Real Estate Business Trends

“It takes more hours to become a cosmetologist than a real estate agent,” says Stefan Swanepoel, author of the new 170-page Swanepoel Trends Report released this month.  “It is disservice to the home buying consumer if the standard required to become a licensed real estate agent is various states requires between 30-120 hours obtaining a real estate license, whereas it takes about 1,200 hours to learn how to cut hair and do nails,” he says.

It therefore should come as no surprise when, according to Harris Poll, real estate agents are listed as one of the least trusted professionals. According to Frances Martinez Myers, SVP for Prudential Fox and Roach, the industry has now for some time been top heavy in licensees but light in professionals.

The low barriers of entry into the real estate industry fueled during the 2002 – 2005 housing boom also caused a disproportionately large amount of newly licensed agents. However, the downturn that started in August 2005 caused the number of transactions of existing homes to decline from an annual rate of 7.2 million transactions to an estimated 5.5 million. Yet the number of licensed agents has not declined with the same ratio, thereby reducing agent productivity even further.

Furthermore, according to a 2006 survey by the National Association of Realtors (NAR), 85% of all agents coming into the industry have no sales experience. As a result, with minimal real estate education required to become a licensee and limited sales experience, the industry is destined for continued high failure rates. 

According to Swanepoel, to create a higher quality real estate professional, brokers and agents need to collectively focus on creating an environment that will develop a more knowledgeable, more technology savvy and more internet capable real estate professional. “Quality education is the key to our growth and success,” says Dave Liniger, founder of RE/MAX, one the largest real estate companies in the U.S. 

Charlie Bross, President of RE Training Center agrees, but also feels that there is a tremendous opportunity at hand and that agents need to just change the way they think and work. There are various methods by which agents can improve their knowledge and skills such as specialized designation courses, skills based online courses, coaching, mentoring or even by shadowing another successful agent in their office.

It is estimated that out of the approximately 2.2 million licensed agents, including 1.2 million members of NAR, only about 400,000 agents have earned one or more of the designations that provide agents with specific knowledge on subjects such as buyer agency, seller agency, staging, luxury homes market, seniors market, etc.

That’s only 17% of the number of licensed agents or 30% of Realtors^®. This number is surprisingly low considering that the NAR 2007 Member Profile reports that Realtors^® who had earned at least one designation had nearly double the annual income of Realtors^® with no designations.  It remains a mystery why so many Realtors^®/agents are not actively working to increase their knowledge and enhance their professional career – let alone their income.

“If agents fail to change their current mindset toward constantly improving their knowledge and skills, irrespective of the minimum standards, then they are destined to remain at the bottom of the list for a long time.  Real estate has always been, and will for the immediate future continue to be, a self-imposed adult learning environment,” Swanepoel says.

“Agents need to reposition themselves as trusted and knowledgeable real estate advisors,” he continued. This will require the average agent to change his or her thinking from a sales driven, commission based and one-time client sales approach to that of a consultative, advisory and for-life relationship. The basis of any such change, in part or in total, is based on a substantial increase in the level of knowledge and skills.

In the 2008 Swanepoel Trends Report the author not only identifies the top 10 trends shaping the industry but provides recommendations to brokers and agents in every chapter on how they can gain the knowledge they need, reposition themselves and improve on their market share. For any professional who is serious about the career in real estate, this is a must read.