Cleansing of the Real Estate Industry
I think the main benefit of the housing market downtown is the opportunity for all the part time and non-producing agents to exit the business. Let's face it, a few years ago, everyone and their mother was either a realtor or a mortgage person. Now, the "easy money" is over and many realtors and mortgage professionals have left the industry, either on their own or have been let go. And many more will follow. This can be looked at as a sad time, but in reality most of these folks should never have been in the industry in the first place.
The big picture is that our industry is difficult, very difficult. Navigating through a transaction is no easy task - it requires hard work and experience. Due to that, sellers and buyers are choosing realtors to represent them that have a presence in the marketplace - that know how to market a property to get it sold, that knows the market inside and out to help a buyer or a seller. One who will be able to handle all the bumps in the road and to provide the highest level of service and probablity of a successful closing is simply that much more in demand now than 2 years ago.
Frankly, in some markets, there is not a real estate glut, but simply a real estate agent glut. There has been too many agents, too many mortgage professionals, too many title companies and so forth. Now with a lot of these folks either out the door, or leaving, it will make our industry that much more competent and professional. And for the agents that remain and make it through the storm, they will come out smelling like roses with a larger market share and positioned for strong growth.
Thus, for those of you in the industry suffering through the pain, agony and ogoda, hang in there and make it through. The big picuture is that if you make it, you will be 5 times as succesful in the next year or two !
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Didn't you guys know that a REALTOR used to be a housewife with a business card !
Times have changed and for the better , the contracts , tax complexities and so much more have made a REALTOR a must have in todays business environment.
As we eliminate the pizza delivery agents , many NEW agents will be able to rise to the top , and the agents that thrived before the "Bubble" will wait for the next one. Now is definately the time to create your niche and brand yourself for the next stage of business.
There's no doubt the cleansing is a good thing, to an extent. Tends to wash out some of the good with the bad though. There is no way of getting around that. Folks who are passionate and competent will be around when the cycle circles again and again and again and... you get the picture.
Evening Christopher, After looking at this issue over the last year or so I am now convinced that the market does purge itself when things get tough. Not necessarily improving the quality, just decreasing the quantity.
I think it will improve the quality as a lot of the so so and has beens get out. The quality agents should be able to hold out.
Christopher and Stephanie:
This is a process that goes in every cycle. It hurts the full time professional dedicated agent to compete against cousins, friends and relative of inexperienced new agents. It kind of takes the cream off the top. I think you heard me say many times that good things come from bad. Thsi is another one that a bad market does some house cleaning.
Richard
Funny, I was thinking about this today. Alot of the old timers here have retired and moved to different area's.
It's pretty depressing right now, I wake up every morning and do my self talk, its going to be a good day , keep postive and so on.
The full time, professional, dedicated agent will always prevail, hang on in there guys we will come out the other end successfully. If you are not that dedicated pack your bags!!!!
Laura - exactly ! You and I are on the same wavelength !
Jason - you are right - it can wash out some of the good too. Unfortunately, it is what it is I guess when that happens. Still, the situation offers a big opportunity to the better agents and mortgage professional... even to home inspectors, contractors...etc...
I could not agree more! I just took a three hour class on disclosures today (blog to follow) and I am just constantly amazed how some agents (actually a lot of agents) are so loose and lax with the most important things... the disclosures! It is tough for everyone right now but I am a true believer in working hard and doing things for the right reasons will get you far. Ok, off my soap box now :o)
Hi guys I would agree with you 100%! The barriers to entry in our industry are way to easy. There are way too many under qualified people in our industry. I am starting to see a weeding out but as difficult as this market is, I would have expected more to leave by now.
I agree, it is easier to do business now with out so many under qualified agents who were there only for the commission, not a career. You forgot to mention, not knowing any who stay who can afford to give rebates either, that will die off too as there is the need to keep the bottom line paid.
Nice thread, but why should we believe that the best agents and mortgage folks will survive? There are plenty who will just go back to their other part time job and wait it out. We will definitely lose good people but our own lack of standards preclude a true measure of quality over quantity.
Christopher and Stephanie ....I think this is one of the silver linings in this tough market....only the strong will survive!
Unfortunately many agents will be around a lot longer. The Atlanta are that used to have only 8500 agents in the late 1990's for an average of 4500 sales a month. Rose to 13000 agents a few years ago, and then jumped to 46000 agents. We are now doing 4500 sales a month and have about 40000 agents. The pie has been divided into 1000 slices.
Many agents are now working a full time job and hanging their license with low fee - small brokers just to keep it active.
I have been saying this for a long time...It is also one of the reasons I left my previous Broker. 4 out of 5 agents we 1-2 deals a year, For me, one or two deals would have made an OK year a year of decent profit and the ability to even more for my clients!
Christopher and Stephanie, the cleansing is like the survival of the fittest, and will be good for all titles in the industry.
Hi Chris and Stephanie -
Just wanted to stop in and basically echo all the comments from above. My team mate and I were just discussing this the other day. In our office they either just quit, or think it will be easier somewhere else. No one realizes the dedication, effort and knowledge required to be successful.
Thanks for the awesome post. You read my mind. :)
I think the market will weed out some, but there are a lot left that simply are NOT professional. Many are "old timers" that continue to do things the same old way. So, the changing market will help to some extent, but the profession as a whole, could use more professionalism.
Agreed. Looks like the Atlanta Area is the place to be!
Seems to me we don't have anything near a shortage of agents around here yet! I've seen a few put their own homes up for sale though.
Good advice. When times are good, business falls on one, and it all looks easy. In down times, it becomes clear who the real estate professionals are.
Yes there is a real estate glut as well as an agent glut.
You guys are so defensive about RE is turn the stomach.
Please just finally admit once and for all that there is an oversupply of overpriced houses.
We, as a nation, built up to a level where new contruction was outpacing household formation by a wide margin.
And we produced realtors even faster.
Thnk of all the no-talent late entrants to the business who made a fortune in the bubble markets. List a house, collect 6% of the median 500k price. Yes, I know you share it with the brokerage and the other agent, but $7,000 for a week's work is pretty good.
And all they had to do was get an agent's license. Whatever.
Thankfully, most of those fools spent their winnings like there would be no end of the riches, and have banked precious little of their 'wealth'.
A mid-2000's vintage realtor and their money are soon parted.
I REALLY FEEL BAD for the good agents who did verything right and lost business to the fast-buck crew who came in during the bubble.
Maybe you guys should make it harder to be a realtor - more like a lawyer.
There are some great real estate agents that are falling on the sword as some seasonal ones too. Presuming some with licenses don't deserve to practice and some with experience should have a larger market share is not what this industry is about. When opportunity arises all will show up and no one can be blamed for looking to get a piece of the american dream.
I agree with you. Most likely only the strong will survive!
There are a lot of great commets and post here. Certanly is an interesting topic in these uncertain times. Will get back to them this eveining. Nice to see it has become a featured post : )
I've stated before I'm not for celebrating a mass exodus of agents leaving the business. There are those agents who didn't have the mentoring and coaching that might have been successful. I watched experienced agents close ranks in offices instead of welcoming some of the younger tech savvy agents to the fold. The newer agents had skills to share and the experienced agents had skills to share. In the cases where they collaborated you can find loads of success stories. In the offices where it was every agent for themselves you can see where both suffered.
It won't only be the strong the strong that survive. It will also be the agents that we complain about who are working as REO mills. Those who have no customer service skills because they are not being held accountable to anyone for their actions. We could end up at the end of the market slow down with group of agents who have no idea what the words customer service means!
I think it will be interesting to see how it all works out in the end. Some of the "bad" agents will make it if they have enough money to survive the market. All I know is that I love real estate and intend to hang in there and become a even better Realtor through all of it!
I agree - many will not be able to cut it now. In times past all you needed was a pulse. Everyone knew someone who was in real estate. I am focused on building to a better and stronger real estate future. Thank you for your positive and uplifting read!
Not to throw a kink in the plan,(as i too watch our dwindling numbers at our local level) but I have seen a lot of very good, very qualified agents "retire" and we have still had many new agents continue to join our ranks. Living in a resort and retirement community we get many part time agents who have secondary incomes or high producing spouses so they are not as pressured to succeed nor are they as likely to have to find ways to "make ends meet" during this market. So, for some real estate will remain a hobby because they can support it and our industry standards allow it to be; for others it is a life choice and a professional career because they hold it to that standard though they may not be able to survive the financial strain.
To me this market is like being at the bow of the Titanic and hoping you can hold on to the last.
This is NOT the type of market for a rookie or a part-timer. Contracts are constantly changing, loan programs change daily. You must be an expert, the biggest investment in your life w/ part time Uncle Joe? Good Luck!!!
I'm tired of the unethical ones.
Interesting topic, good agents, bad agents, full time part time too many agents too many houses.
The way I see it, perhaps some of the brokers own some responsibility for two many agents, in my city each major franchise and some independants have their own Real Estate Schools, cranking out graduates hoping to add as many as possible. Its like a numbers game. I was amazed at what some would do to capture a new recruit. I'm not saying this is all bad, its just the nature of the beast, the more producing agents the more the brokerage makes.
As for weeding out, yes the market will weed out the weak, and many newbies will fall by the wayside, in my real estate class I was amazed that most of the younger folks thought they would soon be rich via real estate. To be honest, want quality agents, teach in the real estate classes, about the negatives of the business, what it takes to make it, bet that will change the quality of recruits.
sorry that was me with the long winded comments up above, somehow I got bumped out while typing,
I am also looking forward to New Jersey (the only state without mandatory continuing education) Real Estate Commission implementing mandatory continuing education in the next legislative cycle.
Bill - I think by decreasing the quantity in turn improves the quality as there are more competent agents serving a larger piece of the pie.
Gene - Agreed. The quality agents will certainly have an opportunity to rise higher as excellent.
Richard - You are right - I believe in that "Good things come from bad". the cleansing will be painful, but will improve our industry overall.
News flash, a lot of agents that can't sell get a teachers license and so the vicious circle continues. The ones that get out are replaced with new ones. In Florida at least the the only license printed more than a drivers license is a real estate license. In fact we don't have to have ID's like most states because everyone can just use their real estate license. That's not too far from the truth.
Christopher and Stephanie, I too believe we will see an exodus of many agents. I believe it will not be selective in the ones who leave though. There are many unscrupulous types that will remain, and many with vast knowledge will depart. Why? Because the unscrupulous will beat the bush and sale their mother's home out from under her just to get a sale - the knowledgeable that many young agents reveer will not look to innovative ways in which to market and will slowly fade away.
Being knowledgeable is one thing - being relevant and with the times is something else.
Being both is the making of a survivor and a great Professional.
When times are good, the pool is full of people that don't really belong. They are opportunists that give any profession a bad name solely because they don't know what they are doing. They are there for the quick buck. It seemed easy to be a Realtor when all you had to do was take a listing and have ten offers on it before you got to the back of your office. When the tide goes out, you see who's swimming without any suit.
Jim Crawford said it... almost 1% of the Atlanta Metro residents have a RE license... Yep, we need to wash a few out.
There are definitely less agents out there, but we still have a few who do not have a clue about what they are doing. I will be glad to say good bye to those who do not believe in learning their craft and servicing their clients.
From what I see, there are a few agents who were on the cusp of retiring, who have done so, but the rest of us who are full-time agents are having a much more difficult time than part-time agents. The part-time agents by definition have another job or source of income. I think there will be fewer agents once this downturn finishes, but it will be fewer full-time agents. The name of the game right now is survival.
Interesting concept Gail. There's definetely a good mix of both full time and part time agents that are going to leave the business. Not sure if the numbers will be higher this year than last as it's all based on how people prepared for this upcoming year. They certainly had plenty of warning.
Well, other than the part about "housewives with a business card" (I would have preferred a comment like every "Jane and Joe Schmoe with a business card"), I completely agree that it is nice to have more knowledgable agents involved in the transactions in today's market. Financing and everything takes more negotiation that requires a truly qualified and experienced agent.
Well, it sure will be interesting to see how it all pans out. It is a shame that some of the really good agents also feel the need to leave the business in this market, but it is a plus that the ones that came into the business for a quick buck and did not develop the skills and client satisfaction to stay in it for the long haul are also leaving in droves.
This is the second time I've been through this. I remember when I got into the business it was standing room only in my real estate classes.... some of those folks didn't stay in the business and now we will see that again.
JL
Bonnie - staying positive is key. A good example is the stock market today up over 400 points. Those that sold yesterday... ouch.
Rita - could not agree more ! The professional that has been through this before or the newer agent with a positive attitude and both with a strong work ethic will do more than fine ! Even better as the market turns.
Cristal - we can all go on on our soapbox per se ! I think the quality of agent should be much higher than it is now - and that gets back to easy barriers to entry and not much training and support when they start.
Bill - Yes, the barriers of entry I think are too low as well. And I would have thought more to have left by now, but it has to come as there are way too many non-producing agents in each office. The brokers may have to make some decisions in regards to this.
Mary - great point ! The rebates should be a thing of the past ! In this market, there is no place for discounted service, things are too complex and tricky. And in reality, it is not fair to the other agent on the other side of the transaction who basically ends up doing the entire deal, and in turn, carries more risk !
Home Realty - that is a good point. Things can always go back to how they were if the market picks up steam. I think each state association should look at their guidelines and standards and perhaps make some changes. It certainly is a great opportunity to do that, especially as there will be more lawsuits, arbitrations...etc, that were a direct result of inexperience.
Debra - you are right ! there are always some silver linings in everything. Like a friend of mine says, from bad there comes good : )
Jim - that is a lot of "agents" in Atlanta. I know a couple of offices around where I am where half of the agents (or more) did 1 deal or less last year ! Why bother having them around ? I dont get it sometimes. That is why I like to sell versus be a broker.
William - good point. Is crazy out there !
Gary - I like it ! "Only the strong will survive !! " : )
One thing we can count on for sure is that people are not going to be racing to the community college to take real estate classes! This downturn and all the press of the terrible market will keep people looking at another option to make a quick buck (or so they think RE is that easy)
It seems like the consensus here is that this could be a good time for all our state and local associations to increase the standards per se. One of the issues is that the barriers of entry are so low that it is very easy to get a real estate license and enter the field. As Paul just said, obviously market conditions will certainly lower the amount of people graduating with licenses and entering the field.
I think one idea is some sort of mentorship/traning program where a new realtor does not become a realtor until working at a company for a period of time and being an association on 6 to 12 deals or something along those lines ? Continuing education requirements could also be ramped up too.
However, having not-so-good agents does help the better agents because over time, the clientele will of course gravitate to the better and best agents per se. Either way, right now there is great opportunity for any realtor to do great work and gain market share and position oneself for great growth when things turn around : )
There will always be agents who's spouses support them financially who will continue to not produce, unfortunately.
Christopher and Stephanie, I agree...there are so many opportunities to improve ourselves and our business in this market and you have to look for that silver lining:-)
Michael - you are right. In those instances and many other instances, I do not understand why brokers just do not let the agents go. I know at RE/MAX every agent has a cost and our brokers will let non-producing agents go. At other offices, there can be a huge group of agents that do one deal a year ! Maybe there should be minimum requirements ?
Debra - You are so right ! That is a great attitude. If more agents looked at it that way, there would be many more successful agents !
In my area we do 1100 transactions a year and there are 275 agents. Do the math. Way too many agents.
Erica - that is a lot of agents !!! There is one office not far from us that has close to 100 agents but may be only 1/5 th of them do any production. I do not understand that.
Christopher--same here. The biggest company has 100 agents. It's the 80/20 or 90/10 rule. I could go through the hot sheet for the past 6 months and I'll be over half of their agents didn't close a single deal. How are they surviving?
When I took my RE classes, 10 years ago, the class was PACKED. It was HUGE! Now I'm standing in front, teaching the class. 1 year ago we had 15 in the class. This fall it's 6.
We couldn't agree more that this will be good for the agents that make it through to the other side of this cycle. In Northern VA, it seems like every party or BBQ has a minimum of 3 agents, 2 of whom haven't done much in the past two years but do the CE to keep their license active. Imagine trying to come off the bench after a 2 year hiatus from real estate to get a listing sold?
It is painful going through this and we had a couple of agents that were good friends hang up their licenses, they just didn't want to put in the effort to succeed in this market. We still like them, but that's a couple agents closer to getting back to where we belong.