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Real Estate News Daily Briefing

May 26th, 2007 8:55 PM by Ron Mastrodonato

NAR member survey shows patience, professionalism pay over time

WASHINGTON – May 11, 2007 – Realtors® come from varied backgrounds, work mostly on commission and become successful over a period of time, according to a new member survey by the National Association of Realtors® (NAR).

The typical member is 51 years old, works 40 hours per week and has been in the business for seven years. More than 1.3 million Realtors – about half of all real estate licensees – are characterized in NAR’s 2007 Member Profile report.

Median income was $47,700 in 2006, down from $49,300 in 2004, which had also had declined from 2002. Members licensed as brokers earned a median of $73,700 last year, while sales agents earned $34,600. During the last two years, NAR membership increased 23.2 percent.

Paul Bishop, NAR’s manager of real estate research, said member growth is distorting the 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.”

Realtors in the business for two years or less earned a median of $15,300, while those with three to five years of experience earned $44,200. For six to 15 years, the median was $64,600, while members in the business for 16 years or more earned $76,200.

One quarter 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. 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.

Only 4 percent of members report real estate is their first career. The majority comes 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.

Even with the varied backgrounds, NAR President Pat V. Combs said there are common qualities among the membership.

“Realtors are people-oriented with strong interpersonal skills – they enjoy helping buyers and sellers, and bringing the deal together,” Combs said. “They’re flexible to accommodate client schedules, entrepreneurial in their approach to business, and in today’s world they also have strong technical skills. In short, successful Realtors are not only high-tech, but also high-touch.”

Thirteen 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. Only 10 percent work fewer than 20 hours per week and 30 percent work 20 to 39 hours per week, while 15 percent work at least 60 hours per week. Nearly six in 10 are women, and the typical respondent has been with their firm for four years. Five percent are under 30 years of age while another 6 percent are 30 to 34 years old; 12 percent are 65 or over.

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. Among Realtors working as full-time sales agents, men earned a median of $61,300 while women earned $54,400. Full-time male brokers made $94,000 last year, while the median income for women brokers was $80,300.

Three-quarters of Realtors specialize in residential brokerage, six in 10 have a Web site, and one in five has at least one personal assistant.  In addition, 74 percent maintain a home office for business purposes.

Among sales members, the median number of transaction sides handled last year was 10, equivalent to five full transactions. In 2004, the median number of transaction sides was 12. Transactions have two sides--buyer and seller.

In 2006, typical residential sales members sold one of their own listings and five of someone else’s, while other agents sold four of that member’s listings. The median sales or leasing volume was $1.9 million, down from $2.2 million in 2004.

Once again, newcomers are diluting median figures. 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.

Professional courses and training are important components of Realtor membership. Many hold at least one professional designation, with the most popular being GRI (Graduate, Realtor Institute), held by 18 percent of respondents; ABR (Accredited Buyer Representative), 13 percent; and CRS (Certified Residential Specialist), 8 percent.  Smaller percentages hold one of 13 other designations.

In addition, members offering specialized services belong to one or more of NAR’s affiliated institutes, societies or councils. Ten percent belong to the Council of Residential Specialists, 10 percent are members of the Real Estate Buyer’s Agent Council, 4 percent the Women’s Council of Realtors and 3 percent the Council of Real Estate Brokerage Managers; smaller percentages belong to five other affiliates.

Most Realtors hold a sales agent license, 63 percent; followed by a broker’s license, 22 percent; broker associate, 16 percent; and appraiser license, 3 percent. One percent hold some other kind of license.

Buyer agency is popular, with 42 percent of residential specialists offering both buyer and seller agency, and another 8 percent providing exclusive buyer agency.

Among brokers, eight out of 10 report their primary business specialty is residential brokerage, followed by commercial brokerage, 5 percent; property management, 4 percent; land and development, 3 percent; relocation, 2 percent; counseling, 1 percent; appraisal, 1 percent; and international, less than 1 percent.

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 inquiries 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 50 percent of the time.

Technology is increasingly important to Realtors' success. Ninety-three 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.

The most popular software is multiple listing, 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.

Although three-fourths of all NAR members specialize in residential real estate, 27 percent have a secondary specialty in relocation, 18 percent in commercial brokerage, 18 percent land development, 16 percent counseling, 11 percent commercial property management, 8 percent residential property management, 4 percent residential appraisal, 4 percent international, 2 percent auction and 1 percent commercial appraisal.  Residential brokerage was cited as a secondary business for 12 percent of respondents, who had other primary specialties.

Some NAR members are involved in ancillary services, with the most common being mortgage brokerage, mentioned by 6 percent, followed by title insurance or processing, relocation, and home warranty, each mentioned by 4 percent.

Half of all members are affiliated with an independent, non-franchised 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 non-franchised subsidiary of a national or regional corporation. Less than 10 percent report their firm was bought by or merged with another firm since 2005.

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 more than one category.

Realtors are well-educated, with 44 percent holding at least a bachelor’s degree compared with 26 percent for the U.S. labor force as a whole. They participate in the political process more than other segments of the population, with 95 percent registered to vote in comparison with 66 percent for the United States as a whole; 90 percent voted in the last national election and 81 percent in the last local election.

Fifteen percent of NAR members are fluent in a language other than English, and 10 percent were born outside the United States. One out of three members report they have clients who are foreign nationals.

Four in 10 Realtors own other residential properties in addition to their primary residence. While most of these are investment homes, 17 percent own at least one vacation home. In addition, 11 percent own at least one commercial property.

Members generally are optimistic about the future, with 80 percent saying they are confident they will remain active in the business during the next two years; only 5 percent were uncertain.

The 2007 NAR Member Profile was based on a survey of 140,000 members, which generated 10,774 usable responses – representing an adjusted response rate of 7.9 percent. Income and transaction data are for 2006, while other data are representative of member characteristics in early 2007. Some data is not directly comparable with previous surveys due to changes in questionnaire design. The study can be ordered by calling 800/874-6500, or online at http://www.realtor.org/newresearch. The cost is $50 for NAR members and $125 for non-members.

© 2007 FLORIDA ASSOCIATION OF REALTORS

 

Builders to sellers: We’ll buy your house if you buy one of ours

DETROIT – May 11, 2007 – Gerald and Arlene Zemke could see themselves enjoying the walking trails, tennis courts and swimming pool in Pulte Homes’ Bridgewater development in Brownstown Township, Mich.

There was just one problem: They needed to unload their home of eight years in nearby New Boston, and the real estate market was in a slow crawl.

“I didn’t want to build a house then have my house unsold and end up with two mortgages,” said Gerald Zemke, 62, who retired from federal government work last year.

But a Pulte salesman arranged for the couple to speak with two companies that help buyers in just such a predicament. The Zemkes went with Marketplacehomes.com and closed last month – selling their old home and buying a new one the same day.

The sale of the old house was “simply something that was taken care of for us,” said Arlene Zemke, 59.

Builders are sitting on an increasing supply of unsold houses – and paying the interest on construction loans until they are purchased. So some will find someone to buy yours if you buy one of theirs.

Builders like Pulte Homes, which does business in more than two dozen states, are either buying the houses outright or working with real estate agents or an investment company to help get potential buyers out of their old homes and into one of the builders’ new ones.

It’s not a new approach, but today’s soft real estate market has more builders offering such plans to prospective buyers in order to move homes sitting unsold in their subdivisions.

Here’s how the buy-buy programs work:

• Sellers are offered 85 percent to 90 percent of their home’s appraised value or the value based on comparable sales prices in the area.

• Other charges are added, including a real estate commission and closing costs, which average roughly 2 percent of the gross sale.

• Some programs charge a flat fee. Marketplacehomes.com, for instance, typically charges a 13 percent fee.

• The company that purchases the properties resells the homes for a profit under rent-to-buy programs.

• Builders who profit when you buy one of their new homes promise you still get a great deal on the new property in this slow market.

“They’re still getting all the great incentives that we currently have to move products,” said Sam Palazzolo of Palazzolo Brothers in Michigan. His company started its Buyers Protection program last summer and promises to buy your home if it doesn’t sell in six months.

“Maybe we’re throwing in the landscaping, maybe we’re throwing in a walkout basement,” Palazzolo said.

The Zemkes, who bought a model home that had sat empty since it was built last July, said Pulte paid their closing costs, one year of homeowners insurance and a year of homeowners’ association fees. The builder also paid a $1,000 upfront amenities fee and bought 2 points on the couple’s mortgage.

Still, there’s a catch: Some builders, including Pulte, require you to use their financing arm, which could limit your ability to find the lowest interest rate.

The Zemkes got a three-year, adjustable-rate mortgage for 5.35 percent through Pulte Mortgage, they said.

Other builders could require you to use their title company, home inspection or other services, said Pava Leyrer of the Michigan Mortgage Brokers Association.

Leyrer advises people who are considering such programs to be aware of all the terms.

Those who are anxious to get out from under an old home might skip the fine print and end up paying much higher prices for services, she said.

“In a market like ours right now, a seller’s a little bit more desperate,” Leyrer said. “Make sure you’re not being pressured.”

Also keep in mind that offers of 80 percent to 90 percent of the appraised value, plus a 6 percent commission and closing costs, take a chunk out of your equity, Leyrer said.
Some sellers may be able to get more for their home if they can wait for the market to turn around.

The Zemkes, however, think they got a good deal for their old 1,700-square-foot house.

“It was close to the amount that we figured we would be able to sell it for,” Arlene Zemke said.

And the fees may seem steep, but in today’s buyers’ market where property values are falling rapidly, “Your offers are going to come in at 10 percent to 15 percent less” than list price anyway, Palazzolo said. “The buyer’s got to look at it as how bad they want” the new house.

Builders were initially hesitant to take deals contingent on someone selling a home, said Mark Charbonneau of ERA Classic in Fraser, Mich.

But in the past year, “They’ve started to build someone’s house, then the buyer says, `I really can’t buy it because my current house is still for sale,’ “ he said. “Then the builder’s left holding the bag.”

ERA Classic has worked with six buyers in the past year, Charbonneau said. The company’s program offers sellers 90 percent of the appraised value of their home and charges a 6 percent sales commission. If the home later sells at a profit, they’ll return the commission to you.

“It’s just a win for everybody,” Charbonneau said. “Builders need it. Buyers love it.”

© 2007 Detroit Free Press, Ruby L. Bailey. Distributed by McClatchy-Tribune News Service.

 

 

Posted in:General
Posted by Ron Mastrodonato on May 26th, 2007 8:55 PM

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