| Real estate agents: Sink or swim
in tougher waters |
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"Florida is one of those markets that had 20,
30, 40 percent appreciation. You can't sustain that year after year,"
says Stevens, who has been in the industry 34 years. Investors have
started selling their investments, thereby increasing supply in
areas where demand has stayed the same or waned, he says.
Whether the nation's sales are up or down, peddling
real estate means more than hanging out a shingle and putting up
"for sale" signs.
Agents encounter fierce competition, making it difficult
for some to earn top dollar. On top of that, most real estate agents
operate as independent contractors, meaning they run their own small
businesses and pay myriad expenses that staff employees don't. And
many point to the recent interest rate hikes and a softening housing
market as harbingers of an exodus from the profession.
Marketing a must
To make it in this business, agents have to market constantly to
compete, says Martha Rooney, a real estate agent in New England.
She says the intense competition turns some new agents away from
the business.
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Rooney has been selling homes for eight years. During
her first six months as an agent she grossed $20,000; last year,
she pulled in $75,000 before subtracting her expenses -- that's
well above average. In 2004, the average gross income for members
of NAR was $49,300. And the NAR members spent a median of $8,200
on business expenses, up from $6,900 in 2002.
Rooney's advice: "You have to be creative to
get business. A lot of business came through our Web site, and I
sent out announcements to everyone I ever knew."
As independent contractors, many agents must market
themselves and pay for business cards, postcards, ads and other
materials. Whether the industry is at a high or a low point, she
spends $864 per year on newspaper ads to keep the business coming.
"We do a lot more than ride around and show people
houses," Rooney says.
Then there's the follow-up work.
"You have to be in the background making sure people get their financing done," Rooney says. "I've heard of people having deals fall apart at the closing table. It's bad if you've already spent the commission."
A missing pay stub, an overdrawn bank account, a dip in the credit score on the buyer's part could kill a deal through no fault of the agent.
These factors often weed out agents that aren't up to par, regardless of the market cycle, says NAR's Stevens.
"Twenty percent of Realtors do 80 percent of
the business," he says. "It's a real tough, competitive
business. The people that understand the business work smart and
work hard and make the majority of the money.
"You have to be a self-starter. No one calls
you to ask why you haven't punched the clock. If you don't work,
you don't make the money."
Call for tougher licensing requirements
Anthony Marguleas, broker and owner of high-end realty firm Amalfi Estates in Los Angeles, thinks the industry shouldn't be spitting out low-producing agents. Instead, it should be harder to become one. |
