Monday, May 21, 2007

Realtors' income goes bust

The St. Petersburg Times reports tough going for area real estate sales professionals.

"Realtors with two years of experience or less earned a median of $15, 300."

"Members in the business two years or less handled a median of $800, 000 in business."


That's still a shade under 2% to the agent alone which goes a long way towards explaining just how grossly inefficient the realty business is.

22 comments:

MotivatedRenter said...

murst?

The Dude said...

FIRST

The Dude said...

Dammit....Dammit

Foiled again!

MotivatedRenter said...

For many, 15300 is still too much.

Rob Dawg said...

It should be easier to buy a house than a car. That reminds me to pull up the quotes from Buckminster Fuller about the Dymaxion House and his condemnation of the home building industry. It was in his estimation prehistoric. No offense Ogg.

The Dude said...

That's what happens when everybody and their brother gets in the business....one that takes little time and training. Mortgage brokers are no better. HERE is a broker who used to be my Dr Pepper rep when I was in McD's. One day he was a "pepper" and the next hawking loans.

Legion said...

@The Dude
"That's what happens when everybody and their brother gets in the business....one that takes little time and training"

Well we have our own poster child for that, I mean to go from selling Olympic Pins to mortgage broker/(ha ha ha)real estate investor. Pretty much anything that the retarded duo get into by default HAS to have a low barrier to entry.

Benoit™ said...

Nigel Swaby will no longer be able to afford the lease payments on his BMW. ;-)

The Dude said...

Legion,

Yeah....I thought of 'ol Nigel when I located Todd's web site. I happen to know Todd doesn't have:

1) An award winning blog
2) A BMW
3) A koi pond, that's fish, and stuff.

He does own a pleather jacket...at least he did the last time I saw him. Maybe there's a connection....

Anonymous said...

15.3k? I'm a poor college student and even i make more than that. Dont Relators have to pay some crazy monthly fees as well?

Anonymous said...

The Dude, after he loses his job, his next quote will be:

"Hi i'm Todd, now with the sale of this car stereo let me tell you about our extended service program"

Benoit™ said...

I've put up a brief page about Casey's alleged Marine brother, named Tim. Any help from the CaseyPedia editors (or anyone else) at citations would be helpful.

I have other circumstantial evidence to post, but chief is Tim's flickr account, in which he's shown in uniform -- and more importantly, in Hawaii (where Casey and Galina stayed with him to save money, when they went on vacation).

Before I get lambasted over throwing a family member into the mix, I'm not defaming the guy in any way... in fact, he's arguably the most accomplished Serin sibling there is :-p

Ogg the Caveman said...

$15k is around $7.50/hr, assuming full-time (which may not be a safe assumption).

I have made $7.50/hr:

* Unloading truckz
* Washing dishez (barely)
* Cashiering
* Answering phonez (You want haterz, work tech support)
* Moving officez
* Doing odd jobz

All of those looser W2 jobs provided a more secure income than these real estate agents get. There might have been little long-term security, but each week I knew how much I was going to work and exactly what I'd get paid for it.

I didn't have a BMW, pleather jacket, or a pond with koi (a kind of fish) though.

BelowTheCrowd said...

MISH had some thoughts about this a while back. I suspeect the stuff he's talking about is just the start: MISH's article

Rob Dawg said...

I want title insurance gone. There is a county recorders office. File a notice to transfer title. Put a notice on the recorder's web site. Three business days later, voila.

MotivatedRenter said...
This comment has been removed by the author.
MotivatedRenter said...

Why isn't there a caseypedia for wheat grass? Inquiring minds would like to know.

Benoit™ said...

@ Motivated Renter:

There is a Caseypedia™ page about Wheatgrass, although it's under "Wheatgrass Shot".

I will add re-direct pages if you search for "Wheatgrass" or "Wheat grass", thanx

walt526 said...

I'm considering taking some CC classes this summer and fall to be able to get my real estate license for when we go to buy in 2008 or 2009. 2-3% of the commission on ~$300k+ seems like a worthwhile investment of 30-40 hours, don't you think think?

BadjerJim said...

@Walt526 11:50pm

Hey... that's a great idea - become a real estate agent and pocket all that commission when you buy your own house!

I've been a real estate agent for just over three years, and I can tell you how that pencils out:

Here in WA state (and most others) it's 60 class hours, not 30-40. Cost of the class (for the online version) is about $500. Maybe your CC will cut you a break... I've never heard of a CC giving a course that counts as accredited "clock hours" for the requirement. Then the state charges $150 for the test, and you finally have your license.

But wait: that's only a real estate salesperson license, NOT a broker's license. Big difference. As a salesperson (agent) you have to find a broker where you can "hang your license" - and you have to do this before you even TAKE the test (the license is mailed to your broker).

Okay, so you find a broker that you can convince that you're going to become a serious real estate agent. So far, so good. Now you have your annuall Realtor dues (payable in advance) at about $500. And the MLS access fee: depending on your state, figure about $400 a year. And to play this game and convince your broker you're serious... business cards and refrigerator magnets and all the other crap that real estate agents have. Figure about $200 if you shop carefully.

So you're up to $1,750 in direct expense just to get your license, and legally collect commission on a real estate transaction.

Oh wait... there's one other little detail: your broker wants part of your commission. If you're a new agent, your're going to have to go with a national franchise broker, like C21, ReMax, etc. They're the only ones who take new agents with no experience.

How much of a new agent's commission to these national franchises take? Fifty percent. Experienced agents get a better rate, but that's after years of proven track record... NOT your first transaction.

Oh, and paperwork. Since you're the agent (for your own purchase), you're going to have to arrange for the property inspection, pest inspection, and deal with the title company and escrow company. And ride herd on all this paperwork within the time confines of the contract. You've got a steep learning curve for this stuff, even though you have your license!

So let's run some numbers: You find your dream house at $300K+, and let's say it's a full 3-percent commission. Let's say it works out to be $10K in commission, just for easy numbers.

Broker takes half. You're down to $5K in commission. Broker's 'transaction fee' takes another $500. You're now down to $4,500.

But then it cost you $1,750 to become an "agent." (Plus your time.)

Your net gain on this one transaction: $2,750 (On which you have to pay income tax, of course.)

Still sound like a good idea?

A much easier way to game the system is find a new and hungry real estate agent, and say: "Look: I'm a fully qualified, pre-approved buyer. I won't give you any BS, and this will be a smooth transaction. There's a 3-percent commission on the property. I want 1-percent of that credited back to me at closing. If you won't do that, I'll find an agent who will."

Which is perfectly legal. This way, you come out $3,300 to the good. And none of the charade of becoming a "real estate agent."

walt526 said...

BadgerJim,

Thanks for the feedback, although what might be true in your neck of the woods is not the case in CA.

To get my broker's license (I agree that just a saleman's would be a waste of time), it would be 8 course (mostly 3 units each, but one or two might be 4 units each). Let's say 30 units total, for the sake. In California, community college classes are $20/unit (regardless of online or in-person). So $600 total in tuition. Add another $200 or $300 for books.

As I already hold a degree (Economics and Political Science from UCD), I would be able to get a education in lieu of experience waiver (brokers would otherwise require 2 years of RE sales experience).

The test and application fees (including fingerprinting) would cost less than $300.

So I'm looking at an outlay of about $1200. This is to get a BROKER'S license (sales would require only three courses, so about half the cost), so no splitting the commission. Becoming licensed does not require joining CAR (contrary to what those bloodsuckers would have you believe), so no need to waste money on annual dues. So MLS subscription and whatnot is about $500.

So a total outlay of $1700 and some hours on course busywork to save a possible $9000 (or more, depending on the sale price of the home). Granted, there would be a little bit more paperwork involved as you say, but I have a hard time not seeing how I would come out well ahead if I were willing to spend the time to complete the coursework.

I should mention that my father is a retired family law attorney who is familiar with estate transactions and I have paralegal and accounting training/experience as well, so I'm not that intimidated by the prospect of mind-numbing forms.

Plus, in all likelihood this will not be the only home that I purchase, so there will be an opportunity to profit from a pretty modest investment in education over the next several months.

The barriers to entry are unbelievably low to become a real estate agent, especially in California where community college tuition is the lowest in the country.

Rob Dawg said...

I'm with Walt, I will be community college slumming to get my brokers license before resuming purchasing income generating properties late '08 certainly starting by '09. Competetive advantage if nothing else.