The typical Realtor is making less money and doing fewer deals as more people have joined the profession, according to the latest National Association of Realtors member survey.
Realtors’ median income was $47,700 in 2006, down 3.2 percent compared to 2004. The median income was $49,300 in 2004, down 5.6 percent compared to 2002, according to the 2007 NAR Member Profile.
While the median income for sales agents slipped to $34,600 in 2006 — an 8 percent drop compared to a median income of $37,600 in the 2004 survey — it was a very different story for brokers.
Brokers’ median income grew 39.6 percent to $73,700 in 2006 compared with $52,800 in the 2004 survey.
Experience appears to be a major factor in Realtor income. Realtors in the business for two years or less earned a median of $15,300 per year in 2006, while those with three to five years of experience earned $44,200, those with six to 15 years in the business earned $64,600 and veterans with 16 or more years of experience earned $76,200.
While the latest survey found that about 60 percent of Realtors are women, women sales agents and brokers tend to earn less than their male counterparts.
Men earned a median income of $58,600 in 2006 and were more likely to be brokers, while women earned $42,000 and were more likely to work part time, according to the survey results.
Men working full time as sales agents had a median income of $61,300 in 2006, up 12.7 percent compared to the median income of $54,400 for women. And men working full time as brokers earned $94,000 in 2006, or 17.1 percent higher than the median income of $80,300 for women working full time as brokers.
The report is based on 10,774 usable responses to a member survey. Statistics related to Realtor income and transactions are for 2006, while other data is representative of member characteristics in early 2007, the association reported.
In the past two years, NAR membership grew 23.2 percent. And that has meant fewer deals per Realtor, on average.
The median number of transaction sides handled by sales members in 2006 was 10, which is the equivalent to five full real estate transactions. That compares to 12 transaction sides in the 2004 survey and 13 transaction sides in 2002.
About 80 percent of survey participants said they are confident they will remain active in the business during the next two years, with 5 percent expressing uncertainty.
Christina Ethridge, a listing specialist for the North Idaho Dream Team, a part of GMAC Northwest Real Estate in Coeur d’Alene, Idaho, said the number of Realtors in her market area has grown from about 600 in 2000 to about 1,350 Realtors last year, and she doesn’t believe the market will sustain all of those real estate professionals — especially those who are struggling.
“I think it’s their intention (to stay in the business) — I don’t think it’s reality,” she said. “It always seems like fewer and fewer Realtors are doing more and more of the deals,” she added.
Chang-Tai Hsieh, an associate professor of economics at University of California, Berkeley, said the median-income drop for Realtors “is clearly driven by the fact that there has been excessive entry in the last two years. You would expect to see some exit in the near future, but as soon as housing prices pick up we’re going to see more entry and then that’s going to drive down (income).”
While there are top-producing Realtors who make a lot of money, “on average Realtors are not making much money,” he said.
Hsieh said that while typical Realtors may not make much money, he believes that the prices consumers pay for real estate services are “extraordinary” and that those services “shouldn’t be costing that much.” His analysis of Realtor commission, population and income was cited in a real estate competition report released this week by the U.S. Justice Department and Federal Trade Commission.
“What is particularly tragic about this industry is that not even the Realtors benefit from this,” he said. A much smaller group of real estate professionals, who charge for hourly work performed, could create a more efficient marketplace, Hsieh said.
Paul Bishop, NAR’s manager of real estate research, said in a statement that member growth is distorting the income data.
“With rapid member growth in recent years, newcomers — those in the business for two years or less — now account for nearly a quarter of all Realtors and are diluting median income,” he said.
“Since most agents work on a commission and become successful over time through training, repeat business and referrals, income in those early years can be quite lean as agents establish themselves. Experienced professionals earn more as their skills sharpen and their contacts expand.”
About 25 percent of all business is from referrals or repeat business from previous clients, ranging from 7 percent for newcomers to 41 percent for respondents with at least 16 years of experience, according to the survey. Seven out of 10 are compensated through a split-commission arrangement; 17 percent receive a full commission; and another 3 percent receive a commission plus a share of profits, according to the report.
About 4 percent of members report real estate is their first career, according to a summary of the survey results. The majority come from a variety of other fields, including management, business or financial, 20 percent; sales or retail, 15 percent; office or administrative support, 10 percent; education, 6 percent; and homemaker, 5 percent. Twelve other categories were each 4 percent or less, NAR reported.
About 13 percent of NAR members have been in the business for one year or less, while another 13 percent have been in the business for 26 years or more.
About 10 percent work fewer than 20 hours per week, and 30 percent work 20-39 hours per week, while 15 percent work at least 60 hours per week. The typical respondent has been with their firm for four years. Five percent are under 30, while 6 percent are 30-34 and 12 percent are 65 or over.
About 75 percent of Realtors specialize in residential brokerage, 60 percent have a Web site, and 20 percent have at least one personal assistant. About 74 percent maintain a home office for business purposes.
Typical residential sales members sold one of their own listings and five of someone else’s in 2006, while other agents sold four of that member’s listings, according to the survey results.
The median sales or leasing volume was $1.9 million in 2006, down from $2.2 million in 2004 — members in the business two years or less handled a median of $800,000 in business, while those in the business at least six handled $2.6 million.
About 63 percent of Realtors hold a sales agent license, followed by 22 percent holding a broker’s license, 16 percent holding a broker associate license, 3 percent hold an appraiser license, and 1 percent hold another kind of license.
About 42 percent of residential specialists offer both buyer and seller agency, and another 8 percent provide exclusive buyer agency, NAR reported.
About 80 percent of brokers reported their primary business specialty is residential brokerage, followed by commercial brokerage, property management, land and development, relocation, counseling, appraisal and international.
Nine out of 10 members report their firm has a Web site, and 61 percent have a personal Web site, which they have maintained for a median of three years.
The typical Realtor received four inquires from their personal Web site, which accounted for 3 percent of their business. Half of all members communicate with their clients by e-mail more than half of the time.
About 93 percent use cell phones daily or nearly every day, 91 percent use e-mail, 88 percent computers, 27 percent PDAs, 23 percent digital cameras, 23 percent wireless e-mail, 14 percent instant messaging, 13 percent GPS devices, 2 percent blogs, 1 percent podcasts and 1 percent RSS feeds, according to the report.
The most popular software among members is multiple listing service software, with 74 percent of Realtors using it daily or nearly every day and another 13 percent using it a few times per week. Other frequently used software includes contact management, document preparation, comparative market analysis, and electronic contracts and forms. Less frequently used software includes transaction management, graphics or presentation, property management and loan analysis, NAR reported.
About 6 percent of NAR members participating in the survey said they are involved in mortgage brokerage, followed by title insurance or processing, relocation, and home warranty — each mentioned by 4 percent.
Half of all members are affiliated with an independent, nonfranchised firm; 34 percent are with an independent franchised company; 11 percent with a franchised subsidiary of a national or regional corporation; and 6 percent with a nonfranchised subsidiary of a national or regional corporation. Less than 10 percent report their firm was bought by or merged with another firm since 2005, according to the survey.
Eighty-three percent of Realtors work as independent contractors. Seven out of 10 receive no benefits from their firm, although 24 percent are covered by errors-and-omissions insurance; 93 percent must obtain health insurance elsewhere.
Eighty-seven percent are Caucasian, 6 percent Hispanic, 4 percent African American, 3 percent Asian, 1 percent Native American and 1 percent other. Respondents could choose from more than one category.
About 44 percent of members reported that they hold at least a bachelor’s degree, compared with 26 percent for the overall U.S. labor force. About 15 percent are fluent in a language other than English; 10 percent were born outside the United States; and 33 percent of members report they have clients who are foreign nationals.
