The Third Bubble …

It has often been said that we have even more of a bubble in real estate agents than we have in real estate prices. In fact we have had three concurrent bubbles – house prices, number of purchases, and number of agents. Unfortunately for the members of the residential real estate sales profession, we are making a lot more ‘progress’ on reducing the first two bubbles than we are on the third bubble.

Last week I went through an exercise of trying to track the growth and reported decline of the number of licensed agents in King County, including metro Seattle and Bellevue, who are members of the Northwest Multiple Listing Service. I had heard that the NWMLS had expected about 25% fallout in 2008. As I got into it, it looked like taking the transaction volumes and median prices at the same time might produce some interesting insights into agent incomes and the desirability of the profession. ( I admit that I considered an alternate title for this post: ‘The Grass Is Not Always Greener…’)

So here’s what I found, using year-end data from published NWMLS statistical reports, but doing my own analysis (and making my own errors – please let me know if you find some or think I missed a point of interpretation).

First are three charts to show the Three Bubbles of King County Real Estate:
bubble-triptych

Second is to show how the growth in number of agents has affected the average number of transactions per agent. A couple of notes on methodology here. For transactions per agent, I split each transaction into two sides, and then just divided the total transaction sides by the number of agents. For the 2009 estimate, I took the business volume for the first four months, through April, and factored it up by the same ratio as the last 8 month of 2008 were to the first 4 months of that year. We’ll get another check on it shortly with the May 2009 data.

(Required disclaimer: Statistics not compiled or published by the Northwest multiple Listing Service)

agents-vs-transactions1

Note how the average number of transactions per agent have been dropping dramatically as the total number of agents rises and the total number of transactions falls. Total number of agents is only down about 10% so far. Some people expected a far faster fallout rate, including NWMLS in one talk I heard, but the inhibiting question is probably ‘Where would they go for an alternate job in this economy?’ A related article from Inman News appeared in the Times last Sunday – Less Experienced Hands Leaving the Business.

And third is to show how the combination of all three factors plays out in average agent earnings. For nominal earnings, I assumed 2.5% commission on each transaction side – we don’t always get 3%, and we often have to give up a bit here or there to keep everyone happy and on track. The data behind the charts is stored here.

agent-earnings1

So for the average agent (and I recognize that most clients would prefer to deal with an above average agent), earnings have dropped from a decent professional income to a pretty marginal income. Last year (2008) it was a little over $30,000 – about $15/hr if you work full time, and this year looks worse. How about $10/hr?

I guess the grass really isn’t always greener…

70 thoughts on “The Third Bubble …

  1. Nice work there, Chuck.

    Many people with licenses don’t work in the biz though. Many are licensed assistants. If those are dues paying NWMLS members (assistants and affiliates excluded, as they are identifiable) vs. “licensed” people…it would be more meaningful.

    I think anyone who hasn’t sold a house in 2 years should have their Supra keypad taken away. Why should they be authorized to go in and out of people’s homes? That scares me…

  2. Nice work there, Chuck.

    Many people with licenses don’t work in the biz though. Many are licensed assistants. If those are dues paying NWMLS members (assistants and affiliates excluded, as they are identifiable) vs. “licensed” people…it would be more meaningful.

    I think anyone who hasn’t sold a house in 2 years should have their Supra keypad taken away. Why should they be authorized to go in and out of people’s homes? That scares me…

  3. There is also a certain percentage of licensees who already have found other full time or part time work and are keeping up with their continuing ed and staying licensed “just in case” they want to help a friend or family member buy or sell.

  4. Actually, what I think is happening is people are hanging their license at these companies that you constantly get bombarded with in your email saying “come work for us for 195 a month.” (CB Danforth, Executive, etc) Why leave the business if you hang your license at one of these no service providers for relatively little, in hopes that you close just one deal a year.

    What used to be…IN MY OPINION, people would leave the big three (WRE, JLS, CBbain) and hang their license at the next tier (Re/Max, Prudential), and those would then leave and hang their license at the next tier (Executive, Skyline)… but with the costs associated with keeping your license and the activity a successful agent needs to conduct (previewing, listing, selling, classes, etc), agents are skipping everything and going to the least expensive alternative, which in the end, is hurting everyone. We have that many more bad agents out there, not attending classes, not actively engaged in the business, and not providing the service that a full service agent provides, as they are too busy helping Mrs. Revine at Nordstroms or serving Mr. Jones at Starbucks.

    It’s sad… we need a better rating system, and MANY more hours to keep skin in the game. You should have to see 500 homes a year to keep your Supra key. You should have to have 6 contracts written (pathetic, I know) in order to stay away from taking remedial classes.

    Will we get there? No. It’s sad, but true.

  5. Actually, what I think is happening is people are hanging their license at these companies that you constantly get bombarded with in your email saying “come work for us for 195 a month.” (CB Danforth, Executive, etc) Why leave the business if you hang your license at one of these no service providers for relatively little, in hopes that you close just one deal a year.

    What used to be…IN MY OPINION, people would leave the big three (WRE, JLS, CBbain) and hang their license at the next tier (Re/Max, Prudential), and those would then leave and hang their license at the next tier (Executive, Skyline)… but with the costs associated with keeping your license and the activity a successful agent needs to conduct (previewing, listing, selling, classes, etc), agents are skipping everything and going to the least expensive alternative, which in the end, is hurting everyone. We have that many more bad agents out there, not attending classes, not actively engaged in the business, and not providing the service that a full service agent provides, as they are too busy helping Mrs. Revine at Nordstroms or serving Mr. Jones at Starbucks.

    It’s sad… we need a better rating system, and MANY more hours to keep skin in the game. You should have to see 500 homes a year to keep your Supra key. You should have to have 6 contracts written (pathetic, I know) in order to stay away from taking remedial classes.

    Will we get there? No. It’s sad, but true.

  6. Sally,

    Used to be you “graduated” to RE/MAX…back when they never, ever took new agents. Don’t get the RE/MAX being “2nd tier” to JLS, etc…

  7. The barriers to entry need to be higher. For awhile on the mortgage side we were seeing people getting out of the business in droves which was a good thing. Unfortunately, the refi boom gave a lot of the bottom tier LOs new life. The industry as a whole would be better off if 80% of the agents and LOs found new careers.

    As with most sales jobs, 20% of the people do 80% of the business.

    The public would have a lot more respect for the professions if they knew it wasn’t so easy to actually get licensed and start calling yourself a Realtor or LO. In addition, it does none of us any good having to associate ourselves with so many marginally qualified individuals.

  8. Glad that somebody brought up the real estate industry’s CRAZY practice of allowing ANYONE WITH A PULSE (i.e. take some 2 week classes) to walk through for-sale houses. The sooner this KEY-box crap ends…the better.

    The main reason I plan to sell my house FISBO is that I don’t want a bunch of sketch-balls going through my stuff.

  9. Russ — “as with most sales jobs” is kinda inconsistent with “the professions”. As Ardell has noted previously (!) agents need to move away from the notion of a “sales job” if they are going to remain relevant.

  10. Nice article, Chuck!
    Sally, I don’t know where you are coming up with this “2nd tier”…Windermere and JLS are relevant local players but Coldwell Banker, RE/MAX, and Prudential are much bigger companies on a national (and international Level in some cases). All are generally full service brokerages with exceptions by agent, of course.
    I agree that it would be nice to raise the bar, but wonder how we can reach agreement on what that bar would be. Cut the bottom 20% out? Maybe that would give some incentive for people to reach a certain level of activity each year.

  11. Nice article, Chuck!
    Sally, I don’t know where you are coming up with this “2nd tier”…Windermere and JLS are relevant local players but Coldwell Banker, RE/MAX, and Prudential are much bigger companies on a national (and international Level in some cases). All are generally full service brokerages with exceptions by agent, of course.
    I agree that it would be nice to raise the bar, but wonder how we can reach agreement on what that bar would be. Cut the bottom 20% out? Maybe that would give some incentive for people to reach a certain level of activity each year.

  12. I think if individuals want to struggle to stay in this business no one should stop them. I have been waiting for this industry to move from high-pressure “sales” mindset to more of a “consulting” perspective for a decade.

    I am amazed at how slowly the real estate industry has been to adapt to the new reality. The consumer is finally starting to realize where true value lies and it is not in the mantra “I’ll be your agent for life”. The consumer is more educated than ever and many already know what they want – you just need to provide it quickly and corrently. More and more the real estate buyer just wants a transactional relationship – and then to move on with no strings attached – but is forced to conform to the traditional real estate business model and lose a lot of money in the process (in their opinion). There is a reason other business models have evolved and real estate attorneys are getting a larger share of sales volume.

    Yes, I am a thirty-something agent and I work with my generation and am waiting for those coming up behind me when they are ready to buy a house – what they want is different than what the old model provides. This is also why my speciality is green real estate and healthy homes – the environment is paramount to these upcoming buyers and being educated in structural design, indoor air quality, energy efficiency, and integration of the home with the surrounding environment is going to matter more than how many deals I closed last year.

    I shouldn’t be forced out of the business because my expertise and business ideals are a little different. If I want to make less money while I wait for the industry to catch up and help the consumer to find me, that’s my choice. Not anyone elses.

  13. I think if individuals want to struggle to stay in this business no one should stop them. I have been waiting for this industry to move from high-pressure “sales” mindset to more of a “consulting” perspective for a decade.

    I am amazed at how slowly the real estate industry has been to adapt to the new reality. The consumer is finally starting to realize where true value lies and it is not in the mantra “I’ll be your agent for life”. The consumer is more educated than ever and many already know what they want – you just need to provide it quickly and corrently. More and more the real estate buyer just wants a transactional relationship – and then to move on with no strings attached – but is forced to conform to the traditional real estate business model and lose a lot of money in the process (in their opinion). There is a reason other business models have evolved and real estate attorneys are getting a larger share of sales volume.

    Yes, I am a thirty-something agent and I work with my generation and am waiting for those coming up behind me when they are ready to buy a house – what they want is different than what the old model provides. This is also why my speciality is green real estate and healthy homes – the environment is paramount to these upcoming buyers and being educated in structural design, indoor air quality, energy efficiency, and integration of the home with the surrounding environment is going to matter more than how many deals I closed last year.

    I shouldn’t be forced out of the business because my expertise and business ideals are a little different. If I want to make less money while I wait for the industry to catch up and help the consumer to find me, that’s my choice. Not anyone elses.

  14. When prices rise, people rush into real estate. Many people come in from failed other parts of the economy. Some people come in because they had high end jobs and retired or got laid off. Quite a few are house wives trying to fill in on flexible hours. However, most are chasing the fast buck. Not many realized that the industry is working an 80 – 20. Meaning 80% of the business is done by 20% of the agents. In many cases it is far more drastic than that. When the markets get hot, the agent count swells well into the bull market, the professional agent looses out to the friend, son, daughter and cousin of a seller/buyer. This is the way of the world.
    On the reverse, many agents in a bear market are gone and don’t realize it. If you haven’t sold a house in a year you are retired. I quoted these statistics last year. We had 10,000 agents in Bergen County New Jersey MLS and sold 13,000 properties.
    That is 1.3 per agent average. I would say over half of the agents sold none!

  15. What I would find interesting is what the top 10% of agents grossed on average in 1995, in 2000, in 2005 and 2008.

    Any data out there that could show me what the top agents made and make?

  16. What a great set of comments on these thought provoking numbers.

    I certainly agree a lot of ‘agents’ are hanging in while doing something else, are licensed assistants, or are part time – perhaps while a spouse has the main job income. But I like Craig’s comment that those are all “kinda inconsistent with “the professions

  17. What a great set of comments on these thought provoking numbers.

    I certainly agree a lot of ‘agents’ are hanging in while doing something else, are licensed assistants, or are part time – perhaps while a spouse has the main job income. But I like Craig’s comment that those are all “kinda inconsistent with “the professions

  18. Pingback: FBS Blog » Blog Archive » Have MLS membership levels hit bottom or is there still shake-out to come?

  19. Cam,

    There is no way to come up with transactions per agent at this time going backward, as it is only recently that the mls permitted the name of the buyer’s agent to show. An agent could have 15 transactions where they represented the buyer and 6 where they represented the seller, and only 6 of the 21 will show.

    I can look at a company today (doing this while typing) and see this:

    55 agents

    Total closed sales in the last 6 months = 25

    Total closed sales in 2008 = 40

    Total closed sales in 2007 = 89

    Total closed sales in 2006 = 93

    Total closed sales in 2005 = 130

    Total closed sales in 2004 = 117

    Total closed sales in 2003 = 132

    Total closed sales in 2002 = 101

    Total closed sales in 2001 = 102

    I can’t see how many agents they had each year, I can only see that they have 55 now. I don’t think the number of agents has changed much, but different ones come and go. The transactions seem to be spread out with no one or two agents doing a lot of the transactions.

    So in all that time they went from 2 per agent, never got to 3 per agent and are now down to less than 1 per agent last year and in the last 6 months.

    Generally a brokerage has no vested interest in any one person being able to sustain themselves and their families. They simply want to have enough total agents, even if each had only 1 sale each, to have some consistency in the total number of sales for the company.

    Also, since a brokerage generally make much less on an experienced agent who does more transactions than a new agent’s first few sales, they actually make more money when the clients are given the lowest standard of care.

    Also, when I check the “biggest names” in the industry they often co-list and have a “team”. So the biggest agent might have twice as many sales or more than the next tier of agents, but has to split the commission with the team and support staff. So the “top 10%” you talk about is not “an agent” at all, but a mini company within a company.

    Not sure that answers your question, but it is how it is.

  20. Cam,

    There is no way to come up with transactions per agent at this time going backward, as it is only recently that the mls permitted the name of the buyer’s agent to show. An agent could have 15 transactions where they represented the buyer and 6 where they represented the seller, and only 6 of the 21 will show.

    I can look at a company today (doing this while typing) and see this:

    55 agents

    Total closed sales in the last 6 months = 25

    Total closed sales in 2008 = 40

    Total closed sales in 2007 = 89

    Total closed sales in 2006 = 93

    Total closed sales in 2005 = 130

    Total closed sales in 2004 = 117

    Total closed sales in 2003 = 132

    Total closed sales in 2002 = 101

    Total closed sales in 2001 = 102

    I can’t see how many agents they had each year, I can only see that they have 55 now. I don’t think the number of agents has changed much, but different ones come and go. The transactions seem to be spread out with no one or two agents doing a lot of the transactions.

    So in all that time they went from 2 per agent, never got to 3 per agent and are now down to less than 1 per agent last year and in the last 6 months.

    Generally a brokerage has no vested interest in any one person being able to sustain themselves and their families. They simply want to have enough total agents, even if each had only 1 sale each, to have some consistency in the total number of sales for the company.

    Also, since a brokerage generally make much less on an experienced agent who does more transactions than a new agent’s first few sales, they actually make more money when the clients are given the lowest standard of care.

    Also, when I check the “biggest names” in the industry they often co-list and have a “team”. So the biggest agent might have twice as many sales or more than the next tier of agents, but has to split the commission with the team and support staff. So the “top 10%” you talk about is not “an agent” at all, but a mini company within a company.

    Not sure that answers your question, but it is how it is.

  21. i.e. Big Name Team has 45 listings – 6 pending and 11 sold in the last six months (listing side only). Every listing has 2 agents, not always the same 2, they have support staff to pay, and 45 listings to service as to cost to sell 11 houses in 6 months.

    I think the average Joe sees those 45 listings and thinks the agent sells more homes in a year than they actually do.

    (archives only go back to 2nd quarter or so of 2000 – so I can’t do 1995 or all of 2000 or anything in between.)

  22. Thanks, Ardell.

    Just send me all your old tax returns going back in 1995. Also, grab Chuck Cady’s and Marlow Harris’s, and that should answer my question. 😉

    Really, I am just interested in how much the talented players with decent contacts, experience and a work ethic make, how much that increased during the bubble run-up, and how much that dropped on the down-turn.

    I have no idea how to convert “closed sales” into Benjamins.

    For most industries and careers, you can get a good sense of how much folks make on the internet via websites that aggregate such data. The vast number of hobby Realtors makes those numbers meaningless for RE agents.

  23. You might want to follow Reply # 16 and the FBS blog. They have posted some interesting info on the drop in number of agents after the peak in some eastern MLS areas – I’ve asked if they can come up with a little more data that would show timing of drop in agents relative to drop in prices.

  24. Cam – The top 10% of real estate agents make over $150k per year. The top 3% make over $250k a year.

    Ardell – It used to be be that you graduated to RE/Max, but in the Northwest, they are less of a player.

    Dag – Just because you sell FSBO, doesn’t mean that during your open house you won’t have 5 groups of people through and scurrying through your stuff. I am rather repulsed at the thought that an agent would go through someone else’s stuff, much less their client. However, know this… It takes longer to sell a house that has showing restrictions. No Keybox, showing restrictions end. Further, most FSBO’s have the cheap 4 digit code keybox on their door, and the sellers give that code to agents to access the property. So not sure what you solve by getting rid of the other keyboxes.

    Sam – You are absolutely right. I think the problem becomes that these companies have franchises such as CB Danforth isn’t providing the same support for the same agent as CB Bain. This hurts the entire industry, not just the CB name.

    Wendy – I work with the consultation approach within the current model. I am not sure why you think the “Agent for Life” model is broken. I get calls from clients that worked with me 10 years ago asking me real estate questions, landscaping questions, remodel questions. If I were to conform to your standards, it would seem that I would be an order taker, waiting for the buyer to use me for my consultation skills.

    Agents have to be proactive, previewing, learning about green homes, learning about net zero homes or even passive homes. I don’t think you can succeed at this being part time. You can have a consultative approach to real estate while working full time, but you can’t be part time and be an expert, IMO.

    Richard- People turn to real estate in good, bad and indifferent markets. Sure, you get some additional people in good or bad markets, but I am not sure you can make a huge strong case that a particular type of economy warrants more agents entering the field.

  25. Cam – The top 10% of real estate agents make over $150k per year. The top 3% make over $250k a year.

    Ardell – It used to be be that you graduated to RE/Max, but in the Northwest, they are less of a player.

    Dag – Just because you sell FSBO, doesn’t mean that during your open house you won’t have 5 groups of people through and scurrying through your stuff. I am rather repulsed at the thought that an agent would go through someone else’s stuff, much less their client. However, know this… It takes longer to sell a house that has showing restrictions. No Keybox, showing restrictions end. Further, most FSBO’s have the cheap 4 digit code keybox on their door, and the sellers give that code to agents to access the property. So not sure what you solve by getting rid of the other keyboxes.

    Sam – You are absolutely right. I think the problem becomes that these companies have franchises such as CB Danforth isn’t providing the same support for the same agent as CB Bain. This hurts the entire industry, not just the CB name.

    Wendy – I work with the consultation approach within the current model. I am not sure why you think the “Agent for Life” model is broken. I get calls from clients that worked with me 10 years ago asking me real estate questions, landscaping questions, remodel questions. If I were to conform to your standards, it would seem that I would be an order taker, waiting for the buyer to use me for my consultation skills.

    Agents have to be proactive, previewing, learning about green homes, learning about net zero homes or even passive homes. I don’t think you can succeed at this being part time. You can have a consultative approach to real estate while working full time, but you can’t be part time and be an expert, IMO.

    Richard- People turn to real estate in good, bad and indifferent markets. Sure, you get some additional people in good or bad markets, but I am not sure you can make a huge strong case that a particular type of economy warrants more agents entering the field.

  26. Sally, your comments on agent earnings match my impression from several years ago. Do you have any info on what the bar is for a top 10% agent these days – like 2008? Still $150k, or dropped significantly?

  27. Sally,

    “Ardell – It used to be be that you graduated to RE/Max, but in the Northwest, they are less of a player.”

    The RE/MAX balloon used to have the slogan “It’s the Experience!” as a guarantee that they did not ever hire anyone without experience. The standards of entry were initially high.

    IF a RE/MAX franchise company does hire agents fresh our of the State Exam pass status AND continues to use the “It’s the Experience” slogan on any of their market materials…well I think that’s covered under a law regarding false advertising.

  28. Cam,

    In the office I started in back in NJ in 1990, the office handed out all agent’s gross commission income titled “Climb the Mountain”. They may have cut off at the top 20 or so. This gave us a benchmark and a goal setting figure. It was very interesting and helpful for new or “move up” agents.

    That practice discontinued when the bickering started. “No fair that Joe is #1 because his wife is his partner and they show all the income as “Joe’s” and that’s 2 agents; not one!” etc, etc… Then they started breaking down awards to “teams” separately from “individuals”, but then people complained if the agent had a licensed assistant. The arguments continue to this day around the Country and info is less available as a result.

    Say one agent you named has 3 buyer’s agents and 2 licensed assistants, but all transactions show in the “team leader” name for marketing purposes. How would you compare that gross income to that of an individual agent? Gross income vs. net is often used as a marketing technique for teams with 2 or more agents.

    If the 2 agents live in the same house, it’s at least one “household” income. If they do not…then I’d say you have to look at the total as half an income.

  29. Cam,

    In the office I started in back in NJ in 1990, the office handed out all agent’s gross commission income titled “Climb the Mountain”. They may have cut off at the top 20 or so. This gave us a benchmark and a goal setting figure. It was very interesting and helpful for new or “move up” agents.

    That practice discontinued when the bickering started. “No fair that Joe is #1 because his wife is his partner and they show all the income as “Joe’s” and that’s 2 agents; not one!” etc, etc… Then they started breaking down awards to “teams” separately from “individuals”, but then people complained if the agent had a licensed assistant. The arguments continue to this day around the Country and info is less available as a result.

    Say one agent you named has 3 buyer’s agents and 2 licensed assistants, but all transactions show in the “team leader” name for marketing purposes. How would you compare that gross income to that of an individual agent? Gross income vs. net is often used as a marketing technique for teams with 2 or more agents.

    If the 2 agents live in the same house, it’s at least one “household” income. If they do not…then I’d say you have to look at the total as half an income.

  30. Cam,

    How about this: NAR says median commission is 5.1% per closed transaction (in recent history they said that as to national figures)

    There were 13,000 licensed agents on average in King County in 2008. Let’s say 60% of them work as real estate agents period vs. holding a license for future or referral only purposes.

    OK, so we have 5.1% commission on 21,747 closings in 2008 in all categories. Note that some commercial sales will show in this number, but not all. But some of the transactions are duplicated, so maybe the inconsistencies even out. I can’t do stats for more than 10,000, so I have to break it into quarters.

    1st quarter 2008 – 5,163 closings – median price $394,000 x 5.1% = I think that’s $103 million. None of my calculators will calculate the 5,163 times $394,000, so I used 394 times 5.1% and then added three zeros to the final answer to get $103 million. Someone double-check me on that.

    $103,000,000 divided by 7,800 agents (assuming 60% active) = $13,205 per agent for the 1st quarter.

    Let’s do the 4th quarter and rough up the in between quarters.

    4th Quarter sales = 4,126 transactions – median $360,950 x 5.1% = $82 million divided by 7,800 agents = $11,000 per agent for the last quarter.

    Let’s call that $48,000 per agent for 2008.

    Now let’s go to Sally’s numbers and assume 10 of the agents made $150,000 on average (which includes the 3% that made $250,000)

    780 made $150,000 = $117,000,000 of the $374,000,000. That leaves $257,000,000 for the remaining 7,020 agents or $36,600 a year for 2008.

    Lots of assumptions there, but how does that look Cam? Looks about right to me. You still have some that made $60,000 and some that made nothing in that 60% of active agents, but the majority who made nothing would likely have been wiped out when I decreased the # of total agents by 40%.

    If someone knows how many of the 13,000 were keeping up with their mls dues and Supra keybox charges, and finds that to be more or less than 60% (7,800) we can run the numbers again. But I think that takes us a step closer to reality.

  31. Cam,

    How about this: NAR says median commission is 5.1% per closed transaction (in recent history they said that as to national figures)

    There were 13,000 licensed agents on average in King County in 2008. Let’s say 60% of them work as real estate agents period vs. holding a license for future or referral only purposes.

    OK, so we have 5.1% commission on 21,747 closings in 2008 in all categories. Note that some commercial sales will show in this number, but not all. But some of the transactions are duplicated, so maybe the inconsistencies even out. I can’t do stats for more than 10,000, so I have to break it into quarters.

    1st quarter 2008 – 5,163 closings – median price $394,000 x 5.1% = I think that’s $103 million. None of my calculators will calculate the 5,163 times $394,000, so I used 394 times 5.1% and then added three zeros to the final answer to get $103 million. Someone double-check me on that.

    $103,000,000 divided by 7,800 agents (assuming 60% active) = $13,205 per agent for the 1st quarter.

    Let’s do the 4th quarter and rough up the in between quarters.

    4th Quarter sales = 4,126 transactions – median $360,950 x 5.1% = $82 million divided by 7,800 agents = $11,000 per agent for the last quarter.

    Let’s call that $48,000 per agent for 2008.

    Now let’s go to Sally’s numbers and assume 10 of the agents made $150,000 on average (which includes the 3% that made $250,000)

    780 made $150,000 = $117,000,000 of the $374,000,000. That leaves $257,000,000 for the remaining 7,020 agents or $36,600 a year for 2008.

    Lots of assumptions there, but how does that look Cam? Looks about right to me. You still have some that made $60,000 and some that made nothing in that 60% of active agents, but the majority who made nothing would likely have been wiped out when I decreased the # of total agents by 40%.

    If someone knows how many of the 13,000 were keeping up with their mls dues and Supra keybox charges, and finds that to be more or less than 60% (7,800) we can run the numbers again. But I think that takes us a step closer to reality.

  32. Ardell, is that 13,000 all WA licensed agents in king county, or licensed agents who are members of the MLS, which is where I got my count, and presumably all are dues paying or the MLS would kick them out. I have often wondered how many people are licensed agents but not members of the MLS. Do you suppose a lot of licensed asistants are not MLS members?

    • Cam and Chuck,

      Just saw this on Twitter from a statement made by NAR:

      The average REALTOR is a 52 year old woman who makes $36,000 a year. #rebcchi

      The Annual Income came out almost exactly to the result of my math calculation! Amazing!

  33. Since I’m using 2008 closed transactions, I’m going back to 13,000 on average as a 2008 number, though it is lower right now. What number do you have? Is there a large variance?

  34. Chuck,

    I balance my method and checks and balances against what I believe is the case. Do the results look roughly accurate to you?

    I did not deduct what an agent pays their broker, as that is an expense of business and I am using gross income before business expenses. Broker, ads, car expenses, dues, license fees, etc… all cost of doing business including the broker’s cut is not taken into consideration.

  35. I don’t have any additional data right now. I assume the NWMLS count of agents in King is all NWMLS member agents whose broker office address is in King County. Presumably the state WA DOL could come up with number of active licensees on the same basis, i.e. where the license is hung, but I don’t see a way to find that out on the DOL public site.

  36. DOL records not real relevant, as many people with licenses keep them up to date just so they don’t have to start from scratch. I’m doing that now with my CA license as I lose the opportunity to renew it on 10/20/09, even though I haven’t lived there since 2003. Keeping your license active and being a registered member of the mls with a brokerage are two different things.

  37. You are welcome. We kind of know these numbers from talking with agents, so they look pretty right on to me. Close enough for sure. Those that make $100,000 or more usually have staff, partners, mega expenses for all the listings not sold. Most of the really high priced properties never do sell 🙂

    Perceptions are often based on what’s “for sale” vs. what’s sold.

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