NAR Member Profile 2009
While preparing for the first night of our Licensing program, I decided to give the new agents some realities about the Real Estate Industry. To me it’s not healthy to introduce a new agent to the business, thinking that everyone is making a million dollars and only working 30 hours a week. While reviewing this information, I decided to use some data from the National Association of Realtors 2009 Member Profile. This book is available for free as a PDF download at www.Realtor.org, under the Right Tools, Right Now campaign area. I’ve decided to put together a few points in this post, based on some of the information that I found there.
Every Realtor that I’ve ever spoken to, regardless of years of experience, say that there has ALWAYS been a desire to "raise the bar" in the Real Estate Industry. There have always been those agents who are good and those who just don’t get it. Traditionally those who don’t get it, end up leaving the industry after only a few years. While reading some of these statistics from the Member Profile, I found some information that debunks some of the thoughts I had about the current state of affairs. Below is a list of conversation starts. As with all statistics it’s open to interpretation and also differs from region to region.
Hypothetical Commission and Breakdown
We all know that Commissions and Brokerage splits are negotiable, so let’s use a 2.5% Buyer Agent Commission, based on a $250,00 Sales price and let’s see what the average agent is going to make:
2.5% of $250,000 = $6, 250
$6,250 split 50% with Broker (Splits are Negotiable) = $3,125
$3125 (Brought over from Broker Split)
-$187 6% Franchise Fee (Varies)
-$588 20% for Taxes (recommended)
-$235 10% Business Savings (recommended)
-$846 40% Back into Business Budget (recommended)
$1269 = Personal Income after above expenses
The NAR Member Profile states that the median income, after tax and expenses, was $23,200 ($36,700 before expenses) in 2008. That means that you would have to sell 18.5 homes to reach the median income. By the way… The median investment by Realtors back into their business in 2008 was only $5,810 in that year. That explains a lot of the lack of marketing from agents. Of this, the median cost of personal development was only $690 and $720 for business marketing per agent in 2008.
I was very surprised that 73% of agents said they would stay in the business in the next two years. It seems in our market, that many from the very experienced to the very new, are contemplating jumping ship. The promises by many leaders seems to be more wishful thinking than based on reality. No one can promise an increase in business or even that it won’t get worse. Even when there were a great many homes selling, there were still too many practitioners in the market place. The chart of most interest was the averaged hours worked… It appears that only 25% of Realtors work Full-Time hours. That means about 75% of agents do not work a full work week.
With 10 being the median years of experience per agent, it seems sad that so many are looking at getting out, after so many years invested in a career.
Here’s the biggest surprise of the report. 41% of real estate agents still practice Dual Agency. How in the world can this archaic and anti-consumer practice be so pervasive in this industry?
Miscellaneous Notes of Interest for 2008
Brokerage specialists reported a median of seven transactions in 2008, compared to eight transactions in 2007.
Approximately 40 percent of REALTORS® completed at least one transaction involving a property in foreclosure.
60% of Realtors are Female and thus 40% are male (in case you couldn’t do the math).
The median age of a Realtor was 54. Only 4% of Realtors are under 30 years old.
72% of Realtors are married (which is a better percentage than most churches)
Now, I am a huge fan of Education… It’s what I do. I fully believe that agents should have frequent, RELEVANT and PRACTICAL education; but that is an effort to provide better service. There are a number of agents who wish to use formal education, such as a college degree as a tool to alienate others from a chance at this career. As the chart to the left shows, only 8% of current practitioners do not have a College Education. As hard as I’ve looked, I’ve yet to find one report that shows a collation between increased education resulting in decreased consumer complaints.
Even nefarious people go to college. A degree in English Lit had little to no impact on a real estate career. Proper pre-licensing training and Broker engagement is the answer. And no matter what else we do, if enforcement actions aren’t taken, than the number of regulations are irrelevant.
What Held the Buyer Back from Buying?
Really all this tells me is that there is no confidence in the market or in the Federal Governments ability to turn the situation around quickly. No real surprises here…