Skimpier paydays are forcing real estate brokers across the nation to rethink, retool and, in some cases, recommit to one of the economy’s most assailed sectors.
Last month, the Wall Street Journal reported that as the result of a two-year downturn, many people working in real estate-related fields had turned to new careers or to second jobs to pay the bills
“The housing market’s long decline has left once-thriving real estate professionals scrambling for supplemental income or changing professions,” wrote WSJ.com’s Dana Mattioli, referring to especially hard-hit markets in California or Florida where property prices have dropped 30 to 40 percent or more. While most still consider themselves primarily real estate brokers, they’ve been forced to look at other ways of making a living.
During 2005 and 2006, residential real estate listings, sales and referrals flowed like the waters of Fountain Creek during the spring run-off, rushing from an apparently never-ending source.
Brokers had but to answer their phones or check their e-mail to learn about bubbling opportunities.
“Most (brokers) — commercial and residential — got used to the good times in 2005 and 2006 when you spent your time servicing clients, rather than building, your business,” said Bill Hurt, owner of ERA Shields Real Estate and president of the Pikes Peak Board of Realtors.
But today is different.
The once-gushing riverbed now runs slower and is traversed by boulders, dams and obstacles that can divert or halt pending contracts and leases. Under-value appraisals, price-choking home inspections, record foreclosures and unwilling lenders all but prevent the river’s progress.
Some brokers have paddled on during 2009, guiding their clients down the trickling stream, but others have opted to go ashore in search of other types of work.
With residential deal velocity in the Pikes Peak region off by almost 25 percent from record-breaking 2005 levels, according to the PPAR, commissions have been fewer and less frequent.
So far, however, the organization’s paid membership remains at a stalwart 3,100, off about 8.5 percent from 3,350 during 2008, Hurt said, noting that the National Association of Realtors and Colorado Association of Realtors have seen about the same levels of member attrition.
“Some have retired. Others who are newer to the business, or who didn’t have the book of business, have tried to eliminate overhead expenses or may have withdrawn from larger companies,” he said. “But most are keeping their licenses active, because by our by-laws, only active licensed brokers can receive referral fees. A lot of brokers — even those who aren’t working full-time — do generate occasional referrals.”
Jackie McGee, an ERA Shields residential broker in her sixth year, said it hasn’t been easy to stay above water.
“I have seen a number of the new brokers leave the business — especially if they don’t have a year’s expenses in the bank,” she said. “It usually takes weeks — even months — longer to get to closing. To make money now, you have to work very hard.”
Real Estate Network broker Joan Morris shares McGee’s view, and admits the past year has forced some of her fellow “high-end brokers” to rethink their game plan.
“I talked to a top Realtor last week who had gone to California,” Morris said. “She told me she didn’t think there was any reason to come back — and at one time she was the top Realtor in the city.”
Morris said had thought about retiring a few years ago at the market’s height, but has since rededicated herself to the business at a smaller, independent real estate firm.
“I had a database with 20 years of clients built up and didn’t really need the kind of support offered by more expensive franchise offices with all their fees,” she said. “Real estate is expensive — and I need to make an income for retirement.”
But Morris is optimistic about a market recovery on the horizon.
“I’m encouraged — and have had two really good months in September and October,” she said. “Everything’s cyclical.”