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How Many Agents Does It Take To Screw in a Light Bulb?

How Many Agents Does It Take To Screw in a Light Bulb? There was a time that the answer to this question could be "As many as it takes!" I think that we all agree the real estate market is now moving in a very different direction. The Atlanta area had about 8500 agents in the 1990's when we averaged about 3500 home sales a month. Around 2004-2004 we still only had about 12500 agents and sales had climbed to about 4500 a month. We then rose to over 45000 agents by 2007, a 300% increase in real estate agents in 3 years. Total monthly sales still never exceeded 6000 a month. Now the monthly sales have fallen back to about 3900 single family home sales per month, and the numbers of actively licensed agents are still at 42000. Wow! Enough is enough! That is still a big number. In fact it is an unsustainable number. Most of those agents must have another source of income, because it is not enough money to raise a family or pay the bills, and a car payment. What about providing hospitalization? OK, where is the money coming from to market your listings? Oh so that why all the talk is about "Craigslist" and other freebies! There's no money!

What I am seeing is a collapse of real estate companies in Atlanta. In recent boom times the numbers of agents and offices rose to unsustainable levels. Recently, many Atlanta real estate offices have closed their doors calling them "A consolidation!" That is BS. Profit has disappeared. There are not enough deals closing to pay a broker and staff and pay the rent. No real estate company is immune from it. For the more established firms, agents cannot afford to pay their bills so they leave the bigger companies to go to an unknown company where they can hang their license until this all blows over. They are like an atheist at a funeral, all dressed up and no place to go. Companies such as Prudential, REMAX, Coldwell Banker, C-21 were just a few of the big players to close underperforming offices...,but wait, there are more to come. No one in the short term will be able to survive if they do not have other funds available. Staff cuts in this market are more than just trimming the fat, they are placing a tourniquet on a mortal wound. Sales need to turn around and start rising before we get back on a healthy footing. My prediction for the coming year is that many Atlanta real estate companies will close the doors, including many discount brokers whose passive marketing will not work in this current market. The numbers of agents will start to decrease dramatically as soon as the reality sinks in that our market is not going to come back quickly. That still is going to take a while, and in the mean time the markets will remain very dysfunctional with loads of inexperienced agents that never sold one home advising buyers and sellers. This is going to be a very rough road ahead for the time being.

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Posted by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO on 05/05/2008 10:14 AM

Comments (28)

atlanta real estate companies, real estate office closures, consolidation of real estate offices, consolidating real estate offices, closures

Originally posted at: Atlanta Real Estate | Atlanta Housing News for Real Estate: How Many Agents Does It Take To Screw in a Light Bulb?

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28 Comments on How Many Agents Does It Take To Screw in a Light Bulb?

MAY

2008

Jim, I agree with your post. Do you have any suggestions on how to deal with this situation or just hang on and wait till this blows over?

Jim,

You're calling it like I'm seeing it!!! Thanks, Fran

AmState Realty Solutions LLC We have to lower costs dramatically, and look for where the market is moving. We must re-evaluate our goals, and focus on how to obtain the new ones cost effectivley.

Fran 'The Title Man' Gaspari Title Insurance-PA & NJ There is no point mincing words.

It is a tough market pretty much all over now. There will be survivors. Those that do the work, keep up their connections and "tighten their belts".

A lot of people will leave the business until the next wave.

Good luck to all.

Isn't the due date for the next NAR dues coming in September?

The number of agents will drop significantly then.

Kevin O'Shea, White Plains, NY Real Estate Homes, condos and real estate will always sell even in the toughest of markets. A challange for those that survive is to identify the demand, and beat everyone else to it.

Karen Luke --- Stockbridge -- McDonough Real Estate It will be an interesting year for sure.

California state numbers are off about 35% and our own market, which mirrored your (only on a smaller scale) has dropped about 20% - and it's still too many. Last year our total sales for the area was less than the number of agents in our association - equating to .77 of a paycheck EACH for the year. Obviously some made much more than that which means a lot more people made nada. Another year or so for the shake out, then we'll drop off a few more when the REO specialty agents fall by the wayside as the market returns to a more normal footing. Just gotta hang on.

Your right on target Jim. Same here in the Little Rock, AR market. It's time for some "Realtor Cleansing" anyway though. Not everyone can operate the way I do, but I started my current company as a group of "Homebased Agents" and we all seem to have adjusted quite well. Not having to support a Brick & Mortar operation and no utilities or "staff"....I don't feel near the pinch as the rest of the herd in this kind of market.

But I agree...we are probably looking at a year, year and a half.

I agree, it's going to be one tough year. In my market Coldwell Banker just bought out a limited service company - I almost cringe in waiting to see what their next step is!

This is so true Jim. And it's not just Atlanta, it's everywhere. I think the smaller and leaner the company, the better. I don't want a lot of agents because of just what you mentioned - when your agents cannot pay their office fees, you have no choice but to cut back on the office itself and the staff as well. I have other sources of income so I do not depend on my office necessarily for income. As long as I break even at least right now, I'm happy. The days of the super profit will come back but it will not be for a while.

Gene Wunderlich - Selling Southwest California Homes / Temecula & Murrieta Someone shared an interesting piece of information that most of the agents in our current markets has not even sold one home. I can beleive that.

David W. Bolick It is going to take a while. I remember in 2001 I had an opportunity to be out at NAR and at that time, there were about 750K REALTOR members, a few years later it had almost doubled.

April Hayden-Munson Realtor, Southeastern Wisconsin In our market Coldwell Banker just closed 3 offices. The owner of Coldwell Banker, C-21, ERA et al...also owns Linens and Things (Apollo Management). Linens and Things just filed for bankruptcy this weekend, and are closing about 120 stores.

Nashville Tennessee Area Real Estate Rhonda Burgess I think you got it right! I feel the same...I do not want to go into the red this year, but will re-evaluate

That sure is a lot of agents in Atlanta, I don't expect those numbers to stay high for very long unless the market picks up there or if they have another source of income. We have had offices close here in Colorado as well. Many agents are also changing companies in order to save money on desk fees.

Jim - We have three offices and have been reducing expenses while still offering support for our agents and marketing for our sellers. It's been a struggle, but we will survive. We're positioning ourselves to be leaner when this market shifts to the positive. It will be necessary for more agents to leave the business leaving more available business for the full-time dedicated professionals. We need to demand a higher level of professionalism from agents.

Colorado Springs Realty Patricia Beck The numbers have held much longer than I thougth they would. The agents are changing the deck chairs on the Titanic.

Lynn Johnson, Owatonna, MN Real Estate It makes perfect sense, the sad thing is that many full time professional agents are leaving and totally inexperienced agents are hanging on.

MAY

2008

I'm seeing it here too, lots of consolation going on even in multi-office situations. Not sure where it will all end. Can't really blame the brokers they have to pay the bills. Also I am seeing it here with title companies, several have closed the doors and others are consolidating with their main offices.

Wow that is more unbelievable than I would have imagined. Let's see, if you do the math here, assuming that any agent who had a deal only closed one (which is not really true), then even at that rate, it means that less than 10% of all agents had any deal at all.

And the real number is probably closer to 5% or less, since many producing agents close more than one deal a month.

Missy Caulk Ann Arbor Real Estate Well in the real world..."Consolidation" is just a fancy word for real estate office's closing due to lack of work.

Kevin Corsa (H.I.S. Home Inspections) - Akron, Ohio Home Inspector You have to back out the bigger agents that close over 20 - 40 deals a month. Your numbers hit a homerun! That is why real estate right now is extremely dysfunctional. People that never sold a home are advising sellers what to do.

Jim, you are so right. I think it will take another year before we see a defining change in the market. I think I'll hang in for the long run.

Jim - when you apply the old adage 20 % of the agents do 80% of the business as the number of sales slip many of the 80% find themselves looking for other sources of income. If I were a vendor today I would be looking to list with an agent who has survived at least one downturn in the market place preferably a severe one. No flash in the pan for me!!

MAY

2008

Bob Cumiskey, Your Sun City Center Realtor (A 1 Connection Realty, Inc.) It will be a while. Same here.

Kathy Clulow ASP® SRES® (RE/MAX Scugog Realty Ltd Brokerage) I agree, but many sellers are still in denial. They just assume the market is slow ,and that their agent is a loser. They will go through at least 3 agents before they realize what is taking place. Those that have an experienced agent will have sold and recouped as much equity as possible before further declines. That is what happened in the early 90's, the difference is this market has not bottomed yet.

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