By Mike Bodeen · 30 May 2016
REALTORS AMASS IN NUMBER AND DECREASE IN AGE
IS THIS GOOD OR BAD FOR YOU THE CONSUMER?
When I arrived on the real estate scene in 1976 in Truckee, California, I was a mere 22 years old. I knew nothing about real estate. While it was technically accurate to call myself a real estate practitioner, I shudder to think of all the folks I “practiced” on in those days.
So when I read these newer studies that show how Realtors are increasing in number and decreasing in age, my gut reaction is to be frightened for an unsuspecting populace. Of course back when I started, it was much harder to find quality training, education and mentorship that encouraged best practices than it is today.
According to the National Association of Realtors (NAR), the median age of a Realtor, as of 2015, is now 53. This is reduced from 57 in 2014 and is the lowest since 1952. This means a lot of younger people are joining the real estate industry.
Our local market is no exception to these statistics. We have been observing large increases in the number of ARMLS members over the past two months. This is the listing service that almost all local agents register with that enables them to hunt for homes and list them publicly as well. Today we topped 36,000 entries in this database. As recently as March 24, we saw fewer than 35,000, which is an increase of 500 agents a month! All of the largest 20 real estate brokerages except (except for one) saw increases in the number of agents as well.
So is this a good thing for Joe Q. Public? Is my gut twisting in knots needlessly? From a base economic standpoint, more laborers within a single industry creates more competition, more choice and, theoretically, lower average costs for the public to employ those agents. So from that perspective alone that can be seen as a gain to the public.
On the other hand, new agents mean inexperience, and in our industry, the knowledge we gain from experience is half our worth. A successful listing agent must also understand marketing, negotiating, and how to price a home correctly to get their clients the highest value for their property. If an agent is representing a buyer they need to know how to read a local market, and to understand the basics of lending so they can guide their client to an honest and fair lender. The 90 hours of classes you must take to become a licensed Realtor in Arizona will not give a person these skills.
My son actually began his career working for a very successful agent in Idaho as a licensed assistant in 2009. He was involved with 50 transactions from start to finish before he ever represented his first client, and I wish more agents would begin their careers this way. It’s not that you should never work with a newer agent, because many of them are motivated, high energy, and desperate for a payday, which means they will break their back for you. The questions you need to ask are; 1. Does this agent know where to find the right answers when they are unsure of something? 2. Does the agent have a mentor/business partner they can lean on for experience? 3. Is this agent taking steps to educate themselves regularly? 4. Is this agent full time?
Fortunately, with larger companies such as our firm, HomeSmart, excellent training is made available to all agents and that’s a plus. We also have tremendous Broker Support, all of which I wished I had when I started in the biz back in 1976.
My greatest plea to a consumer searching for an agent, is not to just go with the first one you meet, which is what most do. Instead attempt to evaluate their level of experience, industry knowledge, and integrity.
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The fallout rate for Realtors is huge. Most don’t make it, at least on a full-time basis. Some get licensed to have something to do, as in a second career after retiring. It’s relatively few who can make it their “career.” It’s not that the work is hard per se. Really anyone could learn what we know do and what do. At its most basic level though, real estate is ALL about “sales.” You can’t get paid unless you can convince someone to trust you to guide them through a real estate transaction
In a 2014 report, 40% of REALTORS were found to be 60 or older. This has dropped to 31% in 2015. I suspect that recent technological advances are the proverbial nail in the coffin for many. I can recall at each major technology improvement over the years, older Realtors would say, “Adios.”
In the mid 70’s when the industry came out with the MLS Book which meant consumers could see all of the listings on the market, instead of just the ones from their agent’s brokerage, a number of agents said, “Adios!” When we went from the MLS books to computer dummy terminals in the 80’s, many Realtors said, “Adios!” Then the websites arrived, and every Realtor had to have their own, again, and in greater numbers, Realtors said, “Adios!” Now everything is online. Our contracts are online. Our clients sign their contracts digitally online, and realtors must be glued to their smartphones to be successful, and so many agents are again saying, “Adios!”
In the end however, our industry still remains personal, which has always played to my strength. This has allowed me to continue to work and enjoy my profession, which by this point, is almost all referral based.
Well, people have to work I suppose, and I certainly can’t fault new agents their enthusiasm. The allure of a large commission can be like the song of a siren for young pups burnt out on traditional 9 to 5s or who have lost their jobs.
Many would be surprised that the median income for a Realtor is only $39,200 (as of 2015). This is down from $45,800 in 2014, no doubt in correlation with the influx of agents. For agents who are in their first year, my bet is that it would be less than $5,000.
Matt Widdows, the owner of HomeSmart did not have a real estate background. His was a computer/tech guy. All of our business done at HomeSmart is digital. We can’t submit a piece of paper to our brokers. It’s taken awhile for many of us to get the hang of that, but we recognize the benefits of less (paper) is more (function).
The median years of experience for an agent has now fallen from twelve to ten. 20% of Realtors Nationally have one year or less of experience. That’s a lot of new blood since 2014, and really that 20% is the scary part. The median income of NAR members dropped from $45,800 in 2014 to $39,200 in 2015. Obviously, there is a strong correlation between years of experience and income level.