Matthew Ferrara, Philosopher
 

Realtornomics 2011: Who is the Modern REALTOR?

How much did the modern REALTOR earn last year? Did they own an iPad? How many leads did their website generate? These answers and more in our annual summary of modern professionals.


First, an important acknowledgement: The stats in this post and video come from a variety of sources, the largest of which is the National Association of REALTORS Annual Member survey (2011). We compile this summary each year to help the industry benchmark itself against similar industries and general societal trends. It’s a snapshot, to be sure, but an important one for an industry at the center of our economy.

The Big Picture – Getting Older, Smarter
The typical member of the National Association of REALTORS has 12 years of experience.  On the surface of it, that means the NAR is comprised of members who remain in the business significantly longer than the average real estate license holder in most states (60% leave within 18 months of licensure). Three quarters of current REALTORS also p

lan to stay in the business at least two more years. Other key demographics:

  • Most REALTORS are female (57%)
  • They are getting older (56 in 2011; 51 in 2007)
  • 40% are over the age of 60.
  • Younger REALTORS are leaving the industry (3% under 30)
  • 30% have a Bachelor’s degree

Production Levels – Fewer, Working Harder, Earning less
2010 was a tough market for REALTORS. Even  markets that didn’t experience meteoric rises or precipitous falls saw the broader economic malaise take its toll. Some key performance indicators are:

  • The average agent did 8 transactions in 2011 (up from 7 the year before)
  • The median gross income was $34,100 (down from $35,700)
  • REALTORS with 16-plus years of experience earned a median gross income of $47,100
  • New REALTORS with less than 2 years experience earned a median gross income of $8,900
  • Most REALTORS worked an average of 40 hours a week; those who reported an average of 60 hours worked a week earned a median gross income of $73,000
  • Only 4% of REALTORS did more than 51 transactions last year
  • Only half of all REALTORS did adeal that involved a foreclosure

Technology and Sales Tools
The use of common technologies continues to be uneven along a spectrum. In some cases, REALTORS have widely adopted the most obvious tool, but even then, more than 25% of REALTORS reported not using a smartphone every day. Other tools, like blogs and social media fared significantly worse:

  • 50% of REALTORS use social media every day
  • 92% of REALTORS used email every day
  • 90% used a laptop or desktop computer
  • 72% used a smartphone
  • 28% used a digital camera daily; 53% weekly
  • 11% used a blog one or more times a week
  • 3% used a podcast one more times a week

On the software front, even stranger data appears. When you consider the following numbers, imagine what a typical agent’s day must be like if they only use these software tools so infrequently:

  • 74% use MLS one or more times a week
  • 44% use a contact management program once or more weekly
  • 44% use document management weekly
  • 48% use comparative market analysis software weekly
  • 21% use graphics or presentation software weekly

Website marketing:

  • 34% have their own website
  • 29% have a website provided by their firm
  • 38% have no website and only 8% plan to have one in the future
  • 10% have a blog; 9% plan to have a blog in the future
  • The average spent to maintain an agent website was $250
  • 27% of websites generated no consumer inquiries
  • 37% of websites generated 1-5 inquiries
  • 9% of websites generated more than 51 inquiries annually

Business generated, by source

  • About 18% of REALTORS generated repeat business from past clients
  • Those with 16+ years of experience generated more than 34% from past clients
  • Most REALTORS generate ZERO deals at open houses; 4% generated 4% of their business from open houses. More experienced agents generated less business from open houses than younger ones.
  • 35% generated no business from their website inquiries
  • 4% generated more than half of their business from their website inquiries

Income and how they spent it:
From an average of $34,100 in income (down from 2010), how did REALTORS spend it on their business?

  • REALTORS spent $250 annually on their websites
  • The median spent $0 on referral/affinity relationships
  • Most spent about $500 marketing their services
  • 79% spent little to nothing on office space/lease
  • The average spent on professional development was $600 for the year
  • The average spent on business promotion was $580
  • About $630 (down from $710) was spent on technology  

So, let’s summarize: REALTORS are getting older, working longer, earning less and barely use social media, blogs and podcasts. They spend virtually nothing on their websites, receive virtually no leads from them, yet also close no business at open houses each week. They plan to remain in the business, while investing only $600 in training and $630 in training each year.

What do you think?
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  • I think part of the reason so few agents are “tech savvy” has to do with how lead generation is shoved down everyone’s throats. They’re so busy prospecting they never take the time to work on the other pieces to help them be more productive.

  • Eric:

    Maybe, but I’m not too sure they’re so busy “prospecting” because if you ask most agents, they aren’t contacting 5 people a day using ANY tool – phone, handshake, email or social… Besides, if you’re supposedly in business for yourself – IN BUSINESS – they how can you not have/make time to put your business infrastructure in place? Answer: They aren’t really in business. Most are just hanging around…. .IMHO
    Thanks for your comment!

  • That’s a good point..I guess I don’t really understand their hesitation since I believe in staying on top of new trends and monitor emerging tools. 

  • Brad Yzermans

    I would have to agree….most are just hanging around…it’s a hobby to them.  Many are not the primary wage earner int heir family.  I am starting to stop asking myself why agents do this….it just is.  I’m shocked by how few agents actually take this business seriously.

  • I agree; but at the heart of the matter is how many BROKERS are willing to let so many agents be some of the “few who take this business so seriously…” don’t you think?

  • This really shows that if you want to work hard and invest in your business, there is plenty of opportunity out there regardless of the market conditions. 

  • Indeed! There’s a lot of the market that could be captured easily from those who don’t invest time, money, etc… I’d say the bottom 40% of the market could be competitively captured from a dedicated company/person for pennies…..

  • Brian

    M
    You said that the average agent conducted 8 transactions. That’s mathematically impossible. Perhaps the average agent that responded to the survey did 8 transactions…

    Statistics show that over 50% of agents in the US closed less than 4 deals in 2010…and yet portend to be in a position to represent homesellers in the largest financial transaction of their lives.

    What is interesting to me is the fact that despite the boom in technology agents are, as you said “working more and earning less”. Many waste away the day staring at a screen…waiting, hoping, praying that a deal will fall out of the sky and land in their lap.

    It would appear that all technology has done for most agents is to marginalize them and the “services” they provide. Technology simply allows consumers to avoid agents…and most do just that for as long as they can.

    For some reason we seem to think that our industry is immune to the continued disenfranchisement of intermediaries (stock brokers, travel agents)…Well, we’re not. And if we dont start paying close attention there will be a change coming that will turn the real estate industry inside out. 

    Its time for our Association to clean up it’s act before the consumers do it for us.

  • Ronn James

    Matthew…

    thank you for singing from the same page as me. Please have a look at erealestatecourse.ca.

    we know realtor money, care about realtor money, and teach realtors about THEIR money…

    good on ya, continue your shout!

    Ronn James

  • Brian:
    Interesting comments. Here’s the quote from NAR’s report:

    “The median gross income of REALTO RS® continued to decline

    to $34,100 in 2010. Residential brokerage specialists reported

    a median of eight transactions in 2010, which is up slightly

    from 2008 and 2009; however, the typical sales volume edged

    down to $1.1 million.”

    Note, that it’s also true that 42% did ZERO deals. But they are often still “active REALTORS” in the sense of being in the group, and being in the OFFICE.

    Thanks!

    Matthew

  • Ronn:

    Thanks for your support! I’ll check out your site.

  • John dambrogio

    Timely article, Matt.  I had a drink with one of our agents last week who had seen the report – This 30 something said “I’m doing everything they successful ones do, except one thing.”  I asked her what – and she said “I’m not OLD!”  But if she keeps it up, she’ll build up her SOI and be a success.  Great insight, as alway.

  • because so many brokers (as soon as they become brokers) forget they should be making money of selling real estate, not of agent desk fees. Sadly, our industry is pathetic. Maybe it shouldn’t be THAT easy to get a RE license… to keep it a bit more professional.  A client will discern, but it may be too far into the buying or selling process when they realise their agent could be (should be) much more savvy, not just tech savvy, but real estate savvy.

  • Brian

    Matthew,
    Brokers are willing to allow these agents to “dabble” in the business and conduct a transaction or two each year simply because the Retained Company Dollar ismuch higher on their transactions. Low producers have low splits.

    Many larger companies quartile their agents not based on the percentage of their agents- instead they quartile the GCI.

    Although the bottom two quartiles account for the vast majority of the agent base they have, the retained company dollar on the transactions that they engage in is much higher than the top two quartiles.

    It’s sad, short range thinking.

    Brian

  • Brian

    There is a huge difference between average and median. Median meaning that half earned more than 34,100 and half earned less…half conducted 8 or more transactions half conducted less.
    Perhaps the NAR should conduct a survey of those agents who do more than X amount of transactions per year. Lets find out what the true top agents are doing and stop paying attention to those who are dabbling and destroying the reputation of some very hard working agents.

  • Maybe, but I think thus approach is actually more correct because it includes those people you could get answering the phone or talking to buyers or called into a listing appointment from a personal referral. We should know what their performance is like, if they are available to the public.

    —– Reply message —–

  • Agreed. But I’m working with more companies that don’t hire New or non producers and its an amazing impact on the customer’s outcomes….. Maybe there’s hope.
    —– Reply message —–

  • Anonymous

    I think most agents don’t have the right mindset coming into the business. I member speaking with one of my mentees a long time ago who said, “Wow, I didn’t realize being an agent included all of this work.” At that moment, I realized newer agents (irrespective of age) preceive us to be door openers and yard sign placers (sometimes the public has this opinion of us as well, especially the ones who consume tech tools and swear by technologies like Zillow). In general, both agents and consumers have no clue what it means to be an agent and I I don’t think either party cares. It’s simply all about them. Another one of my mentees said one of the reasons she came into the real estate sales business and decided not to start a fanchise operation in some other industry is that she thought she could make money fast and not have to invest much time or money into developing her real estate business. (The franchise start-up fee was like $60k). Of the 1 agents in my examples above, only one is still an active agent and is productive. Brokers who hire dual career agents and part-timers do so to meet “other” quotas. Then again, I started in 2005 and the market then is not the market we have now. Then, I didn’t have to know much and could still close 15 transactions without breaking a sweat and for this reason, it doesn’t surprise me that the agents who are in the business today are “older.” I would even say many are more experienced now then before. I would love to see the stats on the number of people going to real estate school for the first time. I’d like to see some of the standards for being and agent change (I know I am dreaming since each state regulates this differently). But imagine if agents had to earn:

    a. 60 college credit before being an agent. That’s our standard for substitute teachers in NJ.
    b. Shadow a real estate agent for x number of hours
    c. Completed X# of Continuing Ed Credit every 2 years (In NJ, we don’t have this standard, at least not until 2013).  

    Again, I know I am dreaming, but what would you add to the list to ensure we have a higher quality Realtor pool?

  • Wow – those stats are encouraging. Sad for our business but I spend a lot of time separating myself. Seems I’m on the right path. 

    I see agents just waiting around for the phone to ring. Change ahead is right. Change now if you want to survive in this business. 

  • Matthew,

    I used this post and NAR’s numbers as the basis of my sales meeting today.  As we explored the numbers, one of my producers stated, “Why are we discussing what the AVERAGE agent/member does?  I want to know what the ABOVE AVERAGE agent does!”

    Fortunately, I was prepared for this contingency with ActiveRain’s similar report, “Rich Agent/Poor Agent”.  Have you read this report and, if so, what are your thoughts?

    As always, thank you,

    Jim

  • Jim:
    Great comment – it is nice to see what the above agent does, and I haven’t read that post yet. Usually I use the CRS figures as good examples. Combined with what the average agent does, it’s a good combination to at least benchmark ourselves to see where we stand – and where we should be going.
    Thanks for your comment!

  • CoachDennis

    Lots of interesting comments, now let’s look at the overall picture.  No question the real estate business has seen much change in recent years.  I started back in 1979 when technology was more of a plan than action.  We knocked on doors, made phone calls, wrote letters, farmed neighborhoods, did Open Houses, visited FSBOs and Expireds to build our business.  Back then only 20% of Realtors were really good at it and did those things consistently. Only 20% really raked in the money, because most agents played real estate. Most agents hated making the calls, working the FSBO and Expireds and always came up with an excuse not to do those activities.

    Fast forward to today:  Other than Technology, what has really changed?
    Technology became the savior of the agents who did not want to do all those things that the 20% were willing to do.  New Players, Same Ballgame!  It is apparent that the internet is the new farming tool, but just like in the old days, some agents will and most will not. Some will skim and others will plow. 

    Interesting stat shows that there is a huge difference in the incomes of agents that worked 40 hours vs. 60 hours.  For those who are really working and not playing, that extra 20 hours really paid off!

    I would also bet that the ones doing 60 hours could actually earn the same working 40 hours instead of 60 if they more efficiently managed their time.

  • Hey Coach:
    I think you’re spot on with your comments. We’ve changed the tools, but in some cases, we’ve even slipped backwards, because making $30k this year is worth less than making $30k ten years ago when the numbers were the same! :>
    I think most agents actually hate being agents. Really. They get into it, without a clear picture of what it means to be a salesperson, and they then learn what it requires, and they go through the motions hoping for lady luck, but instead end up getting fired. Or moving to another company who “promises” they will be more successful because of their “tools and systems” when what they really need is someone to look them in the eye and say, Go get another job!
    But, alas, that’s what we have because that’s what we want. I don’t think these numbers will change until the recession completes its job of crushing the brokers that refuse to run their companies as companies, and make the right choices in their subcontracting arrangements. In the meantime, I just means there’s a never ending need to keep coaching!
    – MF

  • Greg

    Jim,

    That was an interesting info graphic on ActiveRain. I noticed, in particular, that 90% of all agents use Facebook. The key is, how they use Facebook. I would venture to say the more successful agents have custom Facebook pages, don’t promote their listings on their personal pages, and use the site to connect with friends and past clients – not to sell.

    As always, it’s fun being the outlier. I’m 51, spend about $30k+ on technology and promoting by business each year, have my own non-company website, custom Facebook page, blog, video, etc., etc.