When agents leave real estate sometimes it is a good thing for all. It allows for a regrouping of business ideas, reflection and new direction for all. It is a sobering and cleansing event that will allow the industry to thrive once again. The dreams of fast money and a glamorous lifestyle in the last few years were as elusive for many as the winning of the million dollar lottery. The stark reality for many naive participants... was that real estate as a career isn't a fast "Rags to riches" story as portrayed on the many HGTV shows. Becoming a success in real estate was quite the opposite! Many will grasp this concept and others cannot see the reality of the events. What we just went through in the last few years in real estate may never be repeated at that magnitude in our lifetimes. It was an anomaly. The fact is that the economy for a short while was in a frenzied real estate bubble that saw unsustainable appreciation, fraud and greed. The bubble if you follow global economics is not limited to the US real estate market. A lot o folks started to view real estate as an investment commodity. It really isn't because it is not a totally liquid investment as many are now finding out the hard way. What we are experiencing now is that reality is sinking into the minds of the banks, the buyer, the sellers and yes even real estate agents.
The market we are in now is trying to find its headings again, and head back to market that is driven more by need than greed. These are two totally different markets. Many still feel the market is going to roar back to where it was just a short while ago, it isn't. Don't waste your time dreaming. The EZ credit and the mania is not there. Folks that have been in the markets since the 70's or 80's realize this, but real estate agents that came into the business in the mid 90's do not get it. So here is the intervention you may be looking for.
When the brakes abruptly went on the real estate market last summer many of the newbie's in real estate weren't wearing the seatbelts. They were totally unprepared for the quick halt to income. They were unprepared to pay desk fees, marketing fees, car loans, advertising, personal expenses, and mortgages. Newer folks in the business have never dealt with trying to provide for their families while they waited 6 months or more to sell a home or convince a buyer. Veterans in real estate know all too well that the real easy times that spoiled us are over, and we are headed back to a normal market. So what is a normal market in real estate?
First of all, a normal market is not a great thing if you are used to a steady income. Yes being and independent subcontractor is a great thing, we have lots of flexibility in how we schedule our work load, raise our families and provide for our needs. The down side is that more often than not is that real estate can be a feast or famine livelihood. Real estate as a career it is not waiting for work to fall into our laps, but rather a constant honing of skills that improves our way of doing business, conserves capital, budgets our marketing dollars and sometimes going on a starvation diet. It is a life of being pro-active. New comers to real estate may never understand the 6 dry months of waiting for a commission. On the other side of that hill is that once we hit it big we have to pay off our charge cards, pay our taxes, clean up our debt and start the entire process all over again! If you understand the dynamics of real estate, we also realize better times are ahead, with a little less competition, and a lot more opportunities to do really well. If you stick around, you'll love this business! Buyers will appreciate your skills and sellers will thank you for helping them through some tougher times. They will tell all their friends how great you are, and freely refer business to you. Real estate more than ever will provide greater rewards than just a quick commission.
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Jim,
I enjoy your posts so much.
You are so right about this business.
Ups and downs, but all in all you either love it or leave it.
Thanks for sharing your thoughts.
Linda Lipscomb RE/MAX Lexington Henderson County TN It is part of the cycle of the business. Actually if you look at the sales numbers, they are still above the numbers from the early 90's - the problem is that we have a hundred times more real estate agents persuing the deals.
Jim - this is an excellent portrait of the realities of this business. I went through the shakeout when our market in Hawaii crashed in early 1990, and stayed in a nosedive for years. Even some of the hardened agents of the day weren't able to ride that one out. I was a newbie then, and I was the perfect example of one who was unprepared to survive the crash. I didn't get back into real estate for fifteen years, but this time I knew to plan for the eventual downturn. With this post you have given a great favor to everyone in the business, or contemplating joining the ranks.
Michael Mackey (R) ABR, CRS, GRI (CENTURY 21 All Islands) I agree with you. I was licensed in 1979...the 1980's were brutal with 15.5%+ mortgages, ARMS with out cap limits, and negative AM loans. In the early 1990's we moved to Atlanta, and the market here had collapsed in 1988. 4 years later it was still in the tank. That is when we arrived and did very well with expired listings. We sold 37 expireds many of which had sat on the market for 2+ years. There was no agent competition, everyone had thrown the towel in, and we were selling homes. Why? Sellers were now willing to listen, and the market wasn't dysfunctional with agents who never sold anything putting in their 2 cents and telling a seller how not to sell a home.
Jim...
I think that HGTV was and still is part of the problem ... anyone who thinks that a couple of hundred dollars worth of paint will net 20K over list is living in TVLand!
Real estate has always been a tough business, and now it's only the strong that will survive!
Richard Weisser, Associate Broker, E-Pro ERA United Realty, Auctioneer, CE Author (Coweta Fayette Real Estate, Inc. ERA United Realty) I totally agree. I am seeing this all through Atlanta. Over priced homes with not even a lick of paint and way over priced. The rewards are great in real estate if you know what you are doing. It's hard work, long hours away from family, and when it is busy, you can forget having free weekends off.
Loved reading this post Jim. Any number of reasons can be given for the mess the RE market is in; however, SOME realtors have a good bit of blame/responsibility to accept as well. Hopefully more realtors with integrity will survive.
I'd like to see real estate licensees reduced to about 500,000.
Jim good points. You just can't roll out of bed and sell a house now can you.
Jim, I have been saying the exact same thing to my clients; the market is now driven by Need Only. Pricing is everything, good condition is everything, but the one fact that is most clear is need. In my area which also has a second home market, it is even more apparent. Where are the out of town buyers? Not coming. As to the agents, in a small town, it is also clear to see who quit real estate because it is a small pool, and easy to spot who left.
Jim: In BAD times, when AGENTS leave the business, I consider it a process of weeding out. Supply and demand (that includes Realtors).
Susie Blackmon NC Realtor, Maggie Valley, Waynesville (COLDWELL BANKER) I agree. I also feel that the most likely survivors will be the ones that love real estate and are passionate about it.
Allison Stewart REALTOR ®St. Cloud Florida (Florida Pines Realty, Inc) Thanks!
Jim Another excellent post. I miss the hub bub of lots of agents around but it is great to work with primarily the real agents who understand it is a challenging occupation.
I agree with you but like I've said in the past, I don't think its just the new realtors. I think that some of the realtors that came in when the market was red hot and it was easy money and they took "orders" at their desk are shocked too. The phone isn't ringing off the hook and 5 offers on the house they listed 5 minutes ago, isn't happening. I think it's those realtors too.
Lenn Harley, Homefinders.com, MD & VA Real Estate I would have to agree. In 2001 I was attending a meeting at the NAR headquarters in Chicago with the executive board and President of NAR. We were informed then that membership was at about 750000. Our national membership hit almost 1.4 which is almost a doubling of member in just a few years. I believe it inevitable that we will have a major fall off in membership in the next 2 year. Most folks will hang around this year to see what is happening, but real estate is not coming back this year, and perhaps not until the second half of next year. A lot of folks are going to balk at paying membership dues, taking CE classes, and paying fees that they have no use for. They do not have the money to hang around even at a discount.
John Walters (Specialized Real Estate) Thanks! I agree.
Mary Strang, WI Real Estate (RE/MAX Hill Country) I agree. Did you ever hear the saying, "When the going gets tough, the tough get going!"
Kathy "Kat" DeLong, REALTOR (WINDERMERE FINE PROPERTIES/LAKE ARROWHEAD) A lot are hanging on because it is cheaper these days than in the past. Agents are hanging thier licenses with shops that charge $25 / a month. Some of these offices have picked up 3000 agents in each office. These exceed the numbers for the big mega offices, but the one difference is no production from the company! I call it a "Loser HQ!" They left the business, only they don't know it.
Shannon Aldrich ~ NH & Maine Real Estate Seacoast (Keller Williams Coastal Realty) I agree. It is a tough business, but it does have its rewards!
LaNita Cates (REMAX of Joliet) LaNita, I totally agree! I am seeing friends and assoicates of mine leaving the business left and right. Some are older than myself, some are not into technology, some were fixtures in the office... they're gone.
Not Yet Licensed Go for it! If you go into this market with your eyes opened, and are successful...you will do incredible. Be realistic, develop a plan, work closely with a very experienced broker and get a mentor.
Technology is just a tool that a person can use to enhance thier business, but technology does not make sales. You need contract knowledge, sales skills, market knowledge, and closing tecniques or people skills first.
Not Yet Licensed In my own experience, part times never make it. They have already made a choice, and their hearts are not fully committed. It then becomes a self-fulfilling prophesy.
Good post! it is a hard business. I have been told by a seasoned Realtor that when it gets better watch out because we will all be busy. I wrote a blog on Patience and I truly believe that is what we all need to be.
Wow Jim, what a great post. It's true, real estate is HARD work. Many agents in Colorado Springs are also leaving the business but we still have many realtors. Anyone who gets into this line of work with unrealistic expectations as you discussed above is in for a huge letdown because it isn't easy!
Not Yet Licensed Best wishes, you'll do fine!
deVismes P. Sharp, Talbot County Maryland Realtor (Lacaze Meredith Real Estate, A Long and Foster Co.) Patience is a virtue, and it is very hard to practice. If we have faith...it is a lot more bearable.
Colorado Springs Realty Patricia Beck (Prudential Professional Realtors, GRI) Patricia, but even if they have reasonable expectations it may take a while to pay off but it will.
Hi Jim: I'm busier right now than I've ever been, and I can tell you this. It's not because I know a lot of people -- I don't. It's not because I have a ton of listings -- I don't. It's because I'm willing to seize opportunity when I find it and get my butt to work every day. I work in a relatively new market for me, having moved to Sacramento in 2002 without knowing a soul. But I've been in the real estate business since 1974 -- market swings happen. You adjust and adapt.
Great post. I agree with you you and love the last paragraph.
Good points. Some are despairing that agents are dropping out, but I think it's survival of the fittest (best). Those who are professionals and know how to hustle in this market will make it. The weak won't. That's not a bad thing.
Jim, I was ugly during the boom market. I would say I couldn't wait for the market to correct itself so the pizza delivery people could go back to delivering pizzas for a living. No offense to the pizza deliverers out there.
I told the new agents over and over again not to spend their money like drunken sailors because this was not normal and how it would stay, they laughed. They aren't laughing now.
Really good post Jim, tough times will continue, more will drop out, for how long, who knows?
Elizabeth Weintraub, Sacramento Real Estate Broker (Lyon Real Estate) You brought up an interesting item. Keeping the routines when everyone else is walking away or throwing up their hands that real estate is broke beyond repair.
GITA BANTWAL, REALTOR BUCKS COUNTY, PA HOMES (ReMax Centre Realtors) Thanks Gita! I am glad you enjoyed it.
Realty Executives - Erica Ramus - 570 622 6006 It is a good thing. What many do not realize is that as a market gets hot, loads of agents join, when a market soften agents leave. Good market lots of homes, bad market fewer homes. They are all part of the business cycle of real estate.
Audrey June-Forshey, GRI, Gaithersburg, MD (RE/MAX Realty Group) I am the same way in my real estate articles I even shared this, and wrote about it. I did a seminar a few years ago on the changing real estate markets and how to position yourself. The broker did not like it. He was let go a few months later. His office is now down about 35-40% in agents. I talk about truths. Some listen and others don't. The ones that are willing to keep an open mind survive.
BART WHITMORE REAL ESTATE CONSULTANT (THE REALTY MARKETPLACE) I know. No one really has the answer, but I have my own predictions in real estate. 2008 is not the bottom.
Jim, I agree! To be a great agent, it must be in your blood, I believe. Full time, full on! It's time to "clean house' in my opinion.
Huntsville, Alabama Real Estate Agent Elizabeth Ramsey Cooper (Remax Huntsville/Madison) I agree. This is a career that thrives on passion, and runs dry when we just focus on commission.
Jim, I enjoyed your post and the thoughtful advise to "not yet licensed" Like you I have been at this for a while and have had many dry spells, but I prepare for them the best I can.
All the Realtors that I know who last a long time have a plan and work at it everyday, they know that once it gets busy again they will spend months catching up on dollars devoted to staying alive and hopefully reach a smooth point again before another upset. I think it would be nice if those who are selling on a part time basis would jut refer the business and take a referral fee the clients would be better served
In the end you can carry a lap top and have a bluetooth in your ear, drive an SUV and have photos of yourself everywhere, but if the client knows you are in it for yourself and not them, you will have the usual 3 year stint as a realtor.
Karen Turney-Phoenix Real Estate (Realty Executives/Paradise Valley) What you shared is very funny, but it is true. Referrals is a better way to go. Give the leads to someone that has the experience to close them! Everyone makes a dolar!
I have found that my workflow is really different any more. Instead of doing prospecting every day a bit at a time, I now find it easier to focus on that one day each week. It is interesting how differently I am approaching daily business tasks now compared to the hayday of the Seller's market, and even to the days Before! I am rediscovering some systems I used before that seem to work really well again.
Sarah Nopp, REALTOR(R), CRS. RE/MAX Four Seasons, Olympia WA (RE/MAX Four Seasons) The music has changed. We are entering different times. Those that cannot change the dance step when the beat to the music changes are going to find themselves yanked off the dance floor. That is why in life there are obituaries. Things were OK yesterday, but today they're not.