Is the increase in total number of real estate agents good or bad? ... 134

#NAR #realestateagent #Realtor

Deerwood Realty and Friends Podcast

Interesting question posed by Tracy Velt at RealTrends..Does this concern you as a real estate broker?

Subscribe Here https://www.youtube.com/c/Deerwoodrealtystl

Thoughts:

1. So, I’ve been in the business a long time. I’ve had good years and I’ve had bad years. Real Estate Sales, by everything I have experienced, is a cyclical industry. Let me try to illustrate.

When the seller market gets hot, everyone jumps into real estate sales. It happened in the mid 200’s.

As more and more people jump in, established realtors lose business. For example, my 2020 was awesome, my 2021 was terrible. Why does this happen? Well, people tend to choose their family/friends as a real estate agent first, then go with a professional. So many family and friends get licenses, they get the inside track on that listing or buyer. No amount of advertising or word of mouth beats these connections.

2. Agents need to eat. What usually happens is the same people who enter the market and cause everyone to produce fewer transactions come to the realization at some point that real estate sales aren’t for them and they leave. What will happen is that you still see it in the year over year numbers. At a certain point, I will start to do much much better as people leave the field….AS LONG AS I CAN HOLD ON.

3. Let’s do an example. Say you are Joe the realtor, and you usually do 10 deals a year(the average) On a year with increased agents, you might only do 4 deals…your expenses, gas, insurance, marketing could have increased or stayed the same, but your sales are down…way down.

But let’s say you are Becky the new realtor. You just got in the business and you’ve done 2 deals all year. You’re probably not going to make it. You probably don’t have the cash to continue in an overheated market. So you leave.

2009-2010 was a little interesting because much of the blame was put on real estate agents pricing homes at silly prices and conning the public into buying them….which caused a few agents to leave the business. That blame has now been shifted to the lenders for the most part.

4. I have to keep large sums of cash available for this cyclical action. When I see agents and teams spending huge sums of cash, I see that they don’t know what is going to happen next. And, it’s not good. And, remember, it’s easy to spend money when the market is going well, and as more new agents enter the market, the amount of spend on your marketing versus your actual lead pool gets lower…you end up confronted with the question of whether you should spend more for leads…and some do. Those are the places that end up going under because they are spending more on advertising commitments than what they are making.

5. This is not to say that one shouldn’t become a real estate agent because of the increased competition. This is just to try to explain that real estate sales is a mature business. There are some people who jump in and have great success and never look back. There are others that build a great book of business over time. And, unfortunately, there are many who fail for all sorts of reasons.

6. Some feel that the brutal competition amongst real estate agents is great for the consumer, because it naturally drives commissions lower. This doesn’t take into account the agents being squeezed on commission are already making fewer transactions, which makes being an agent super difficult. But, the consumer may get a break. My commission doesn’t change very much with regards to the competition. There is a lot of work and a lot of time and a lot of expense relative to being in business, and I see no reason to take losses just to stay busy.

7. To answer the question, does the increased number of agents concern me as a real estate broker, I would have to say that it doesn’t concern me any more than anything else. Tech bros in iBuying scares me, because if they hoard houses, it’s going to make affordability much more difficult for homebuyers. Same thing with Wall Street purchasing single family homes for investments on a scale we’ve never seen before. This again effects home ownership and their ability to purchase and maintain communities.

Source: https://www.realtrends.com/there-are-more-realtors-than-ever-and-few-homes-to-sell/

NAR monthly report ended Dec 2021

media@deerwoodrealtystl.com

Check us out at https://www.deerwoodrealtystl.com/