IS THE AVERAGE REAL ESTATE LICENSEE ABLE TO MAKE A LIVING INCOME TODAY??

By
Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372
http://actvra.in/dxG

IS THE AVERAGE REAL ESTATE LICENSEE ABLE TO MAKE A LIVING INCOME TODAY??

A review of the NAR statistics on AGENT and BROKER earnings for 2010, it would appear that agents and Lennbrokers need other forms of income to maintain a standard of living to which are accustomed. 

For agents who entered the real estate business between the years 2004 and 2007, they have had a rude awakening.  While our business has always had it's ups and downs in terms of agent income, the loss of about 20% of the NAR membership is not matched by a 20% increase in income for present members.   

  • The NAR reports that the typical NAR member had 8 transaction sides in 2010-this is up from 7 sides in 2009.

For the average market today with a sales price of $200,000, this number represents an annual income of about $24,000.  

  • The NAR reports that Brokers and broker associates typically had 10 transactions, while sales agents typically had 7.

That would represent an annual income of about $30,000 for brokers and broker associates.  Not sufficient if the broker is also a broker/owner.  Of course, this number may represent "net income to the broker".  The question is, "what is the overhead"? 

  • The NAR reports that 51 percent of members had transaction involving a property in foreclosure and 44 percent of members had a transaction involving a short sale.

THAT IS VERY TELLING since most foreclosures and short sales represent a less than average SOLD price and the commissions for these sales is generally lower than for home owner sales.

  • The NAR reports that - While the median transaction sides increased, the brokerage sales volume fell to $1.1 million in 2010 from $1.2 million in 2009. Members had more transactions (typically), but the total volume of what those sales were worth was lower in 2010 than in 2009.

If that $1.1 million represents "sales volume", it may also represent "gross income", in which case, the income is not sufficient to maintain a real estate practice in most real estate markets across the U.S.

  • The NAR reports that - A transaction side can either be the selling or buying side of a real estate transaction. If the agent worked as both the buyer and seller's agent that would count as two transaction sides.

Which serves to encourage dual agency to the detriment of many home buyers.   Although the benefits of dual agency to an individual agent is not generally significant because of the limitations under most state's license laws, to brokers, it usually means twice the income.   

  • For more information on the 2011 NAR Member Profile, click here.

Enjoy.

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Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Nestor & Katerina Gasset 07/06/2011 01:19 PM
  2. Ernie Steele 07/07/2011 10:31 AM
  3. Judith Abbott 07/07/2011 10:43 AM
  4. Keith D. Myers 07/07/2011 10:55 AM
  5. Loreena Yeo 07/07/2011 10:58 AM
  6. Anthony Ebright - NMLSR ID #247647 Purchase and Refinance Mortgages 07/07/2011 11:22 AM
  7. Jill Watts 07/07/2011 01:10 PM
  8. Winston Heverly 01/09/2012 11:46 PM
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Ambassador
2,361,165
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Christine.  It's easy to simply say "cut back to part time" or get another income stream".  However, it's not always so easyto do.  Once an agent reaches a certain age, jobs are not that easy to obtain.  In a high unemployment economy, older agents will be competing with younger applicants for almost any job.  If an older agent has enjoyed the bounty of our industry for years, the loss of selling opportunities may put them so far behind now that the loss of home is real.  There are no simple scures to the situation which many agents in our industry face.

Gail.  You speak reality that we can all see if we look hard.

DeeDee.  Along with that drop in prices, income and the increase in work it takes to generate business, the loss of buyers and the tougher lending just makes everything worse.

Rob.  It's possible that the competition is not getting less because the loss of competitors hasn't kept up with the reduction in transactions.

Gerard.  Indeed and remember, these stats come from the NAR which is interested only in membership numbers, not income.

 

July 08, 2011 05:09 AM #211
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Kay old friend.  So nice to have you drop by.  You wrote:

"Much of the fault lies with brokers who don't properly train the agents who work for them.  Too many  are still going with the theory that if they have enough agents all they need is one or two deals from each one to make a profit.

But the biggest issue is that the qualifications necessary to become an agent are too lax.  NAR and all the state real estate departments should be ashamed of themselves for not pushing for agents to be more qualified.  This is especially true in the current economic environment.   We have agents who can barely fill in the blanks on a contract giving advice to homeowners who are in dire financial  trouble... it is  a disgrace!

Now is the time to get tough on requirements before the market turns and we allow anyone with $100 to get a license."

You are, of course, 100% correct. 

July 08, 2011 05:10 AM #212
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Lee.  It's true that most agents, especially newer ones, do not understand that they are managing a business.  Brokers are loath to train agents in business management for fear of losing them.  Sadly, that is the very thing that would help agents mature into productive business persons and not simply a desk in a brokerage.

July 08, 2011 05:14 AM #213
Rainmaker
517,512
Jill Sackler
Charles Rutenberg Realty Inc. "Said and Done!" - Merrick, NY
Long Island's South Shore Real Estate Agent

I've only been around for a couple of years and was not here for the boom years. Unfortunately, I am not yet paying my bills as an agent. Fortunately, I have a working spouse which is a tremendous help.

July 08, 2011 08:10 AM #214
Rainmaker
128,464
Laura Levenson
Michals Realty, Inc. Mchenry County, IL - McHenry, IL

I am a 2005 entrant, so I was never able to "experience" the booming market!  That being said..what challenges us, makes us stronger! (We HOPE!)  In addition, I must say...NEVER a dull moment in this marketplace!

Keep smilin'! :)

July 08, 2011 08:47 AM #215
Ambassador
2,361,165
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jill.  A supporting spouse is often the difference between success and failure.

Laura.  Never a dull moment is an understatement.  If real estate is dull to any licensee, they are napping too much.

July 08, 2011 09:27 AM #216
Rainmaker
116,583
Harley Wilcox
West Group Real Estate - Victor, ID
Harley Wilcox

Lots of good Posts! Hard work and persistence creates luck. We are lucky to be at the top 5% of our peers with a brokerage we started in November 2010. I still have all the important stuff: my Bride of 20 years, my family and friends as well as a good attitude. Things are positive in my world.

July 08, 2011 09:37 AM #217
Rainer
102,122
Jan Stevens
Coldwell Banker Pittsburgh - Cranberry Township, PA

I entered the business at the end of 2006, but with many years of sales & marketing experience behind me. It's been challenging, and my original 5-year plan has been set back a couple of times! But everything I do & observe leads me to believe that those who work hard, learn fast, and keep their full-time focus WILL be successful.

Like many other commenters, I would like to see those NAR numbers broken out by part-time and full-time, and I'd love to see them broken out by markets. There are such huge differences in local areas in the size of the average transaction and the number of foreclosures and short sales. That would be useful info to have.

July 08, 2011 09:39 AM #218
Rainmaker
1,256,067
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Lynn it is tough.  I have always viewed this business as an 80-20 business with 80% of the business going to 20% of the agents.  I am not in the 20% but I feel I am moving closer to it.  I am also revamping how I market and to whom and it is starting to pay off.  I would be interested in seeing medians or other numbers if they are available.

July 08, 2011 12:05 PM #219
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Harley.  May it always be so.

Jan.  NAR has no interest in full or part time since to the NAR, we are all dues paying members.

Gene.  I have no interest in medians.  I want to know averages.

July 08, 2011 02:03 PM #220
Rainmaker
309,635
Wandanna Melliphant
Royal Lepage Credit Valley Real Estate Brokerage - Mississauga, ON
A Name Real Estate Investors Trust and Recommend

Hi Lenn,

Vey, interesting stats!
Just like any profession, the average people will just get by.
Even in difficult times, there will always be persons that strive and do well!
A couple important things to ask ourselves are: 1. What can we do better? 2. What opportunities are currently available that we aren't taking advantage of?
Remember: "The Crème Always Rises!"

July 09, 2011 04:56 AM #221
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Wandanna.  Indeed.  Someone has to be on top. 

July 09, 2011 05:37 AM #222
Rainmaker
259,789
Coral Gundlach
Century 21 Redwood Realty, Arlington Virginia - Arlington, VA

Interesting.  Averages sure don't tell the whole story. I entered in 2004 and have not exactly had a rude awakening.  Yes, transactions are harder, but my volume is way up.  I've steadily built my business over the past 7 years, nearly every year topping the year before.    I am thankful to be in a very strong market, but also thankful that I had great mentors and training in the beginning and learned the basics even though the market was so hot.

July 09, 2011 11:47 AM #223
Ambassador
2,361,165
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Coral.  You are in the best spot in our entire market. Arlington, Old Town and close in Bethesda never slow down.

July 09, 2011 01:47 PM #224
Rainmaker
161,572
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty licensed in GA and AL

Wow Lenn, you really touched a hot spot.  It is harder to make money now.  But it is what it is, and I will keep on keeping on. 

July 10, 2011 02:23 PM #225
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Karen.  HA!  I surely did, didn't I?? 

Well, keep on keeping on and you'll be fine.

July 10, 2011 03:35 PM #226
Rainer
10,315
Vince Berruti
Coldwell Banker Real Estate Services - Murrysville, PA

Bottom line--there just aren't as many buyers out there and sellers are still overpricing their homes no matter how much we try to educate them.  Buyers are still being scared by the negative media into thinking twice about buying a house.  We as agents will be seeing tons of short sales and foreclosures out there for a long time and this makes it even tougher to make a buck.  Whoops...I just remembered..I have to write a check for July's multilist dues...there goes that anticipation of filling my gas tank.

July 11, 2011 08:52 AM #227
Ambassador
2,361,165
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Vince.  Isn't it the truth.  Cost of living for the important things such as gasoline and coffee (is coffee a produce?) seems to go up in direct relationship to the drop in home values.

 

July 11, 2011 04:13 PM #228
Rainmaker
145,192
Mike Reyman
Berkshire Hathaway HomeServices Fox & Roach Realtors - Media, PA
Delaware County Real Estate

Lenn,  Great mathematics and an unfortunate reality for many of us.  However, I see some agents just continue to follow the basic concepts of marketing while incorporating some for the new technology strategies and it seems to pay off.  I'm new so I am just building that foundation and hope that the future brings better economics for all!  I think the saying that "there is no such thing as luck.  Luck is jusr opportunity meeting preparedness"  is a good motto for me today!  Thanks for the great post.

July 11, 2011 09:12 PM #229
Rainmaker
162,824
Elisa Uribe Realtor #01427070
Wells and Bennett Realtors - Oakland, CA
California Homes for Sale in the East Bay

I have to agree with Alex on the 80/so rule, good post!

September 01, 2011 12:34 AM #230
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Lenn Harley

Real Estate Broker - Virginia & Maryland
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