May 21, 2006
Real-estate agents keep jumping into field even as U.S. market cools
Special to The Seattle Times
MARK HARRISON / THE SEATTLE TIMES
Jennifer Peterson, 31, has closed seven residential real-estate deals since April 2005, the month she got her real-estate license and joined ReMax Metro Associates in Seattle.
As new-agent stories go, she's had unusual success in the first year. The average real-estate agent in the U.S. completes about six deals a year, the National Association of Realtors says.
Most starting agents can expect to handle far fewer deals their first year. And most agents need to pay their dues, literally, in the form of association memberships, continuing-education classes, "desk fees" at their brokerage, and other startup costs before they can make a living in the field.
They also may have to "work the floor" — answer phones or hang out at open houses to try to meet unrepresented buyers.
For Peterson, getting a real-estate license wasn't necessarily a knee-jerk reaction to the booming Puget Sound real-estate market.
Pay to play: Agents' costs, fees add up
In the first few years in the business, real-estate agents earn, on average, less than $13,000 a year, the National Association of Realtors reported in August. Here's a look at some of the costs they pay:
Pre-license training: $335 to $379 for a 60-hour course
Washington state license test: $138.25
Washington state license renewal: $146.25
Brokerage fees: Most share commissions with their brokerages; splits vary.
Duplicate license: $26.50
Desk fees: Many agents pay $300 a month or more to have a desk at a brokerage.
Seattle King County Association of Realtors: $500 a year
Continuing education: $45 to $59 a course (at independent schools)
Sources: www.RealEstateExpress.com, Seattle King County Association of Realtors, Washington State Department of Licensing
Instead, she said, working for two years as an assistant to her brother, an agent in Mukilteo, taught her the ropes of the industry.
She decided she'd be a good fit for the job. She knew she'd get the occasional late-night call and that she'd be footing a big bill at the gas pump.
"I decided I really liked it," Peterson said. "I had a feeling that this was the right field for me."
How'd she manage to sell so much in her first year? Peterson said she came out of the gate successful because she began building her network of referrals before she was licensed, notifying friends and friends of friends that she'd soon be available.
"You have to come out of your shell and let everyone know you're a Realtor," she said. "The competition is fierce."
Throughout the U.S., the number of real-estate agents is on the rise. The National Association of Realtors (NAR) reported membership has climbed 44 percent since 2003, from 876,195 to 1.26 million now.
But while the number of Realtors practicing nationally has increased, those in the early years of the job may find the most competition.
NAR reported in August 2005 that the median income of agents with less than two years' experience was only $12,850, while that of agents with six to 10 years' experience was $58,700.
In Washington state, the flight into real-estate mirrors national trends. The number of adults who took courses to qualify for state real-estate licensing tests here has almost quadrupled over the past four years.
In 2001, 1,172 adults completed training; last year, 4,561 did. The number of practicing agents statewide also has nearly doubled from the 22,356 in 2001. At the end of April, 42,712 were working, Department of Licensing data show.
But at a time when mortgage rates are heading north and many prognosticators say the real-estate boom is about to stall, how will all these agents find business?
Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, says the rise in the number of agents in the state isn't surprising. However, it's likely that number will drop as the market cools.
"During periods of time when the housing market is hot, we get a surge of new licenses who are convinced this is an easy-money business," Crellin said. "During a period of stabilization in the market, this [number] will drop."
He said the number of people entering the business and the number letting licenses lapse will start to level out "very shortly."
For now, though, people continue to enter the profession. At the Rockwell Institute in Bellevue, one of several schools offering prelicense courses, classes are packed.
Kris Neese, vice president of marketing, won't release enrollment numbers but says the institute saw an uptick starting in 2001 and continues to enroll more students.
"It's been amazing," Neese said. "There's a huge demand."
The school used to have 40 or 50 people in a class but now must cap enrollment at 100 and refer students to online training.
Not all students plan to use their license for a full-time career selling residential real estate, Neese said. Some opt to work with brokers part time or want the education so that they'll be better-informed investors or sellers.
About 86 percent of new agents are said to drop out of the business during their first year, Neese said.
Some say the slowdown has begun.
Erin Sullivan, a registrar with Windermere Education in Seattle, said she sees fewer new agents these days.
When Windermere brokers hire new agents, they typically send them to Sullivan's department for in-house training, a practice common at most brokerages.
During much of the past three years, new-agent-training classes have been packed, Sullivan said, with a dozen or so people on wait lists for 48-person classes. Now classes fill up only at the last minute.
"The plateau started a few months ago," Sullivan said.
Some new agents, aware of the market, persist despite talk of a downturn.
"The market is definitely something you need to be aware of," said Earnest Watts, 23, who got licensed in November and works with Prudential Northwest Realty's Admiral office in West Seattle.
Watts, a Northwest native, graduated last year from the University of Washington. He said real estate appealed to him it and would let him take advantage of his interdisciplinary-arts major, which emphasized architecture and design.
He didn't necessarily want to be an architect, and he didn't want to get tied down in an office job. He said real estate allows him to spend time around buildings and architecture and work with people.
"I can spend time in homes, and I can help match people to the right homes," he said.
So far, Watts has helped two buyers close on single-family homes, and he has more deals in the works. But in his first year, he is definitely in the red.
"Hopefully that will only last a few more months," Watts said. "I'm definitely going to stay in the field. I enjoy it."
Other new agents wander into real estate without worrying about the market at all, and temper expectations for profit during their first year.
"I had never considered real estate," said Jessica Winston, 26, an agent with the Coldwell Banker Bain North Stevens office in Tacoma. "I didn't get into it because the market was hot. It seemed flexible."
Winston had been teaching toddlers and planned to go back to school to finish her bachelor's degree when she learned she was pregnant. She and her husband, an architect, discussed what she might do instead of returning to school.
After talking with friends, they concluded real estate might be a good fit for her. She got her license in June 2005.
Two months later, she found out she was pregnant again, so her first year was somewhat unconventional in time invested in the job. She sold her first home in January to an investor looking for a fixer.
Her second child was born in March. This month, she said, she'll work weekends again — a plus for her family because her husband can be with the children while she's in the office or in the field.
She'll take calls on Saturdays and work open houses on Sundays to meet prospective buyers.
Financially, her expectations for her first years on the job are modest. She says she'll be happy if she can make $20,000 a year while her children are young, and will try to stay calm despite talk that the market is changing.
"The people who do well in my office kind of go with the flow," Winston said. "They have fun with it."
Still, she is aware many agents are vying for business.
"You meet someone and think they're a potential client," she said, "and they already know a [real-estate agent]."
If the market were to turn, Peterson said, new agents who get nervous can find plenty of other ways to use their skills, including jobs as property managers, escrow and title agents, back-office or management roles at brokerages, and other jobs in the mortgage industry.
"If you just couldn't take it, there are a lot of other opportunities," she said. "I'm not worried about [the market] stopping."
Jane Hodges (firstname.lastname@example.org) is a freelance business writer in Seattle.
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