In my last post I mentioned how Real Estate Agent is still a poplular choice of careers despite the downturn in the market. Some things to keep in mind are
There are over 2.5 million real estate agents according to the National Association of Realtors (NAR). The competition is tough given that in October 2006, the sales of new one-family houses was at 1,004,000 a 25.4% decline below October of 2005.(Source U.S. Census Bureau & Department of Housing and Urban Development)
7% to 10% of all realtors generate 93% to 90% of all transactions. If October 2006 had 1,004,000 sold new homes, then there were only 104,000 homes for the other 2,250,000 real estate agents to sell given the statistics above
First year drop out rate ranges from an estimated 40% to 80%.
After year three of those who survived the first year, only 10% continue on to year 4.
The average yearly fee to be a member of the local, state and national realtor associations is between $300 to $400. Being a realtor requires a lot of up front cash until that first house is sold.
The average profit for a real estate firm was 2.3% of gross revenue in 1996 the last year data was collected according to the NAR. This is still better than the grocery industry that averages a little over 1% profit from gross revenue.
Salaries are decreasing even with home prices increasing. Due to additional fees such as referral, affinity or to pay for other costs such as closing or home warranties, research suggests that commission rates have declined 16% between 1991 and 2004.
So if you want an easy job, with great pay, easy selling, then you may wish not to become a realtor. For the real estate industry is not for the faint of heart, but for proven professionals who understand what it takes to become successful in real estate.
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