ShareThisBy OTESA MIDDLETON MILES
Sunday, November 05, 2006
After six years as a stay-at-home mother, Melissa Silver entered the real estate sales game last year, when the market still boasted a boom.
Talk of home prices included words like "record breaking" and "skyrocketing," as buyers outbid one another, making both sellers and sales people happy. While Silver got her feet wet in the rising tide, selling $400,000 homes in Framingham, Mass., little did she know the market would soften before she got a chance to pull in the big bucks.
As the nation's five-year real estate boom loses its bang, real estate agents _ who saw their ranks swell with the same tide that elevated housing prices _ will likely see their numbers recede, along with sales and home prices.
But, it's not all gloom and doom on the other side of the boom. Flexible hours, commission-based income and the opportunity to be your own boss are still attractive to many, including Silver. She says she's still on track to earn the $30,000 she projected for this year, working 15 to 25 hours per week, far more than the $9,800 she grossed in 2005.
Silver isn't the only person who jumped on the real estate bandwagon.
More than 2.6 million Americans have real estate licenses, and roughly half of them belong to the National Association of Realtors. Last year, NAR added 163,117 people nationwide, pushing its membership numbers to a record 1.2 million people by year's end. Tom Stevens, president of NAR, says the group has added 500,000 new members since 2000. "That usually happens when there's a good market, and we've had five record years of sales. There's a lot of interest in the business."
Now Stevens expects the slower real estate market will curb the influx of new real estate agents.
Whether the nation's sales are up or down, peddling real estate means more than hanging out a shingle and putting up "for sale" signs.
Agents encounter fierce competition, making it difficult to earn top dollar. On top of that, most real estate agents operate as independent contractors, meaning they run their own small businesses and pay myriad expenses that staff employees don't. Many point to the recent interest rate hikes and a softening housing market as harbingers of an exodus from the profession.
To make it in this business, agents have to market constantly to compete, says Martha Rooney, a real estate agent in New England. She says the intense competition turns some new agents away from the business.
Rooney has been selling homes for eight years. During her first six months as an agent she grossed $20,000; last year, she pulled in $75,000 before subtracting her expenses _ that's well above average. In 2004, the average gross income for members of NAR was $49,300. And the NAR members spent a median of $8,200 on business expenses, up from $6,900 in 2002.
Anthony Marguleas, broker and owner of high-end realty firm Amalfi Estates in Los Angeles, thinks the industry shouldn't be spitting out low-producing agents. Instead, it should be harder to become one.
Marguleas researched the number of hours it takes to become a licensed real estate agent, which varies by state. In California, he says, getting a license calls for a 45-hour class. Nationwide, the requirements range from a low of 24 hours in Massachusetts to a high of 120 hours in Ohio.
"Real estate agents typically get ranked right around used-car salesmen. The bar is so low to get a real estate license," says Marguleas, who has been in the real estate business for 15 years. "I would love to make it as hard as it is to become a doctor or lawyer to raise the professionalism. So many people who do this are part-time and not very knowledgeable about what they're doing. It's why consumers have such a poor image of real estate agents."
J. Andrew Hansz, whose own credentials include the prestigious Chartered Financial Analyst designation and a Ph.D. in real estate, has taught graduate-level real estate classes at the University of Texas in Arlington since 1999.
He says the cyclical nature of real estate may thin out the herds of agents. "A lot of people flood in when times are good, and a lot of people flood out when times are bad. When the market isn't booming, there isn't a lot of money to be made."
However, Hansz is optimistic about people entering the industry now.
"This is a good time to learn," Hansz says. "You don't want to start when business is booming, because once you get up and started the boom is over."
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The benchmark 30-year, fixed-rate mortgage rose 11 basis points to 6.42 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.32 discount and origination points. One year ago, the mortgage index was 6.1 percent; four weeks ago, it was 6.44 percent.
The benchmark 15-year, fixed-rate mortgage rose 11 basis points to 6.11 percent. The benchmark 5/1 adjustable-rate mortgage rose 17 basis points to 6.23 percent.
(E-mail Otesa Middleton Miles at editors(at)bankrate.com.)
