Rethink Real Estate Podcast Transcription
Audio length 21:54
RTRE 37 – NAR’s 2018 Member Profile Breakdown[music] [Chris] Welcome to re:Think Real Estate, your educational and hopefully entertaining source for all things real estate, business, news and tech. [Christian]: I am Christian Harris in Seattle, Washington. [Nathan]: Hi, I am Nathan White in Columbus, Ohio. [Chris]: And I am Chris Lazarus in Atlanta, Georgia. Thanks for tuning in. [music] [Chris]: Welcome back to re:Think Real Estate where we discuss all things real estate and how it can impact your business. I am Chris Lazarus here with Christian Harris and today we are talking about the new member profile for 2018 put up by the national association of realtors. I know a lot of this stuff can probably get boring because it’s…it’s detailed but we’re gonna try and make it as easy to understand as possible. So that you can understand who relators are by the numbers. So first off Christian why is this stuff even important? [Christian]: Well I think…I think it’s important because on the brokerage side from that perspective you know you want to know who the agents are out there for recruiting purposes, you know. What their average age is. Kind of what people are making. How many transactions they’re doing so you have kind of some metrics to go by and figure out. On the agent side it’s important to know what your peers are doing out there you know, are you above or beyond you know the averages. Where do you stack…stack up you know numbers wise but also demographics and stuff. It’s interesting to know. [Chris]: Yeah stuff like are you depending too much on marketing? I mean that’s good to know right? So let’s find out…So first off let’s go into who realtors are. So we’re gonna cover a little bit of the demographics. So first off 200.000 members were surveyed. They got just over 12.000 responded back. The margin of error on their number is less than a percent. So it’s pretty accurate.
So realtors right now, the average realtor is 54-year-old white female who attended college and was a home owner. Now 63% of all realtors were female which is interesting because there is this whole women up movement that is going on and trying to push for more women leadership in an industry because this is a one third male industry.
16% had a previous career in either management, business or finance. 16% in sales or retail and only 5% of realtors came in where real estate was their first career. So that…that’s who realtors are right now. There is more data. We will post a link to the findings for the NAR profile on the comments. But the business characteristics also.[Christian]: Before you get into that Chris I thought it was interesting because I read that a couple of years ago. You know because they do it every year and the typical age has come down by 3…3 years. Because I remember it was 57 and now it is 54. So that’s kind of interesting, you kind of dive into it a little later. [Chris]: Yeah I wonder if that’s because people are retiring or young blood is coming in the industry. [Christian]: Sure probably both. [Chris]: Now. Only 5% of relators are under the age of 30 so I don’t know if it’s too young but this report doesn’t have it broken down by age and decade old. So some of the business characteristics. Now we know who relators are. You know your average 54-year-old white female, some college and is a home owner. 65% of relators were licensed agents. 21% hold a brokers license. 15% hold a broker associate license.
And that doesn’t…That doesn’t state the differences between the licenses on a state basis. Take that statistic with a grain of salt because every state is different and how they do their license but just understand that about 2/3rds of the industry have their state license and about a third of the industry has either a broker’s license or a higher license than that.
A typical realtor has 10 years of experience. And 51% of realtors have a website for at least the last 5 years. 9% have a blog and 71% of members were on Facebook and 59% on LinkedIn for professional use. So for the other agents that are on Facebook they’re not using it for professional use.[Christian]: Yeah. So what do those numbers tell us? What is the so what factor of some of that stuff Chris? [Chris]: So the so what factor from a broker’s perspective, if I am marketing for recruiting, right, if I want to…If I am reading articles about all these millennials coming into real estate and I just read an article about Jen Z entering the housing market…Everybody always focuses on about “What’s the next generation? What’s the next generation?”
The next generation is not in real estate yet. Right. The next generation is not gonna be in real estate for another decade. So we’re fortunate to be on the early side of that so we get to build our business. But it’s important for a broker because now I know if I am trying to recruit agents I need to build my office to really meet the needs of who the average agent is. If I am building an office that is successful and thriving and fun and collaborative but it’s only tech, it’s like super high tech and it gets rid of all the…the collaboration that people…most people want but especially that demographic wants that is not gonna be very effective for me. Right? Christian what does that mean for you?[Christian]: Yeah. I think you know I mean you kind of take these numbers with a grain of salt because it’s almost like looking at real estate trends nationally. Like it’s interesting but it doesn’t…I mean it almost doesn’t matter like you could see the big picture but in the Seattle market it’s gonna be much different and in general there is a lot younger tech savvy, you know, professionals in real estate than maybe in a small town in mid-west where, you know, there is…I don’t know. Whatever that demographic would look like, you know. So I would take it with a grain of salt because these are big picture national numbers of the NAR. As opposed to you know New York is gonna look a lot different than the Midwest than Seattle you know. LA or San Francisco or something. [Chris]: Absolutely. And you know even demographics like in Atlanta I know for a fact that our industry is much more diverse than it is on a national level. Like I think minorities make up about 25% of the total market. Nationally almost, and that’s including all minorities. I know for a fact it’s more here in Atlanta and it’s gonna be different in every market. You know Wisconsin may not be so. I just don’t know I don’t live there. I don’t know what their demographics are.
So it culturally, it is also important to know this stuff because we have 13 different countries represented in our company which is fantastic. I love it. And it’s…it’s pretty split down the middle as to demographics. Our company is a lot more I think we’re 35, 38% minority and so it is just completely different for every market. And it’s important to know that stuff.[Christian]: Yeah that’s all very interesting. Do we want to get into kind of the income expenses? Some of the financial numbers? I don’t think we’ve gone over them. [Chris]: Absolutely yeah. [Christian]: So I guess I will take lead on this so… [Chris]: Take the lead. [Christian]: Yeah you know getting into that aspect of it you were saying that 35% of realtors were commencing with a fixed commission split. Noting that is under 100%. That is not including the 100% models. Followed by a 25% with a graduating commission split so like a split that increases with productivity.
I thought that was kind of interesting because I just assumed in my market the experience I had was that with most of the franchises have graduated commission split models so it’s interesting to see that is not the majority nationally. And then the income for realtors has gone down in 2017. There was a 39.800 with a decrease in the prior for the 2500. Obviously it doesn’t go into the why that is. It could be you know decreased inventory or could be more agents so the business is spread out a little wider. I don’t know if you have any thoughts on that Chris?[Chris]: You know I don’t know if it’s because more agents are coming in. They said that the number of relators increase from 1.2, 2 million to 1.3 million last year. So I don’t know if the productivity is down because the agents are coming in or if it’s because of the shortage. Now interestingly enough today is the 16th and Inman just put, Bran Inman posted last night that he is declaring the shortage over. That we have left the peak of the shortage from everything that he is hearing. I haven’t read the article yesterday. It came out this morning but that is quite possible because I know our numbers were down a little bit and most of the industry’s numbers were down just of shortage alone. [Christian]: Yeah and then getting into like the next bullet points talking about how relators with 16 years or more experience had a medium gross income of 78.000 compared to realtors with 2 years less experience with a medium gross income of 8000. To me I am like “Well duh”. Of course you know have you know you’ve got longevity in the career of course you’ll be making more money but I am still not really sure what the actual flexibility of it is. It seems pretty common…common sense.
The business expenses were for the medium business expenses 4400 in 2017 which is a decrease form 6000 the year prior. Which you know to me seems kind of low but obviously it depends on what you’re doing for business. If you’re doing you know marketing, if you’re paying for leads that’s gonna be a lot more expensive. But you know maybe I don’t know, I don’t think they broke down full time versus part time agents. That sort of thing. Obviously you’re gonna treat your business very differently and have much different expenditures.[Chris]: Yeah. [Christian]: Based off if you’re full time or part time. [Chris]: Absolutely. And you know it’s interesting the obviously being more experienced in this industry you’re gonna have higher income. That’s just…I would hope so. If you’re 15 years in the industry on a full time basis and you’re making the same as you were in the first 2 or 3 years than you know you’re not doing much for growth you’re just really sustaining. But one thing that really hit home…probably the most important thing that hit home for me is the outlook that real estate agents have on this industry. 80% of realtors were very certain that they were gonna remain in the market for 2 more years. Christian are you planning on being here for 2 more years? [Christian]: Yes, as the brokerage owner I sure hope so [laughter]. [Chris]: I do to. [Christian]: I do not have an exit strategy because this thing is my baby. So… [Chris]: Absolutely. [Christian]: Yeah it’s interesting kind of relating to that a little bit you know talks about how 9% of realtors worked at a firm whose bought numbers in the last 2 years. To me it seems pretty high. You know, but it also goes hand in hand with what I have been seeing which is you know a lot of new brokerages that are you know like Compass and what not they’re getting into markets or you know bigger franchises. They’re buying up you know smaller franchises. That sort of thing so… [Chris]: Oh yeah franchises are being people up all day every day. And you see Compass, you know, last year was big with pacific union. They were buying up everything in California. Interestingly though 53% of realtors were affiliated with an independent brokerage. So hey we win. We’re the majority. We win. 50 plus 1 [laughter]. [Christian]: Yeah. Well it’s interesting because I tend to think at least in my market I tend to think the most visible brokerages are you know the mega brokerages. The big franchises that 8000, 4000 you know agents but you take into account all the smaller brokerages and there is a lot more by number of the smaller brokerages even though they may not have as many agents. You know still comes out on top as far as the independent brokerages have more agents because there is just more of them. [Chris]: I think that all comes down to the personal touch that we’re able to give that a lot of big brokerages aren’t. [Christian]: Yeah and I think the shift is gonna continue in that direction as I think you know number of factors. One of them being you know more millennials getting into not only buying houses but being agents and at least in Seattle there is definitely, for lack of better term, anti-corporation you know feel. And people want to go with the more boutique, the more…Even though they want technology they also want that experience and brokerages that are going to be doing something more than just focusing on transactions or most business therefore are the best. [Chris]: Yeah that message that says “Hey, you know, we’re not the big brand, we’re the specialist”. [Christian]: Yeah. And kind of relating to that talks about how the medium tenure for realtors at the firm they’re at right now is 4 years. And I thought it was interesting because you know it seems like agents don’t have…I mean unless they’re locked into a brand they’re…or a brokerage they really believe in and are sold on, they don’t have a lot of…commitment. A lot of…what is the term I am looking for? [Chris]: Buy in? [Christian]: Yeah they don’t have a lot of commitment so to speak. A lot of loyalty to their brokerage. [Chris]: I think that’s gonna be a lot with the independent contractor model. It…One of the hardest things that I deal with on a daily basis is trying to get people to buy in and believe in what we have and be a part of the work family. Because if…if you don’t do that than what loyalty is there? When a shiny object comes along, you know, we all have the shiny object syndrome. And the shiny object comes along and you compare it to what you have if you don’t have a relationship there and it’s a lot easier to go take that shiny object. But if you would dread that conversation of “I am thinking about leaving” or “Pleas release my license”. I mean than the retention, the…just the whole relationship is much stronger. [Christian]: You know I wonder how representative these numbers are of the entire industry. You know one of the things that I was thinking about is you know, so it is obviously very state to state MLS by MLS. In Washington state the MLS is undependably owned. It’s not by…by NAR. And so you get the option as far as a brokerage owner whether or not you want to be a realtor or be a member of the NAR.
So I wonder if you know my experience you know in this market most franchises the large franchises are and so I wonder if those legacy franchises tend to have older agents because they have been there forever. And so I wonder if you…I wonder in general indie brokerages would have lower numbers and maybe aren’t represented here because maybe they’re…you know if they’re not forced to be part of the NAR maybe they are being more independent. They’re kind of getting away from the status quo. And so I wonder kind of what that would look like nationally. Like how many actual licensed members there are if those numbers are lower at non realtor brokerages and agents.[Chris]: Yeah I mean that’s always gonna be the question because there is no large independent, non-realtor organization to collect the data. What I can say about you know realtor versus non realtor is that for the first 7 years our company was a non-realtor company. And we grew exponentially. But we grew from 150 agents in 67 million in sales so the numbers they were pretty abysmal.
Once we joined a board and we started pulling the agents that were…the producing agents of the non-realtor plan and putting them onto the realtor plan and we started recruiting agents and expecting them to be realtors and giving them the data and the name and all the stuff that goes with it, productivity increased drastically. We went from 148 agents, 67 million in sales to 115 agents and the year before last we were 115 million in sales and last year we were 103 million in sales.
So in my experience from all of this is I found that agents that are non-realtor and go to the non-realtor style companies generally in our market produce less than the agents that are realtor affiliated. Because typically those are the people that are the some time agents. You’ve got your full timers, your part timers, your some timers. The some timers typically go just because they want to keep their license active. They may do a deal every 3 or 4 years for themselves or a family member and that is all they do.[Christian]: Sure they try to keep their overhead low. [Chris]: Keep the overhead low yeah. I mean that is always gonna make up a portion of the market. And you know people at my board have told me in the past “I really respect everything you do. I love your message, everything you do but I don’t understand why you have non realtors”. As they’re in the board. And first and foremost everything is a business decision and we sat our expectations across the board whether you’re a relator or not that you’re gonna do business ethically, legally and you’re gonna use the same contracts regardless.
So if you’re a non-realtor with us you still have to buy the contracts. And we just stopped recruiting for non realtors. Mainly because it didn’t make sense to continue it. But we have a lot of great agents that want to keep their fees down. And they’re doing the right things and they come to training and they’re doing better. And they’re increasing their productivity. With that it is a lot harder for the non-realtors because they don’t engage as much. So take it with a grain of salt. That’s just my experience.[Christian]: Yeah for sure. So kind of wrapping this up what would you say the takeaways from this NAR member profile? [Chris]: Yeah so it…go read through it. We will put the link in the comments. Whether you’re a realtor or not it’s good to know these stuff so that you know where your industry is going. Because right now number of realtors are up, income is down and supposedly our supply shortage is over. So take that with what you will, apply it to your business and hopefully you can use some of this stuff to maybe make a change or a nudge in the direction of your marketing or your tactics.
Importantly for agents look at what other agents are reporting as their spend is because the survey got over 12.000 results. So the numbers are pretty accurate whether you’re a realtor or not. So that’s my takeaway. Thanks for tuning in everyone. This has been re:Think Real Estate.[music] [Chris]: Thanks for tuning in this week’s episode of the re:Think Real Estate Podcast. We would love to hear your feedback so please leave us a review on iTunes. Our music is curtesy of Dan Koch K-O-C-H, whose music can be explored and licensed for use at dankoch.net. Thank you Dan. Please like, share and follow. You can find us on Facebook at Facebook.com/rethinkpodcast. Thank you so much for tuning in everyone and have a great week. [music]