Homes sell for more but agents are not richer

queen anne house
Queen anne

You would think that real estate agents would have had the best year ever in 2017 with home prices up.

On average agents had fewer sales because of the shortage of homes for sale.

According to a report by the National Association of Realtors, the median gross income of Realtors was $39,800 in 2017, down from $42,500 in 2016.

At the same time, the median number of transactions for Realtors fell to 11 in 2017, down from 12 in 2016. Even though we are seeing record high prices real estate agents on average are not seeing record-breaking earnings.

There are a couple of other things going on too. The number of real estate agents has increased and the competition for listings is causing lower commissions.

I can’t see a downside for homeowners as we remain in a strong sellers market.

People often see the job of real estate agent as being easier than it actually is. . . which is probably why there seem to be so many new agents. 🙂

REALTOR isn’t a job title

I am a REALTOR because I belong to the national association of REALTORS. Most of the people I meet use REALTOR as my job title. There are now about 1.3 million REALTORS and every the National Association of Realtors (NAR) publishes some statistics about members.

Here are some interesting highlights from the latest survey:

Demographic Characteristics of REALTORS®

  • The typical REALTOR® was a 54-year-old white female who attended college and was a homeowner.
  • 63% of all REALTORS® were female.
  • The majority of REALTORS®—83%—owned their primary residence and 39% owned a secondary property.

Office and Firm Affiliation of REALTORS®

  • 53% of REALTORS® were affiliated with an independent company.
  • Nearly 9 in 10 members were independent contractors at their firms.

Business Activity of REALTORS®

  • For the fifth year in a row, the difficulty finding the right property surpassed the difficulty in obtaining mortgage financing as the most cited reason limiting potential clients.
  • Most REALTORS® worked 40 hours per week in 2017, a trend that has continued for several years.
  • The typical REALTOR® earned 12% of their business from repeat clients and customers, and 17% through referrals from past clients and customers.

Income and Expenses of REALTORS®

  • In 2017, 35% of REALTORS® were compensated under a fixed commission split (under 100%), followed by 25%with a graduated commission split (increases with productivity).
  • REALTORS® with 16 years or more experience had a median gross income of $78,850 compared to REALTORS® with 2 years or less experience that had a median gross income of $8,330.
  • The largest expense category for most REALTORS® was vehicle expenses, similar to last year, which was $1,310.

. . . the more you know.

Even though the typical REALTOR is a 54-year-old white woman, advertisements about real estate agents and companies most often feature mostly men and some women in their 20’s and 30’s. The reason for this is that our culture favors youth, especially in pictures.

At one point about ten years ago the median age of REALTORS was 57. The great recession and the crash of the housing market caused older agents to quit or retire.

The job of real estate agent does not attract a lot of young people and it never has. There is no health insurance except what we purchase on our own and there are no paid vacations or benefits. To me, there are plenty of benefits.

We get to vote today

Don’t forget to vote in today’s primary. There are several important races. We will be voting for a new Governor, a

vote

Senator to fill Al Franken’s seat and a new attorney general.

Minnesota Public Radio had an election guide for those who need to learn more before they vote.

Minnesota has had 43 Governors. Each one of them has been a man. Your vote could help make history . . . but you have to vote in November too, on November 6th which is just one day after my birthday.

Vote today. Find your polling place and go there.

Time to take advantage of back to school sales

Apples

There are a lot of “back to school” sales this time of year making it a great time to buy office supplies, computers, small electronics, bedding and other household items.

A couple of years ago I took advantage of the “college” section in one store and bought a toaster and a new crockpot. Both were on sale. August seems to be the best time for sales on items that might be used in a dorm room.

Microwave ovens, laundry baskets, bedding, towels and other items can be found discounted at back to school sales. Kind of like Christmas during the summer.

This year I bought a new laptop on sale $200 dollars off the original price. I am considering a new sheet feed scanner and looking for sales.

August and September the months that I buy all of my office supplies. My business is fairly paperless but I do use some office supplies and this is the time of year that I stock up for the whole year. I’ll buy paper, pens, notebooks, folders, glue, markers and art supplies.

My own offspring are beyond school age . . which means I have more money that I can use to buy school supplies to be donated to children who need them.

This summer is going way to fast.

City sidewalks what could possibly go wrong?

Bird Scooter

I walk a lot. At least three miles a day, often closer to five or more miles a day. Many of those miles are in the downtown St. Paul area. I can tell you the sidewalks in St. Paul are a challenge. There are a lot of cement heaves caused by tree roots and actual potholes in many locations. I have tripped more than once and gotten injured more than once.

People walk down the street in downtown St. Paul without ever taking their eyes off of their phones.  Usually, they are moving slow enough so that I can stay out of their way.

In the downtown area, there are places where it is impossible to ride a bike in the street so people ride the green Nice Ride bikes up on the sidewalk.

There are other obstacles too like entire restaurants on the sidewalk leaving a thin walking path right next to the pothole-filled street with no bike lane.

Crossing a street at an intersection is a challenge. I end up yelling and pounding on car hoods to get them to see me. I have been thinking about getting some kind of a flag I can wave.

Now there are electric scooters on the sidewalk. I am told that it isn’t safe to ride them in the streets downtown so they ride on the sidewalk. Apparently, the train tracks and potholes are just too much for them.

What could possibly go wrong with scooters on the same bumpy broken sidewalks where people dine, walk, look at their phones and ride bikes?

Walking can be a good source of exercise. We should be able to safely walk on city sidewalks. How walkable a neighborhood has an impact on property values.

What is a real estate broker?

I rarely introduce myself as a real estate broker. I usually say I am a real estate agent or a Realtor®. Most people do not know what a real estate broker is or does but they do understand what a real estate agent does.

Being a broker means that I have a brokers license which in Minnesota requires that I first have a real estate license for a few years and that I get additional training and pass a test. My license is also more expensive and costs more to renew.

Real estate agents need to work under a broker if they want to sell real estate. We say that a real estate licensee’s license is held by a broker. If the broker loses his or her license then the real estate agent is unlicensed until they find another broker.

There are real estate companies that just have a broker and no agents.

A license is not required to buy or sell real estate for yourself. A license is required to represent another for a fee when they are buying or selling real estate.

Some brokers sell real estate and others have are more like managers. Associate brokers have a brokers license but are not “The Broker”. Each real estate company must have one broker of record who is responsible for all of the transactions of his or her licensees.

In some of the bigger companies, there is one broker of record and each office has a manager who often has a broker license. The manager supervises the agents and checks the paperwork. In some offices, it is an unlicensed administrative person who checks all of the paperwork.

Even though real estate agents are independent contractors brokers are required to provide supervision which is really more like oversite. Every home buyer or seller who is being represented by a real estate agent is doing so through a broker.

When there is a problem with an agent some brokers are reluctant to confront the agent because it is the agents who bring in the money. The more agents a company has the more real estate they sell and the more money they make.

Some real estate companies are run owned by huge corporations. They spend a lot of time recruiting and training agents and giving them fancy offices so that the agent will work under their brand.

Being a broker and having my own company is a good job especially for those who do not mind paying for their own health insurance and never getting a paid vacation. There are a lot of risks involved but it is mostly worth it. I have some control over my hours and a lot of control over who I work with.

Also, see:

Counting Minnesota Realtors

The Truth about Real Estate Companies

How to get a Minnesota Real estate license

Real estate teams are not always what you think they are