As the market continues to change and correct, what impact does this have on local Realtors?
As a Board of Director for both the Idaho Association of Realtors as well as the Ada County Association of Realtors, I spend a lot of time analyzing this. There is a lot of bad data out there that I continually try to quantify and correct.
Most recently, I have been hearing a lot of comments regarding the massive number of local Realtors that are reportedly dropping out of the business like lemmings off a cliff. Selfishly, I wish this rumor was true because that means more business for remaining agents like me! However, some people get confused when they see different statistics for the number of Realtors locally. They need to make sure they are looking at the same base of comparison, not last years licensee's in the state verses this years licensee's that are members of the Ada County Association of Realtors.
When I received my Realtor license 15 years ago, I was one of just over 700 Realtors in Ada County. That is my benchmark for the size of the real estate "pie".
As the population grew and the market heated up, many people decided to jump on the band wagon and get a license. I knew people in all walks of life that are treating real estate sales as a second job. When the market was great, many of them left their primary profession to claim real estate was their new "chosen profession". The number of agents increased as did the number of transactions so even though the pie grew, the number of pieces it got cut into did too, so many agents really didn't realize much of a net gain. I know when I started in the business, 20% of the agents did 80% of the business. Now 7% do 93 percent of the transactions.
Ironically, now with more agents and less sales to spread amoung them, I know many agents are back to tending bar, going back to nursing, renewing their teaching credentials, etc. as their "primary profession".
People assumed that just because the market was great for over 10 years, that Real Estate sales was easy money so we escalated from one source of real estate pre-license education in the Boise area to about 7 pumping out new agents like crazy. Because of the fairly low cost of maintaining a license, with the decrease in sales, not that many have relinquished their license making the 3,500 Realtors in Ada County compete for the smaller pie being cut into 3,500 pieces today.
If agents were employees instead of independent contractors, employers would be laying them off like Micron has had to with it's employees. Instead, some agents are just changing the companies they are working for to reduce "their" overhead by working for companies that may offer a lower commission split, but pays for the agents office and advertising costs.
Contrary to many of the rumors however, the agent count in Ada County still has not declined! Last month, there was a decrease in the rate of growth of new agents, but there was still a positive net gain. The regional MLS system did however, have it's first net loss of agents (20 agents) last month (not the hundreds or thousands some claim).
I have noticed much of the print advertising has decreased in size even though number of listings has mushroomed. I have seen other marketing cuts as well as some try to compete on discounted commissions. As agents and agencies revise their marketing plans to compete in todays market, make sure that you are still getting the services you would expect.
For example, I have actually included a new program in my marketing that has raised my commission rates (if a seller elects to) in which I provide extra marketting with 100% of the extra fees with any unused portion going back to the seller at closing! I personally believe it is better to offer more exposure for my clients in hopes of obtaining better offers netting them higher profits, than discounting the price, service, marketing and my commission and somehow expecting to acheive the same result.