We’ve discussed at length over the years what the ideal size for the number of Realtors in America is and most people have been too shy to actually put a number out there. Perhaps because there’s a risk of being wrong, but more likely because of the naysayers who point out that anyone can practice if they want to.
This week, we spoke with Ron Peltier who is the Chairman and CEO of Home Services of America, who was willing to not only say that the number of Realtors is oversaturated but that he has a number in mind of how many is too many (hint: we’re at that number right now).
Peltier said, “The real estate industry currently has too much capacity in all areas whether we are referring to sales associates, brokers and or mortgage loan consultants as well as title operations. When we reflect on where the market is today, we are back at the year 2000 level, which had approximately 5 million existing home units.
To that end, at that time we had a significantly smaller universe of players—approximately 800,000 sales associates— as compared to a high of 1.4 million to where we are now, which is right around 1.2 million sales associates. We need fewer people in the industry and clearly the bottom 30% do not perform. Likewise we need fewer brokers and fewer loan and title providers.”
Peltier continued, “We bubbled up to about 1.4 million members [in 2006]. We don’t need 1.4 million. We need probably 750,000 agents.”
In other words, there are too many Realtors. That’s a pretty big statement coming from someone who offers brokerage service and relies upon agents. Most companies maintain a burn and turn team mentality that recruits new agents, gets their five familial leads before they fizzle off into the land of “incapable of lead management” and go off to the indie brokerages.
Naturally, the National Association of Realtors (NAR) benefits from membership dues even if there is no activity from individual agents. What would happen if NAR allowed agents to freeze their accounts and dues if they have zero closings in twelve months? Or maybe there should be minimum production levels for membership?
None of this will happen because the goal is to increase membership to increase dues, but in a Utopian society there would be ways to legitimately alter membership.
Is a healthy membership level done through educational measures and the boring old “raising the bar” conversation? Is a healthy membership level the responsibility of local associations that are more in touch with their membership? Is a healthy membership level the responsibility of brokers not engaging in mass recruiting of useless agents? Is it the responsibility of agents to remove themselves from the membership if they can’t produce?
How do you think the industry should get to 750,000 Realtors? Or should it be left as it is? Add your thoughts in comments.