I read an interesting article today in the Las Vegas Review-Journal that has to do with the impact of the real estate market on agents. The downward pressure on house prices coupled with reduced buying has impacted the real estate agent career path significantly.
Raising two teenage daughters in Las Vegas is tough enough. Throw in 60-hour work weeks and a 50 percent reduction in income, and life for the husband-and-wife Realtor team of Joe and Linda Stewart has become a lot more stressful in the last couple of years.
They’ve had to trim salaries and staff at their Realty Executives office, cut direct-mail postage costs, advertise less in glossy home magazines and do more virtual tours on the Internet.
At 6 percent commission, typically split between buyer and seller agents, that’s a loss of $781.5 million in commission, enough to force about 5,000 Realtors to give up their licenses and thousands of others to take part-time jobs to supplement their income.
It’s all part of the adjustments Las Vegas real estate agents have made as home sales fell from more than 64,000 in 2004 to 45,000 last year and median prices dropped from $290,000 to $123,000.
Even beyond the reduced numbers and quantity (hey, 5% of $300k is a lot more than 5% of $150k!), the increased workload associated with short sales means more time spent on lower revenue producing properties for real estate agents, ultimately impacting the profitability to agents.
So, how can investors and agents make the most of the situation? It’s by improving your short sale efficiencies. Let’s face it, in today’s economic climate, being proficient at short sales is a requirement, not a bonus. It is absolutely critical. Agents can help save themselves time by working with investors who will do a lot of the legwork. Software like Short Sale Artisan also helps out with increased efficiencies.
I’ve never bought into the “Excuses” category. In the article, there is an interesting blurb about a particular realtor who quit the real estate market because short sales were too difficult:
Christopher Rauschnot was a Realtor with Rise Realty, marketing arm for the Pinnacle high-rise luxury condominium project once proposed on Tropicana Avenue. He gave up the designation and went back to being a sales associate when the market soured.
“It’s too expensive for fees every quarter,” he said. “I tried to do a couple short sales and the banks never got back to me. I couldn’t perform for my clients. There just wasn’t any business for me.”
I find this to be lamentable. Is the market as lucrative and easy as it was six or seven years ago? Of course not! But it’s hardly impossible, and being adaptable and flexible and staying current with the news (like reading this blog!) will help.
You can always weed out the best real estate agents. They return calls, are commensurate professionals, act in the best interest of their clients, and are simply organized and confident. In a way, the downturn in the real estate market ends up helping out the average real estate investor, homeowner, or anyone else who needs the services of a licensed agent because so many under performing half-assing it realtors had no choice but to find a different career path.
That doesn’t mean it’s easy, but there are plenty of agents who are succeeding in difficult times. So find a way to make it happen!
Commissions are not set in stone, but the 3 percent split for each agent is most common, he said. They may be lower for listing agents of real estate-owned properties, or foreclosures, because of the high transaction volume, and short-sale commissions frequently get adjusted downward for both parties.
Wasn’t HAFA supposed to alleviate this? Hmm….
Along with receiving less in commissions, real estate agents are working harder on short sales and foreclosures, which account for about 70 percent of home sales in Las Vegas. Short sales, or sales for less than the balance owed, require lender approval and can take four to six months, though Realtors are reporting some progress in shortening the process.
“You work three times as hard for one-fourth the income,” Susan Rubin-Yehros of Royalty Realty Las Vegas said. “You really have to hustle and you always have to be accommodating, more so today. If someone calls at 8 o’clock at night, you’ve got to be very patient, very considerate. People are hurting. You understand their pain and there’s only so much you can do.”
Just as we said…. short sales take more work. So find ways to improve your efficiencies, just like Steve Hawks here suggests!
Realtors need to be diversified and flexible, Steve Hawks of Platinum Real Estate Professionals said. He’s doing short sales in California and Las Vegas, working with investors at trustee sales and helping buyers find homes that are reasonably priced.
“So because my overhead in Las Vegas is quite low I’m doing OK,” he said, “though others in my office who got used to the bubble income are having a more difficult time adjusting.
Recap in a nutshell:
- Stay positive
- Don’t settle for mediocrity
- Find ways to improve your efficiencies
- Become proficient in short sales, REO, and distressed market techniques
- Partner with investors and build relationships with those who can help you
Nothing is impossible and there are always silver linings in the cloud. When the market does come back, those realtors who succeeded through these times will be some of the best around!
