Real Estate Agents Abandon The Business
More rates and news from
Yahoo Finance and Realty Times
(Our slowing housing market is causing all sorts of interesting trends in the real estate and mortgage industries. )
One notable trend is that more and more real estate agents who signed on during the housing boom from about 2000 to 2005 are now jumping ship.
Slowing home sales means less commissions and increased competition in an already extremely cut-throat industry. As agents find themselves fighting to obtain a listing, many are throwing in the towel and seeking a career in a different industry (probably something completely unrelated to the housing market.)
“Not an agents’ market, either,” by Diane Wedner and featured in the October 29, 2006 edition of The Los Angeles Times, discusses how we are going to see a drop in the amount of real estate agents in the next few months as the market continues to stall.
“The air coming out of Southern California's real estate balloon is sending more than a few agents packing. In a business where 15% of the agents make about 85% of the sales, according to industry experts, and the number of sales in California has plummeted 31.7% since September 2005, it's no wonder that rookies and veterans alike are opting out.”
“‘People come out of the woodwork when the market goes up, because they think it's chic to be an agent,’ said Syd Leibovitch, a broker at Beverly Hills-based Rodeo Realty. ‘When it changes, they leave — even the longtime agents, who are tired and burned out.’”
An industry trade group, the California Association of Realtors, expects to see a 6 percent drop in membership next year. This year, there are 210,000 registered members and they project the amount to drop to 197,000 next year, according to Leslie Appleton-Young, the CAR’s chief economist.
“‘About half of our Realtors today have been in the industry only four years or less,’ Appleton-Young said. ‘Many have not experienced a downturn and find it challenging.’”
“Although current data do not reflect a drop in licensees yet — there typically is at least a two-year lag between a market downturn and a drop in new and renewed licenses, according to the California Department of Real Estate — history tells us a fall will come.”
An important thing to remember though is that not all real estate agents are Realtors, so there are more licensed agents who are not Realtors. A Realtor is an agent who is a member of the trade group, it is not mandatory to sell property.
“The last time the number of licensees peaked was in 1992-93, when there were 371,000 — three years after the market reached its zenith, department spokesman Tom Pool said. The number then fell every year through 1998, to 297,000 licensees. Each month since then has seen an increase; in August, there were 511,000 licensed real estate agents.”
Now, the number of licenses is expected to decrease again as the market hits another rough patch. This will also affect the number of real estate companies that may be forced to close-down or at least consolidate during this cooling period.
All in all, this “weeding out” of agents could actually benefit homeowners looking to sell because it will probably eliminate a lot of agents who were just in it for the money.
“Agents who've experienced Southern California's up-and-down real-estate cycles say the housecleaning eliminates some of the fly-by-night and discount brokers. The mainstream agencies will absorb the best agents whose companies are shuttering offices, and clients will benefit from their experience and perseverance.”
