One reason for the more experienced agent's higher income level is that customers and clients are finally learning to expect (demand) value. Experience doesn't guarantee value, but it might be a pretty good indicator.
If we want to talk about business models, higher customer expectations is - in my opinion - one reason the separation between buyer agent and seller agent continues to grow. There is an increasing number of buyers who do not want to be forced to work with a seller's agent simply because he or she snagged the listing.
My personal "model" is pretty simple. I expect to be paid what I'm worth. And I expect to be worth (earn) what I'm paid.
If I'm at the poverty level that doesn't mean the the problem is with the model.
Submitted by Ki Gray on May 21, 2008 - 5:37am.
I don't have a problem with discount agents I think consumers deserve a choice. But I dont know about the claims that they will change the industry in a drastic way. Discount agents have been around for several years in Austin. Initial claims were made that they were going to take over and change the market. But after several years that doesnt seem to have happened. In fact seeing companies like red fin running into financial problems doesnt really support the idea that discounters are the wave of the future. Of course I could be wrong we will wait and see.
Site Austin Tx real estate.
Search Austin MLS
Blog Austin Real Estate Blog
Submitted by Ralph M on May 23, 2008 - 6:34am.
Real Estate associates income will rise when they start valuing their own time.
Stop wasting time on "Open Houses"
Stop providing "Free Market Analysis"
Stop providing FSBO's Free knowledge
Stop taking over priced listings and wasting your time and effort on marketing them...
Submitted by Ron Taylor on May 25, 2008 - 6:18pm.
The National Association of Auctioneers have reported over the last several years an increace in the sale of residential and commercial by using the auction method. There is a reason for this.
It used to be that when one heard the word "auction" someone would think of foreclosures, bankruptcies, or government seized properties. While that may still be true to a degree, times are changing and changing fast.
Many consumers are not seeing "value" in the amount that is being paid in the way of commissions. That is one reason they are turning to auctions as an alternative to the list and hold method.
As a professional Auctioneer, I can tell my clients that I can sell their home in 30 to 45 days from the day we sign the agreement, get a contract without any contingencies, and have a qualified buyer that has already been approved and can close in 30 days or less. My clients see value in that.
Auctioneers that are licensed to sell real estate will see their income increase because of the upside down real estate market we are in today.
Ron Taylor<><
President/Broker/Auctioneer
The Restorer, Inc.
D/B/A Taylor and Sons Real Estate & Auctioneers
252-257-4822 (Office)
252-257-1302 (Fax)
www.canSellnow.com
Submitted by Ralph M on May 29, 2008 - 6:58am.
"It used to be that when one heard the word "auction" someone would think of foreclosures, bankruptcies, or government seized properties. While that may still be true to a degree, times are changing and changing fast"....
Wow! You must be the only person blind to what is going on in the real estate industry...Let me get this right...In the current real estate market, people/consumers will NOT think that a real estate professional conducting an auction will assume the property is in foreclosure???
Real estate auctions are successful "at times", but not all times.
Your telling me, all of your auction sales of properties sell? I seen auctioneers deal fall apart quicker than most real estate professional deals....the people who come to bid, most are not pre-approved and most can not get loans after the bide due to defects in the property or title of the home. Your statistics on your national stats, do they come from the same bs stats we get from NAR?
Submitted by Ben Kaeding on May 29, 2008 - 9:07am.
I believe that the time is here when the Brokers must begin embracing the FSBO trend rather than turn a blind eye wishing it wasn't. The fact remains that FISBO sellers still need the Brokers to get into the MLS. Why are discount Brokers so successful? They do seem to get a lot of listings. Most discount Brokers provide all or many of the same services. The Seller gets their property in the MLS, a yard sign, flyers, a little Internet marketing and pay a lower fee. Full price offices need to step up and provide a value service. A service worth 6%. They need to set themselves apart. I have seen some offices do this by offering a "guarantee that it will sell, or they'll buy it" or even a handyman service to the buyer. Other companies provide a more complete Internet marketing package. What sets you apart?
Ben Kaeding
www.justsnooping.com
Submitted by Ralph M on May 31, 2008 - 8:13am.
Ben,
A couple things should be noted here.
1- Number 1 real estate site is ....Forsalebyowner.com and this stat is from realtor.com
2- "The fact remains that FISBO sellers still need the Brokers to get into the MLS."....wake up, trulia, zillow, and 100 other free sites along with prudential manor, keller williams real estate and Century 21 use have been promoting the use of other search engines therefore diluting your realtor mls.
3- AARSTEAM CORP (Association of Associates Representing Sellers) at www.aarsteam.com allows fisbos to advertise for free
4- Why do REALTORS pay upwards of over $1,000 per year to be a member of Realtor.com???
The REALTOR industry needs to wake up and start leading, instead of playing catch up or accept a slow death (as they are currently are going through)