[NOTE: This is a thought piece and meant to evoke thought, not emotionalism or critical attacks on the author. Just saying.]
We seem to be at a crossroads of sorts in our profession. We know, according to some statistics, our average income is around $30,000. This is inadequate for the average individual unless single and living at home with the folks. There must be a change in something to make our profession more profitable for more practitioners.
With about one million REALTORS® in the business, plus those who aren’t members of the National Association of REALTORS® yet licensed to practice, the pie is sliced rather thin. Very few (as a percentage of the whole) are receiving a living wage from the endeavor of real estate. What is the reason for this?
We all know what our areas of operation receive as a percentage of a sale in the form of compensation. Raising the level of compensation would increase the number of FSBO sales and shoot ourselves in the foot. What then might be another answer?
Simple math is a simple answer. With over one million of us working in the field of real estate, there is a finite number of dollars to be spread around. To increase the amount earned each year, other than working harder and hope to increase your bottom line, would be to reduce the number in the profession.
Here in Texas the idea of raising the cost to get into the profession and also to stay in business has been discussed. We have just raised the number of years required to become a broker, albeit in an attempt to raise the level of competence. By making it more expensive to get into the business, a normal decrease in the annual accessions would be realized. Over time, the overall number of practitioners would decrease and the effect would be an increase in annual income.
While uncertain continuing to allow every Tom, Dick and Mary who wants to be in real estate is a smart move on our part, it has been said a new agent is the life blood of a large brokerage. Even though the majority last a short time in the profession, their sphere of influence proves profitable to the company. By limiting the number who enters our workforce, the profit margin would also be limited, making the average brokerage’s bottom line suffer. Some will howl at the thought. OK, so be it. However, this still may not be all bad either.
Seems of late there are more and more new offices opening up to ply our trade. While there is benefit to competition, we know the majority of small businesses fail. We should be cautious about too many of our types of businesses failing as it makes for an overall pale on our local market reputation. This proliferation in offices dilutes to profit for all, which goes back to the previous points made earlier.
The solution just may be tighter control on how many newbies come into the business each year. We cannot sustain an infinite number of agents while expecting to make a living wage. So you know, my annual income keeps my business in the black so this is not written with teary eyes and a sad heart. My thoughts are with the change in the business climate; our business structure might need some tweaking.
With much anticipation your thoughtful comments are solicited.
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