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Realtors new to the business earn less than minimum wage

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The average Realtor

What does the face of the real estate industry look like? According to the National Association of Realtors (NAR), “the typical Realtor is a 56 year old white female who attended college and is a homeowner.”

The 2011 NAR Member Guide shows very similar statistics regarding membership as it has in recent years with a caucasian 50+ woman being the poster child of the NAR membership. What perplexes many, however, is that if the face of real estate is female, why isn’t the executive suite at big box brokerages female?

Gross gross income

Consumers have this image of Realtors as the Cadillac driving millionaires who wear Prada and yell at servants because of television portrayals of the industry, but the truth is that Realtors don’t make much money at all. Although the median gross income of Realtor households is $91,700 and up from the year before, the median gross income of the Realtor alone was only $34,100 which has slid 4.5% from 2009.

No, that isn’t Prada money, that’s just over $17 an hour if an agent works 40 hours each week (although we know many many agents work closer to 60, putting it at roughly $12 an hour… can you say gas station attendant salary?).

The average Realtor has 12 years of experience and while average annual gross income is reflected by experience and years in the business and Realtors with over 16 years of experience brought home $47,100, those in the business for less than two years earned a median gross income of $8,900. That’s eight thousand nine hundred dollars… a year. If an agent works 40 hours per week at that rate, they earn roughly $4 per hour, well under minimum salary.

The dreamers of the past who saw opportunity in real estate should know these numbers and know that the industry is more hard work and less shopping for Prada than they might think. If NAR membership drops in the next three years, it is more likely that potential members will take less risk in a down market than the $40 annual increase in dues.

80% of NAR members specialize in residential real estate and 21% are certified in short sales and foreclosures. Although those certified in short sales and foreclosures is up from 12% in 2009, that leaves 79% of agents that have not sought certification. This stat is of note because it is highly unlikely that only 21% of Realtors are handling 100% of all short sales and foreclosures. There is a major disconnect between the number of Realtors certified to handle these complex transactions and those that actually do handle them.

Real estate is the sole occupation for 75% of NAR members leaving 25% of all dues paying Realtors as hobbyists, part timers, or people with full time jobs that hold membership in the event an extra pay check is dangled in front of them. Industry insiders have mixed feelings about part time agents versus full time agents with critics arguing that full time agency is the only fair way to oversee a transaction while supporters note that many NAR members hold a license as a housewife or even as an investor handling nothing more than their own transactions.

The future of the industry

We acknowledge that the economy is bad, housing is still in a crisis and Realtor income will likely shrink even more as home prices continue to slide. 75% of Realtors are certain they will be in the real estate business in two years. Although this appears to be an optimistic outlook, when we polled our story sources, nearly 100% believed they would be practicing real estate in the future.

Despite shrinking income, a horrific economy, a disconnect between certification and practice, as well as a disparity between the female dominated practitioners and a male dominated leadership suite, the bottom line is that Realtors are confident that they will still be in business in two years.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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38 Comments

38 Comments

  1. Sullivan County NY Real Estate

    June 5, 2011 at 11:21 am

    Sobering stats. Perhaps is is champagne wishes and cavier dreams, but reality is mac and cheese and coors lite.

  2. anna m precourt

    February 29, 2012 at 1:55 pm

    Ok -this is a whoa….Ive been a realtor since Sept 1985.
    And I just found a business that I can dedicate my time and energy to and still be a realtor. Feel free to email me for any questions….

  3. Ken Brand

    April 16, 2012 at 2:10 pm

    Fortunately the real estate business is pure pay-for-performance. Our raise becomes effective as soon as WE are. There’s only a few things we need to do to make our raise a reality.

    1. Make more on-purpose and in-person contact and conversation (activity and actions). This will uncover opportunities share, solve and serve.

    2. Make your contact and conversation relevant and with the right tribes, networks an niches. Follow up and follow through – relentlessly – as if your pay depended on it – because it does.

    3.. Amp up the effectiveness of of your presentation and communication (visual, audio, physical, mental, spiritual). This takes awareness and on-purpose practice, drill and rehearse (just like any pro). Practice doesn’t make perfect, perfect practice makes perfect.

    The concepts, principals, actions and activities are simple to understand, information on what, where, when, how and with who are everywhere. The difference between poor and prosper is consistent execution.

    My 2cents.

    • Jeff Brown

      April 17, 2012 at 1:59 pm

      You and I, along with countless others have been pounding this drum for quite awhile, Ken. Yet, some in the biz get testy when it’s said out loud. When Grandma told us that the truth can hurt, we should’ve listened. 🙂

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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