The last few years have been tough for real estate, but exactly how tough? Tough enough to lop off a quarter of your income, according to the 2010 National Association of REALTORS® Member Profile, released in May at the REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C.
The report shows that in 2009, REALTORS®-including brokers and sales associates-earned a median gross income of $35,700, a drop of 2.8 percent from 2008. That's not too much more than the roughly 2.5 percent decline in the broader U.S. economy during that same period.
But when the numbers are compared with those in 2006, the year before the recession is generally recognized to have taken hold, the decline is far more significant-a whopping 25 percent down from $47,700.
The loss was the most severe for brokers, whose median gross income dropped 33 percent to $49,100 in 2009 from $73,700 in 2006.
As you would expect, transaction volume during those four years also fell significantly, by 30 percent, to a median of seven sides from 10.
Financing Stalls Deals
Clearly the economic downturn is the underlying cause of the drop. But getting into the nitty gritty, the Member Profile makes it clear that consumers' difficulty in securing mortgage financing was the root problem in getting transactions to the closing table.
Just over a third of all respondents (34 percent) say financing was the most important factor standing in the way of a completed transaction. Not surprisingly, commercial specialists had the hardest time with this issue, with 48 percent citing financing as a deal-breaker.
Those least likely to report financing hurdles were REALTORS® with 16 or more years' experience in the business. Of that group, just 29 percent cited mortgage financing as a problem that limited clients in completing a deal.
The data suggest that REALTORS® with more experience are better equipped to handle the difficulty. They may have more and stronger relationships with mortgage brokers or be more familiar with financing products. Or perhaps they work with more all-cash buyers.
Does Spending Lead to Success?
The Member Profile suggests that you really do have to spend money to make money. REALTORS® who earned between $10,000 and $25,000 in 2009 spent a lean $2,220 that year on business expenses.
By contrast, those who earned between $100,000 and $150,000 spent $18,000, and those with gross incomes of more than $150,000 shelled out $35,750.
That same principle held true for real estate Web sites; REALTORS® who spent less than $500 per year on their site said that it generated just 5 percent of their business, but those who spent more than $1,000 said their site brought in nearly a fifth of their business.
The other most telling indicator of success was experience. REALTORS® with 16 years or more in the business made the most money-a median of $52,300 in gross income in 2009. Rookies with just two years in real estate earned a median of $8,800.
But even for those with longevity, incomes were a fraction of their size in 2006, when rookies brought in a median of $15,300 and veterans earned $76,200.
The good news is that the worst appears to be over, so those who've learned how to survive during the lean years could be well-positioned to thrive as conditions improve.
By the Numbers
A look at data from the 2010 NATIONAL ASSOCIATION OF REALTORS® Member Profile.
- 36: Percentage of REALTORS® in 2009 who had 1-5 short-sale transactions
- 40: The median number of hours worked per week-the same for brokers and sales agents
- 220: The median dollar amount that REALTORS® spent to maintain their Web site
- 4: The median number of customer inquiries generated from a REALTOR®'s Web site in 2009
- 16: Percentage of REALTORS® who reported a gross annual income of $100,000 or more
- 700: The median dollar amount that REALTORS® put toward professional development last year
- 54: The median age of a REALTOR®
- 34: Percentage of REALTORS® older than 60 who participate in social networking, versus 76 percent of those who are younger than 40
About the Author:
Robert Freedman is a senior editor of REALTOR® magazine. He can be contacted at email@example.com.