Real Estate Jobs in Jeopardy?
A: Over the past few years as the housing market surged, thousands of either unemployed or unhappy workers decided to become a real estate agent. Unfortunately, the housing surge was only temporary and as every seasoned real estate professional knows, refferals and creative marketing are what drives your business. So I ask you, what will thousands of relatively new real estate agents do now that the housing market is cooling and they are in the hardest part of their careers; Building Their Business & Refferal Base. Fact is, it can take years to build one's real estate business where personal and professional refferals are the main driver of your annual income. Its just unfortunate for those who will never make it!
When I was at a recent Citi-Habitats office meeting, it was announced that the average length of a real estate agent's career is 1.1 years. It was also announced that the average career of a top producer is about 4.5 years. While these numbers are probably not exact figures and one could argue that numbers could be presented in any possible light, its hard to ignore the disparity between these two concepts; average length of career and average career length of top producers.
So what happens to the rest of the agents? Well quite simply they die out. According to today's CNN Money article:
Over the past four years, the housing market has been a big driver of job growth as almost four out of every 10 jobs created in the United States were housing related. "At best people should prepare for no pay increase and no bonus, something they have been getting a lot of," Mark Zandi, an economist at Moody's Economy.com told the paper. "At worst they should be thinking they may need to change occupations."
Its a tough world out there when you try to chase a surging market. I've lived through it when I was an equities trader during the dotcom boom, and I'm living through it now as a real estate agent in a cooling housing market. Who will survive with so many agents fighting for a share of a decreasing # of sales housing market in New York City? Will sales agents start doing rentals? Will they retire? Will they move on to other jobs? Well, they have one thing going for them. The national economy is booming and job creation is strong. But when will the denial of a still-booming real estate business actually be overcome?
I'm hearing from colleagues that the older generation brokers are for the most part, beginning to move on. While I have no stats to back this up, it does make sense. Younger brokers have come in droves over the past few years and have brought with them more energy and determination to work harder for their clients. The days of putting a listing in the system, showing 3-4 OH's on Sunday, and getting a direct deal and bringing a 6% commission to the house are over!
Perhaps its just the old American Way of chasing the big money, wherever it happens to show up. I recall when I was at the Real Estate Institute studying for my license that the teacher said to a class of 50 or so, "...forget being a buyer broker. They just take your commission and will never last". Boy was he wrong. It even sounded as if he was frustrated by the fact that buyer brokers are entering the market and taking away 3% of his commission; since he didn't bring in the buyer and get a direct deal. In my humble opinion, buyer brokers are a key aspect of the real estate industry. In fact, I believe there is a stat out there that aprox. 85% of deals in NYC are co-brokes; meaning that 2 brokerage firms worked together to get the deal done and share the commission. Think about this:
What is the value of the seller broker right now besides acting as the gateway to the rest of the brokerage community? Shouldn't the buyer broker who brings the actual deal to the table be rewarded most?
And what about the online real estate landscape that is changing so drastically? We are still waiting to see how this plays out and who the winners are. How will it affect sellers and seller brokers? Its going to be very interesting to see which brokerages are the survivors, which online sites are the survivors, and more importantly which real estate agents are the survivors. Maybe it will be the real estate bloggers that come out on top? Maybe not!
In the end it comes down to one hugely important aspect when discussing the future of real estate jobs: WHO HAS THE BEST & MOST CREATIVE MARKETING STRATEGY AND THE LARGEST REFFERAL BASE! Trust me Jacky Tiplitzky will be just fine. Michael Shvo will be better than fine. Dolly Lenz ain't going anywhere! So how could we learn from them!
~ Real Estate Jobs in a Sad State