The rise and fall of real estate brokers and agents first tuesday journal gaston y daniela


As real estate entered its boom phase of the market cycle in the mid-2000s, new agents arrived en masse with the optimistic belief that extra money was to be had working real estate. In 2006, following the peak of the boom, there were a total of 2.7 active agents for every active broker. save electricity pictures The high number of agents accompanied an inflated market, with unsustainable prices and little sense fundamentally.

In October 2006, for instance, there were 261,000 active agents, but 376,600 Californians held agent licenses. Compare this to the more stable period of January 2000, when there were 122,300 active agents and 196,500 total agent licensees. Rather than just providing brokerage services to other individuals, the superfluous agents — active and inactive — bought and flipped properties. They speculated in the market while operating as insiders pulling (or saving) a fee when they, their family members and their friends decided to buy the property they located.

Even now, as we anticipate a return to core economic principles (supply for sale vs. demand by actual user-occupants rather than speculators) and real estate fundamentals (price-to-rent and mortgage-to-income ratios) in the residential and commercial markets, the chart above shows the licensee population is above the standard 1.5:1 agent-to-broker ratio. Expect the current ratio to drop slightly until licensee numbers rise significantly, expected around 2020.

Not likely. The boost in home prices experienced in the end of 2012 through 2014 caused increased optimism among the agent population. The perception of a healthy real estate market due to price increases has lured more individuals seeking career opportunities to become real estate agents. New sales agent and broker licensing jumped in 2013 and remained at their highest levels since the housing crisis fallout in 2008.

California demographics, and the extremely low present demand by occupying homebuyers, point to this return of “excitement” in the field of real estate around the time period of 2019-2021. Even then, the rate of buyer-occupant homeownership which has dropped from 61% in 2006 to 54% in 2017, will continue to suffer. electricity voltage used in usa Thus, fewer brokers and agents will be needed to service the purchase and sale of homes.

In 2013, home sales volume essentially matched the years 2009 through 2012. 2014 experienced home sales volume roughly 7% below 2013. However, home sales volume picked up in 2015 and ended the year level with 2013, with 2016 sales volume ending roughly level with 2015. For brokers and agents looking forward, sales volume is forecast to remain flat to down in 2018 in reaction to rising mortgage rates, low inventory and too-high prices.

No longer do we see the sort of high competition between agents that helped push up prices from 2003-2005. The return of lending fundamentals, pushing higher down payments will set a slower pace in the real estate market than has been experienced at any time during the last decade. If it weren’t for the cash-heavy speculator interference experienced in 2013, California property prices would have remained at their 2012 levels without the bounce.

Purchasing trends in 2014 reflected the intermittent influxes of excited purchasers who are experienced neither as investors nor homebuyers. These buyers who are speculators are most frequently nothing more than gamblers placing bets on houses without the patience or intent to do anything but wait for the market to increase the price so they can cash out on their “investment.”

Large single family residential (SFR) brokerage operations with branch offices have always depended on a constant flood of newly-licensed agents to fill their cubicles. This practice was enabled in the past by a high agent turnover rate, as freshly-minted agents burned through their family members and social contacts without developing a viable client base.

These “list-and-run” type agents have disappeared from the ranks of new agents, as the total number of new agents has dropped dramatically. During the peak years of 2004-2007, 5,000 new agents were licensed monthly. Since October 2007, the number of new sales agents has remained steady with a slight general decline, from 1,100 monthly at that time to about 1,000 monthly through 2012. Then, licensing spiked in the first half of 2013 (due primarily to excitement caused by the price movement resulting from the speculator frenzy).

In the meantime, employing brokers take in fewer dollars and shoulder the costs of overhead, promotion, often servicing unmarketable listings at great cost. Gradually, the younger and more aggressive agents employed by large brokerage offices will look to become brokers or team up with brokers and other agents relocating into smaller operations. gas finder Others with a long-term client base will join “rent-a-desk” operations in order to reduce the fee percentage taken by the broker. Survival and success

Sellers who continue to demand unreasonable prices (the sticky price phenomenon), or who involve themselves in other conduct which keeps the property from selling within a 30- to 60-day marketing period, need to have their listings cancelled and returned. All this conduct suggests that fewer agents are needed by brokerage offices to effectively service the needs of the public.

Brokers who advertise property that looks good from the curb, and who set listing prices appropriate to the property (prices which are likely to quickly generate offers at near the listed price) will get an offer within 30 days. Such conduct will provide for the survival and success of the rational seller, the broker and their agents. At times of speculative fervor, which are always short in duration, discussion of a stable office environment might seem like nonsense to those with a short-term outlook.

Brokers who learn to cut overhead and eliminate operating inefficiencies while beefing up their staff of performing licensees in 2017 will be in the best position for the up-tick in the annual sales volume likely to begin by 2018. Employing brokers operating successfully in 2017 will be defined by their ability to plan ahead. They will have to be visionaries if they are to get in on the action when the federal government and Wall Street return to easy lending standards in a time of newly lucrative home sales.

If that is not bad enough for real estate educators, the license renewal rates among brokers and sales agents (especially those hit-and-run agents who arrived during the past six years) dropped to unprecedented levels by 2011. While renewal percentage rates jumped significantly going into 2013 on pricing bubble enthusiasm (despite the slipping sales volume), renewal percentages will not begin a sustainable rise until later in 2017.

Many let their licenses expire, then wait to see if the real estate market picks up during their two-year grace period for late renewal. Some of them cite price movement reports in 2013 as a reason to renew when they otherwise would not have done so. Most will be disappointed as the volume of sale has remained defiantly flat in spite of very volatile price movements. Several years remain before the next boom arrives – around 2019-2021. The broker takes charge

Thus, the agent knows from the beginning just what level of production is expected by the broker as a requirement for remaining with the office. Also, the broker will be demonstrating their expectation that the sales agent is to maintain a competitive attitude about producing listings and buyers that do deals. electricity invented what year Further, an environment will have been created with a greater probability of producing purchase agreements and closings, which spells success for all involved.

We stopped using real estate brokers because few brokers understand the term brokering a deal. It means bringing the selling party and the buyer party together and help to construct a for both parties an acceptable integer deal. We do not need copy and past most of the agents do that, in some cases the documentation provided is poor outdated and uninformative. Decent they demand knowing everything about the buyer including proof of funds. They refuse to show their mandate to sell and refuse to give any guarantee that the so called PoF or Bank letter of comfort that to will only be show n to the seller. By the way the financial comfort provided is not even worth the paper that it is written on.Third the real estate agents push the prices upward which is good for the seller and bad for the buyer. However it destroys the business and may result in the future in balance sheet adjustments. Last point is their commission : they will want to sit in on any conversation between seller and buyer and would if they could have somebody permanently living with the buyer and seller in order to control then deal. Do the real este agents or their companies provide any guarantee about the claims they make? of course not. Last but not least there is the arrogance of some of these top agents in HNW circles by not answering and claiming they know it all. gas natural This may work int he USA but it will push away overseas investors. They also believe by taking properties of an don the market that they can improve their sales chances. We use a lawyer who is providing us with all of the necessary details information we need without revealing anything and is capable of negotiating a deal with the owners that increases the sellers margin and provides us with a better an secure deal. electricity definition science Show me any broker who is prepared to do that! Reply

Real estate is a business (sales business, not a profession, the title companies are the professional side) where the 80/20 rule applies (80% of business done by 20% of agents, if that) Even if you are the listing agent, the commission is going to be split with your broker, and 90% of the time with the buyer’s agent and broker. So your cut might average 1.8%. (6% x .5 = 3%, then 3% times .6 =1.8% Typically agent 60%, broker 40%). So if you are in on $2,000,000 of sales in year (unlikely until you are in the game a while or stumble into something by luck), your gross will be $36,000, of which 15.24% ($5,486) goes to self employment tax off the top, Add in your MLS fees, vehicle, meals, insurance, etc, etc, and you won’t have much if any left. That is probably a best case scenario for the first few years, most really don’t make anything and just rack up expenses. That is why there are a lot of female agents, with the spouse providing the income and health insurance base. And full disclosure, I have a degree, am retired from a professional career in land management, and have a real estate sales license and experience. I would only advise those in very financially sound situations to venture into real estate sales. Though the classes are interesting and mostly about the legal and regulatory side of the business, the day to day reality is more like being a car salesman, so consider the move carefully! Reply

wow, I am so glad you folks were able to stay in the business and struggled, while some of us, would have been homeless, or we had children to raise…I love real estate and I want to go back to it, but with all the set up fees, the fees for this and that…how in the world am I suppose to do that? In my first time through real estate was back in 1980 to 1986, we had 15% interest in Illinois…I had great mentors and wonderful caring and helpful brokers. When I first started, I didn’t know anyone…I was terrified…all of the Realtors that were there had been there forever…they didn’t treat me different because I was new…they helped me, therefore I helped them. I actually sold. I loved the business…I went back, or tried to in 2008 out here in California…I went for a big company…I should have gone with Century 21 but because it was close to home and a smaller office, wanted to get my feet wet, things were much different here and the times obviously changed…I received zero help from the other Realtors, some of them were married, and had been in the business for years and years….I got no help…I waited too long, I shouldn’t have even chosen that office…hindsight is 20/20–so don’t be so harsh on people that you don’t even know…I will go back, I will be more selective in the office I choose…so until you know the circumstances you have no right to judge…. Reply

I agree with Joseph Sarria – instead of the DRE making it close to impossible to figure out what a broker has to do to get a NMLS endorsement on her license in order to do loans. The DRE could start by making it more difficult to obtain a salesman’s license…Now for the NMLS endorsement one must have a background check, pre-licensing education, SAFE act, 20 hours of education, take their test, have a credit check and fingerprints, not to mention NUMEROUS fees and charges…The NMLS website has to be the most confusing I have been in contact with so far, and I’ve been licensed as a broker since 1984 and licensed since 1976. Make it more difficult for the “newbies” – make THEM have a sponsor, and fulfill all the other requirements that the government keeps throwing up in front of us. gas density conversion I was an appraiser for several years until they required licensing. Could not find a sponsor. Got a trainees license, but could go no farther. End of story. Everything is becoming more and more difficult – EXCEPT the ability to obtain a salesman’s license. They are still cranking them out to flippers, etc. Reply