Are brokers/agents a dying breed?

Well, already a newbie error. I did select "Brokers", but must have changed to "Sales" upon submission. Could threads be moved to the correct category? Apologies.

if by law, you mean being a criminal, then RE brokerage my be right for you

I'm fairly new to real estate sales, having switched mid-career after nearly two decades in publishing. I wrote a memoir of my first year in the business which was pretty well-reviewed by the NY Observer and others, and I recommend it to you: http://tinyurl.com/2ag28z

In general, I would say that the rise of internet information is changing but not elimating the business. There is a large annoyance factor, similar probably to what doctors feel when their patients come in with pages from WebMD, but even several years after computerization most people still seem to want agents and advice.

The question for you will be how to find those people. I'm your age, and I found that most of my cohort who were going to buy had already done so, so I found getting started took a little time. In general, you should be prepared to float yourself for the first six months to a year without income.

But if you can stand that, and you're willing to work six days a week, it's a varied and interesting job.

ali r
DG Neary Realty

"but even several years after computerization most people still seem to want agents and advice"

"but even several years after computerization most people are still stuck with agents and mostly crappy, self-serving advice"

FTFY. :)

I bought and sold in another city and did not need a real estage agent either time.

However, in Manhattan, the process terrifies me because (in most cases) owning an apartment involves purchasing shares of a corporation that you don't know very much about and have limited ability to research beforehand.

I don't need white glove service or someone to take me around and show me properties, but I do need someone who knows the area and can give me an (approximate) idea of the building's financial health, what the board is like, how to most effectively submit a board package, etc., etc. As long as there are co-op boards, I think the profession will survive in Manhattan.

agents have this town locked up, no worries

be ready to float yourself or a year or two in this market, especially if you're planning to do sales. in rentals you can earn a buck after 6 months, but it's a lot more running around.

marco_m - I know you're a big fan of brokers from your posts, so I know you're just joking. I did "steal" my friend's car during college as a prank and got arrested (dismissed of course) - does that count?

ali - Thanks for your reply. I have enjoyed reading your posts while lurking and hope I can reach out to you if I have questions. As always, your words are thoughtful, soothing and helpful.

pulaski - "There cannot be good in the world without evil". Without beating a dead horse, I am in the camp that believes there are good agents and bad agents. I know the mere mention of the word "broker" has a negative connotation in most industries though.

lad - Thank you for your thoughts. That is very helpful to know. I know my father who owns Manhattan real estate is "forced" to work with some agents simply because he has given up hope on finding a better one. "Evil that you know...etc" I hope you find some good agents to work with.

gcondo - Short and sweet, I like that. I hope that my clients don't feel that way when I represent them though.

ab_11218 - I hear you, it's tough right now. I'm much more curious if the industry will become the next beta-max though.

Thank you all for your replies, it's much appreciated.

Vintage65

"be ready to float yourself or a year or two in this market, especially if you're planning to do sales. in rentals you can earn a buck after 6 months, but it's a lot more running around."

And even then, it'll be JUST a buck. Allow two years before your RE income actually replaces the income you have now.

This is why RE has traditionally been a "wife" job.

I love that so many people on this board think real estate agents make too much money although we still don't make "guy money."

Vintage, feel free to email at ali [at] dgneary {dot} com. Put "streeteasy" in the subject line so I can find it.

ali

Did a real estate agent just compare themselves to a Doctor?? That has to be a whole new level of delusion...

Vintage, your background sounds ideal for this. The only other question I have is, do you like real estate? That is, do you just enjoy contemplating buildings and apartments and/or vacant land? Somebody told me the most successful real estate investors are those who just plain love real estate, and I happen to think this is true of agents/brokers as well.

I got my license in July, have sold one apartment and have exclusive listings right now, as well as plenty of buyers to take around to properties. In fact I was getting too many calls/emails, I was getting burned out and stressed out, so I deliberately backed off and am doing much less work than I did my first couple of months. I'm pretty comfortable now.

I love being a real estate agent, and some people definitely want and need us. I got my most recent listing because the seller tried going the For Sale By Owner route, had a buyer, and then lost them during negotiations and decided after that harrowing experience that a pro's help wasn't optional. There's more to it than access to listings and advertising.

I believe one needs 1-2 years of living expenses in the bank, or a cooperative earning spouse, to embark on any kind of freelance endeavor. This is standard advice and I agree with it. I was a successful freelance writer for more than 20 years BUT I had two false starts in that field before I could make freelancing stick long-term.

And, contrary to what people write in books, I do believe you can do real estate part time, but it will take a lot longer to make any money.

NYCMatt - 2 years? Wow, lucky, I've always been a "prepare for the worst, hope for the best" kinda guy.

ali - Thank you! I'll definitely be in touch if not to just say "Hi".

corlearshook - No, but I guess some may have read it that way.

Fluter - I've read your journey via your posts while lurking. You're another person I may wish to contact for some advice. The short answer to your question: "Yes", but since I have not dealt with RE on a professional level, I do not know yet. I have an interest in helping people and making money. I did help my father market his properties (residential and commercial) and even had deals close. No I did not receive $$$ as per State law. Guess that wasn't that short. :)

Thanks again for all the replies.

Vintage65

Welcome,Vintage: There are good brokers. In the middle of my closing on my condo, a question came up about something in the unit. The nice lady broker went to the building with me, to check. She wouldn't leave my side. We came back to my attorney's office (good thing that it wasn't far from the building), and I proceeded to sign my checks. I would see her around the neighborhood, often after I moved in. She was always rushing to show something to somebody. I was exhausted just watching her. She worked hard for her money!

http://www.housingwatch.com/2009/12/21/your-broker-is-worth-it/

check out this post for a breakdown of how agents make their money (there's also a sister post associated with it on how to negotiate commissions)

I think the old generation of brokers is over; being a matchmaker and opening doors won't cut it anymore ... I think the time is ripe to make this profession be more than just a default job for part-timers or those with no clear qualifications; it's time to upgrade it to a destination career that manages one of the most real of asset classes out there: real estate. We need product sophistication, increased educational standards, and differentiating designations among agents. Further, we need to somehow change the compensation model, which I believe is a material culprit behind the ills of the industry.

A crisis is a terrible thing to waste, and I believe the industry as a whole needs to reinvent itself to remain relevant and, moreover, add the value it can and should add to executing one of the most significant purchases most people will make in their lifetimes!

Are we asking about agents dying because of business changes, or people killing them?

Truth - Great to hear stories like yours. Seems you got lucky with your agent. From what I've been reading, I'm beginning to think you are in the minority. :( It's a shame but doesn't surprise me.

Honeycrisp - I'm not sure if I should thank you or curse you out (in a nice way) for that link. LOL - I got to to page 3 of the comments and couldn't go on any further. Seems the word "broker" is a four lettered word to those who unfortunately met the wrong ones or to the successful DYI'ers who have bought/sold without problems. I see so much anger and hostility from people who hate brokers and brokers who hate people who hate brokers. I think some, if not all of your suggestions, would certainly improve public opinion of RE professionals. Finally, I'm beginning to sense that this subject has been brought up many times before, so I won't continue with this thread unless it develops on its own. Sad to see the industry has a very bad rep due to bad agents who ruin it for the good ones.

somewhereelse - LMAO - what about suicide?

Thanks again to all.

Vintage65

Vintage65 - indeed, there is much tension out there between those who support/understand and those who hate/distrust brokers. I think the industry is .05% above used car salesmen in terms of reputation *lol*

I'm kinda passionate about changing that :) not just the public opinion (like a pr campaign) but in substance as well.

in any case, glad you enjoyed the link ... enjoy your wknd

Once my general contract friend told me , he LIED ALL THE TIME.
When I challenge him, his excuse was all the developer, real estate broker he worked with, they all lied one way or the other too.
So,if you can lie through your teeth and can still sleep, then you can be a real estate agent for sure.

@Vintage65
Yes I do think the brokerage model is going to change, it is a dinosaur, big, slow but I think ultimately doomed. Since I started back in 1991 the proliferation of firms/agents through the boom years has been substantial, now unsupportable. There will continue to be consolidation as there just will not be enough business to support the number of agents and firms trying to get a piece of the pie.

I am a supporter of the agent/associate broker, they are the ones that do the heavy lifting and ultimately generate money through their hard efforts.

What needs to change is the brokerage model where an agent shares their commission; usually starting at 35-50% with their firm. The "firm" is nothing more than a hub where agents congregate and to some degree may receive some support from a "manager". The brokerage firm is in essence a giant commercial or billboard to convey a message to the public and inspire confidence in the service they can provide. But essentially it is a straw man, as it does neither in terms of any tangible contribution to procuring a deal. First you must understand how brokers actually work to understand what I mean.

In these days of the internet, brokers get their clients from ads they place on some web based media, mostly the NYT's, though StreetEasy, Trulia and Zillow are growing by leaps and bounds. The majority of successful agents get most of their clients(buyers,seller's and renters) via referrals and these days that is ever so important as the internet is JAMMED with so much noise it's getting very difficult to procure quality leads this way.

When an agent has a buyer, regardless of which firm they work at, large, small or medium; they all search for listings more or less the same way. That is they will enter the buyers information into a database and hit send, generating a list of possibilities. From there the agent will filter through the search results, sorting out and then sending the listings to their customer for review. We will then discuss which listings the client would like to see and schedule the appointments. What is most relevant is working with an agent who understands what you want and provides honest, transparent and knowledgeable service. It is about the agent...not the firm. (More or less the same process when you list a property).

The change has begun with companies like Charles Rutenberg that provide all the necessary tools, but the firm receives a fraction of the commission collected by the agent. After 20 years in this business I have started a company that is agent/consumer centric, it provides a platform for agents to be able to work more effectively and efficiently while keeping the lions share of the commission. It also gives the agent freedom to actually lower commissions , rebate part of the sales commission back to the buyer for a guaranteed added value(I have an agent working on a deal that will result in the buyer getting approx. $140,000 dollars back from us at closing).

Things are and will change and in my opinion sooner or later a big player is going to step in and fund a company that will revolutionize this business the way Schwab, Etrade etc changed the way we buy stocks. It can happen without changing the fundamental way you buy, sell and rent property, but the traditional role of the firm is what will change. Agents are waking up and realizing "why am I giving a $100,000 dollars a year to my company", "did they really earn that?" Getting both buyers and agents to change will take some time, humans are creatures of habit, they are afraid to rock the boat but as some take this path others will follow and it will be a better, more efficient market for everyone, not a static place where "negotiating" a commission is 5% instead 6%. The agent will continue an important role but the playing field will change. That said the powers that be wont go down without a fight, but I bet one of them will break off the pack and you will see the next Charles Schwab rise up, $9.95 for a trade, who would have thunk it 20 years ago?

For the agent it can and will be truly liberating as you have the freedom to create deals that would not be possible at the majority of firms. I do things now that I could never have done before, I have created a FSBO with Benefits, I showed one apartment yesterday to a client I just met and charged a fee to go along with the amount of effort, 1/2 a months rent. I give my clients gift cards for renting apartments with me where the owner is paying the fee, I have listed and sold apartments at 3.5% giving the cobroking agent 2.5% and 1% for moi(at my old firm it would have resulted in 1.25(5% divided four ways).

I don't think the full price firms will go away as some people will always be willing to pay more for brand. But I think you will see more and more viable options from competent people within the industry. I have no qualms with an agent or client that feels compelled to work in the "traditional" model, quite frankly without them I would not be an alternative model.

http://theburkhardtgroup.com/services-and-fees-c14358.html

Keith (broker)

Keith,

I wish you every success with your model -- but I work for a boutique firm. The answer to "why do I give $100,000 to my company?" is not because of the brand.

First, my firm pays certain expenses I would have to float if I were on my own -- office rent is not free, and neither is maintaining computer/copier/fax/scanner, and certainly neither is the volume of advertising we put out for sellers, which includes advertising to the brokerage community, directly on the Internet, through local newspapers such as the New York Times, and through targeted trade publications such as Variety.

It seems it would be tough to cover those expenses on 1 percent -- don't forget that Foxton's, a top international firm with a lot of resources, tried a few years ago and failed pretty spectacularly.

But more importantly, I pay part of my income up to get the expertise of my sponsoring brokers. The decades -- and I do mean *decades* -- of experience they have between them means they've seen pretty much every situation before. They know how to find the holes in a co-op's financials, what persuasions are most likely to work with a persnickety co-op board, and what buildings secretly have skeletons in their closets.

In that sense, it's not unlike a junior lawyer supporting law partners. You don't need them 95% of the time, but when you do need them, they're there, and in those situations they're priceless.

I closed a sale in Chelsea yesterday, from customers I got off this board, and what they said was, "you guys did such a great job for us -- we know this deal took a lot of hours and that you didn't make much per hour, but we are so thrilled with the service we got we are recommending you to two sellers in our building."

For clients like those, the model is not broken.

ali r.
DG Neary Realty

Keith
I think your points are all valid and, indeed, the compensation model in as far as the brokerage firm is concerned may well change.
I do think that putting more of the total earnings in agent pockets and/orlowering commissions is merely the tip of the iceburg, . Part of the flawed piece of the comp model is that the seller pays everything ... why? why can't a buyer pay for buy-side service and the seller pay for sales-side services? this seems so silly to me. further, why are there so many legal issues in trying to change HOW agents are paid? (i.e. who says that the fee received needs to be a percentage of the sales amount? why not a flat fee? why not a hybrid)
I'm at a firm where we have similar flexibility to you - that's the greatest issue in my opinion. it's the long-standing and law-supported standards of who pays for what and who has the upper hand. why, after 6 months of working with a buyer and doing right by her does she have the legal right to drop my representation literally at the closing table such that i don't get paid? similarly, why are sellers "stuck" in a sales exclusivity contract if they are unsatisfied with the service they're getting. I know, all of these issues have their exceptions and workarounds, but it's the norm that rules.

Further, the discussion above neglects the distinction among different level of services (there's only so much you can write in a post *smile*). I do NOT believe that the key value agents provide is that of a matchmaker. NO WAY! This is why those who are threatened by the internet and the information on it are the very ones who relied on the opacity of information to make a living: "I know something you don't know (past closing prices, date of purchase, comps, etc.), and that's why you need to pay me". That time IS long gone.

I believe the new breed of agents come from backgrounds like wealth management, the legal arena, etc. These are skills the industry desperately needs to actually add value to this asset class. The financial/equity markets have blown up with a plethora of products and services (no, not all of them good, but there's something to be said for the sophistication of an industry.

I was astounded when entering the industry that agents barely have basic excel skills. Are you kidding? This is YOUR profession! How are you going to help your client figure out which investment property best complements his existing portfolio, which he should sell first, etc? How are you going to create upside and downside scenarios for different decisions your client might make, and put them into perspective? This kind of experience or value-add should be standard, which is why I think we need to elevate the barriers to entry, or AT LEAST create certifications (CFA comes to mind) to distinguish old-school vs new-school agents.

One of the most important things an agent can do is add perspective to a deal, either on an emotional level (thereby helping the buyer avoid attachment and the seller avoid anchoring), or on a valuation basis (what SHOULD the property be sold for and how do you assess that). The opening and closing of doors, that's a no go.

Lastly, like you, I don't believe it's about the firm. Unfortunately, tell that to the seller who believes a big name matters. For all of you buyers out there, do you really remember or care who the sell-side broker worked for? Did the brand name play any role in your finding the property or your decision to buy that home?

For as long as the big brand names continue to have more success in getting exclusive listings by leveraging sellers' beliefs that the name matters, the big firms will continue to flourish. I actually think they have a big role and responsibility to play to upgrade our standards, precisely because of their market share.

I guess, for me, bottom line is NOT just about fees. It's what comes along with those fees. (I don't think you would disagree). Our website (www.anaANDmarie.com/services) used to have a huge section, like yours, about different compensation models ... not only did nobody bite, but the legal risks we were apparently exposing ourselves to was huge. I'd love to chat with you about how you got around those.

Ok ... I think this is long enough :)

"why can't a buyer pay for buy-side service and the seller pay for sales-side services?"

I believe this is where the change is headed

front_porch - totally agree

urbandigs - amen!

Ali,You do sort of support my point, you can work at a small firm and still be successful. I would have to disagree that the firm is worth approximately half of what you earn, and this is where I see opportunity for change. My model is designed for experienced brokers(not saying you're not) that are looking to maximize profits and have the freedom to be creative. My team includes qualified CPA's and attorneys to help a buyer decide if a building is worthy of an investment.

Successful brokers such as Noah and Doug Heddings are just two example of brokers leaving the herd. But I understand by your comments that it works for you, so continued good luck and success! But comparing what I do to Foxtons is simply incorrect when you understand Foxtons failed business model, not quite as simple as what you have stated, and not at all what I am doing. As pointed out I cobroke listings at 3.5%, on a direct sale I receive 2-3%, on a cobroke I receive 1%(on a cobroke at a traditional firm an agent receives 1.25-1.5%). This is also only a portion of my business as I have traditionally focused on representing buyers and I also generate income through Hybrid sales listings and rentals.

I have found that a large portion of marketing expense is fluff. At the end of the day most buyers have a broker and brokers don't look in Variety or at billboards, they search for listings in one of many broker databases. Most of my buyers come from referrals and I would estimate 95% of all deals in Manhattan involve two brokers.

I have now been working with my model for two successful years and like you have satisfied customers who have been quite enthusiastic about our model and the service provided, many I have received from this board. I have been successful for twenty years, raised two children here(both now in college), so I guess I'm doing something right :)

Ironically most of the critique seems to come from brokers at traditional firms (: I'm just trying to offer a viable alternative that works, I love free efficient markets and I love a challenge.

@Honeycrisp so far there have been no conflicts with what we offer not quite sure what you mean? But I would love to grab a coffee and chat. I agree its about the broker, whether they are at BHS, Elliman or working from a netbook at Starbucks.

Best of luck to everybody in all of their pursuits in life as well as business!

arthur1071 - I mostly agree with your comments. One only needs to look at the daily papers for an example of the "liars" in those fields. That said, I think lying transcends to many/most industries. IMO, it's part, an inherent flaw of the regulatory agencies, but I believe most are actually due to just unscrupulous individuals. In the end, liars are liars no matter what profession. Doctors, lawyers, investment advisors, etc - these are supposed to be professions which are held to the highest degree of duty to their clients, and yet we all know in reality, this is not the case. Somehow, I'm beginning to feel that being a good "person" may lead to bankruptcy in this field. I hope I am wrong.

Keith - I've been reading your post with great interest. I think an argument can be made that alternative models may indeed flourish in the not too distant future (regardless of the Foxton failure - though I did not research the specific reasons for their demise). This is especially true, imo, after this recent RE bubble.

I'm beginning to understand why the PTBs would want you to fail though. Without going into the organizations that would love to see you fail, this industry certainly feels like it's run like an oligopoly. Many of the "old school" brokers are probably cringing at the thought of having to re-educate themselves into a new "competent" breed. More importantly, I'm sure they are even more worried about the potential loss of billions in revenue. I would imagine they spend gazillions of lobbying dollars in order to maintain the status quo.

You bring up many valid points and I'm sure I'll revisit them again. But for now, I give you much "props" for putting your money where your mouth is sir. I look forward to reading more of your posts.

ali - Yet again, your post is very helpful. Your point about being able access the experience of your sponsoring broker is espeically helpful as it confirms my own thoughts exactly. On a trading desk, without a head trader with experience, a new trader would be dead in the water. Same applies of course about your law firm example. As you mentioned, the overhead a sponsoring broker pays for is nothing to sneeze at either.

All valid points to consider as I start looking for a sponsoring broker. I must admit, my head is spinning right now about finding a good sponsoring broker. I feel like I'm at a mall having to decide between Bloomies, Walmart or somewhere in between. arrrghh.

Honeycrisp - I think many of your "why" questions in the first 1/3rd of your post is due to government revenue and special interest group lobbying. I may be oversimplifying, but whenever I see ridiculous regulations/legislation, those two culprits always seem to come to mind.

I also agree that there needs to be an overhaul of the licensing requirements. I'm not advocating that everyone needs to be a Harvard MBA, I certainly don't have one. But when a person with an average IQ, like myself, can pass the NYS licensing exam without even finishing 50% the 75 hour course, Hmmmmmmm.... I know the RE industry is not the only guilty sector. I felt the same way when I took the series 7 and 63 during my Wall St. days. What a joke.

At least make it so that one really learns something before receiving their license. One particular issue I have with the 75 hour classs (online btw), is that whenever a legal or financial issue comes up, they go to great lengths to explain the material and then conclude with "but you are not a lawyer nor an account, so make sure you advise your clients to seek professional advice". WHAT? HUH? Then what's the use? Again, I'm not suggesting that we all need to be CPA or lawyers, but tell it like it is. If we as professionals need to know a certain level of law and accounting, treat it as such for licensing requirements. But I digress...

My personal take - In the end, I believe this topic will boil down to the evolving demographics of the 21st century. What remains to be seen is how far the general public will go to educate themselves about the entire process of buying/selling RE. Should there come a point where we reach critical mass and MOST people can do it on their own, then I guess we are doomed to become just another 8 TRACK tape. If however, the same public finds that it's still too much for them to handle, it seems like the industry will change, but perhaps not that much.

Thanks again to all, your feedbacks are greatly appreciated.

Vintage65

PS: urbandigs - your post was so short & to the point, I didn't really really know how to reply. But Honeycrisp's comment sure does make logical sense. I just don't have the experience to comment on specific issues like this.

"Are brokers/agents a dying breed?"

If justice prevails, yes. All of them. By machine gun fire...

Vintage65, here are my thoughts on the field as a complete outsider. First, don't worry about the industry a whole lot. There are over a million real estate agents out there (http://www.realtor.org/library/library/fg003), and despite the "oligarchy" of firms people think is out there, it is to a great extent just an industry of loosely-connected individuals. Agents can and do get up an leave one firm and set up shop elsewhere with little friction.

What does this mean to you? It means you can behave however you want. You want to be honest rather than a sleazeball? Go for it -- there's a huge market for agents like that. You want to tell it like it is rather than tote the BS company line? See UD. You want to give people a service-level / pricing model that they want rather than forcing the standard full-service 5-6% down their throat? See Keith. You want to be an "over-educated" broker bringing the value of "intelligence" to the field? See front_porch or Honeycrisp. I think these people have used the power of the Internet, and SE in particular, to create a niche that works for them, and they're doing things on their own terms.

So is the future looking less bright for brokers that add less value and try to hang onto their income by grasping to keep a business model and reputation that customers don't necessarily like? Sure. Is it looking better for people that provide better service? Absolutely. It's not quite like the auto industry where you have to be married to a potentially broken business model because you can't quite start making cars on your own in your own terms.

One other note on the general dislike of brokers. I think part of the problem is that brokers have earned their poor reputations as a group, and that's a fair criticism. For whatever reason, it attracts less ethical people than some other industries.

However, I think part of the animosity is the view that brokers are unfairly over-compensated for little work. I think this is just plain wrong. There was a chapter in the Freakonomics book on the subject, but if you look at the numbers, brokers as a group are just not that highly-compensated. The average home price last year in the U.S. was something like $270K, with about 5 million sales. That's $1.35 trillion over 1.1 million agents, so something like $1.2M average sales per agent. Six percent of that works out to $72K per agent, but about half of that is eaten up by various costs -- office, phone, marketing, etc. -- so $36K per agent in income.

That is just not that large a number. Sure, many agents are part-time, but then again that 1.1 million number misses non-"REALTORS (R)". I'm also sure the average NYC agent makes more, but so do many other professions in NYC. I think the income of top performers is so visible for work that seems "so easy" that people just have a wrong impression.

Even the top agents make relatively small amounts compared to most industries. Looking at the gross numbers from this list:

http://online.wsj.com/ad/top100individualvolume.html

Assume the agents got to take home 2% of the gross numbers. The #100 person barely cleared a million dollars. Not to be flippant about what is no doubt a very large income, but you had to be in the top 0.01% of your field to clear $1 million. Maybe that list doesn't include everyone, so maybe it's more than 100 people, maybe it's 200, 300, 400, or 500 people. But at the end of the day, we're talking something that is no more than 0.05%.

Compare this to, for example, medicine or "high finance" (investment banking, private equity, hedge funds, etc.). In these fields, it seems the average is about 5-10x higher than the $36K for real estate brokers, and the fraction of the people earning over $1 million in any given year is probably on the order of 1-10%. For perspective, that's like 100x higher than real estate agents.

Something like engineering also pays significantly higher -- probably 2-3x on average ($70-100K?). I have no clue the fraction that make over $1M annually, but given the number of engineers who are at high-level positions in tech companies with large stock options grants, or the number of startup millionaires, I can certainly see the number being appreciably larger than 0.01-0.05%.

Even building a business in real estate is not that lucrative. If you look at the most successful example, Barbara Corcoran, it was like $70 million for tens of years of work. Compare that to the most successful examples in, for example, technology, and it's like 100x off.

In short, as they say in poker, RE seems like a very hard way to make an easy living.

"For whatever reason, it attracts less ethical people than some other industries."

That's an easy one: Because people who have ONE bad personality trait (namely, laziness) tend to have others as well (dishonesty, lack of committment, etc). And make no mistake, even long-time realtors, if you can get them to be honest with you, will tell you that realtors are inherentl LAZY people. They simply do NOT want to show up on a regular schedule at a normal job like most of the rest of the world. They do not want to have to take orders from anyone. They do NOT want to have master a body of knowledge that would take a bit of study, like law or finance or accounting or engineering. They are the scammers, the moochers, the schnorrers of the world...

wintage - dont really want to talk about it too much anymore as I have plans of my own. long time SE users likely know my feelings and views on vision on how change should come...its desperately needed and the consumers have to back it!

i got my license 6 years back because of the low life who sold me my first place and one of the rental agents that i was "lucky" to deal with before that.

what i noticed during the test is that most people were not educated, few did not speak a word of english, and heard many young ones say "I have a sponsor, but I don't think they'll want me if I fail this test again." most of them did fail again and again.

it would make it better, if you are allowed to take the test 2 times and then have to wait 6 months before trying again. this way you will eliminate the high school dropouts who think that they can still party like no tomorrow and then come in to work to sell/rent and money will keep flowing.

Hugh_G, I hope we're not in the same industry. I wouldn't want everyone to think I'm a total ass just because of what I do for a living.

I'm sure the brokers will challenge , but in a place like NYC with tools like ACRIS, websites like NYT to advertise, FSBO should be occurring more. I did my homework priced smartly and taking into account the avoided commission I came out ahead. Brokers are over-rated.

"They do NOT want to have master a body of knowledge that would take a bit of study, like law or finance or accounting or engineering."

And they are paid accordingly, at around $36K a year on average.

Sunday - I sincerely doubt we're in the same industry. My job requires advanced degrees and pays exceedingly well. You, on the other hand, are a flight attendant...

"this way you will eliminate the high school dropouts"

Good idea, ab. Of course, my plan of machine-gunning them all like the worthless low-lifes they are would, likewise, eliminate the high school dropouts from the profession...

p.s. I was going to say "machine-gunning them all like the worthless DOGS that they are", but I didn't want to offend the dog lovers on the board. Hugh is exceedingly sensitive to others feelings...

Well we don't make anything anymore in this country, just buy,sell and gamble.
http://www.slate.com/id/2245328/pagenum/all/#p2

The views of the Good Father drew some approval, mostly from people who admired the fiscal virtue of the Romans during the Punic Wars. But others, including many of Basicland's prominent economists, had strong objections. These economists had intense faith that any outcome at all in a free market—even wild growth in casino gambling—is constructive. Indeed, these economists were so committed to their basic faith that they looked forward to the day when Basicland would expand real securities trading, as a percentage of securities outstanding, by a factor of 100, so that it could match the speculation level present in the United States just before onslaught of the Great Recession that began in 2008.

The strong faith of these Basicland economists in the beneficence of hypergambling in both securities and financial derivatives stemmed from their utter rejection of the ideas of the great and long-dead economist who had known the most about hyperspeculation, John Maynard Keynes. Keynes had famously said, "When the capital development of a country is the byproduct of the operations of a casino, the job is likely to be ill done." It was easy for these economists to dismiss such a sentence because securities had been so long associated with respectable wealth, and financial derivatives seemed so similar to securities.

Basicland's investment and commercial bankers were hostile to change. Like the objecting economists, the bankers wanted change exactly opposite to change wanted by the Good Father. Such bankers provided constructive services to Basicland. But they had only moderate earnings, which they deeply resented because Basicland's casinos—which provided no such constructive services—reported immoderate earnings from their bucket-shop systems. Moreover, foreign investment bankers had also reported immoderate earnings after building their own bucket-shop systems—and carefully obscuring this fact with ingenious twaddle, including claims that rational risk-management systems were in place, supervised by perfect regulators. Naturally, the ambitious Basicland bankers desired to prosper like the foreign bankers. And so they came to believe that the Good Father lacked any understanding of important and eternal causes of human progress that the bankers were trying to serve by creating more bucket shops in Basicland.

Of course, the most effective political opposition to change came from the gambling casinos themselves. This was not surprising, as at least one casino was located in each legislative district. The casinos resented being compared with cancer when they saw themselves as part of a long-established industry that provided harmless pleasure while improving the thinking skills of its customers.

As it worked out, the politicians ignored the Good Father one more time, and the Basicland banks were allowed to open bucket shops and to finance the purchase and carry of real securities with extreme financial leverage. A couple of economic messes followed, during which every constituency tried to avoid hardship by deflecting it to others. Much counterproductive governmental action was taken, and the country's credit was reduced to tatters. Basicland is now under new management, using a new governmental system. It also has a new nickname: Sorrowland.

Hugh_G, enjoy your next meal and drink in your first class seat on the next flight, because if you behave the same in person as you do online, I'm sure your meal and drink are made with extra care just for you.

Median income of realtors willing to answer the 2008 realtor survey -- $36.7K:

http://www.realtor.org/library/library/fg103

Average income of a McDonald's Store Manager -- $38.7K:

http://www.glassdoor.com/Salary/McDonald-s-Store-Manager-Salaries-E432_D_KO11,24.htm

Present company of over-achieving brokers excepted, why exactly should we expect, on average, a level of service commesurate with "advanced degrees"?

Thanks for the advice, Sunday, but I usually don't rely on advice from the help...

I usually don't give advice to a total ass, but "usually" doesn't mean "never", so you're welcome.

This thread has indeed taken a life of its own and thus, my apologies for no longer replying to specific posters. I am very grateful for all the responses, it has been a VERY eye opening thread. As I see the picture being painted, I must admit this is not what I had envisioned.

inonada - Thank you for your lengthy reponse. I always have gratitude for anyone who posts above and beyond for a newbie.
Noah (I reviewed your site) - Having run a website myself, I give you props for running your site, the research you must be doing to run it, and running a RE business. It must be quite challenging to shuffle all of that at once.

Top all the DYI'er and broker haters, more power to you. It's certainly a great feeling to do things on your own.

Thanks again to all for your input and I'll just keep reading while this thread continues on its own.

Vintage65

Thanks Vintage65 - Glad it was helpful.

Ionanda - "why exactly should we expect, on average, a level of service commesurate with "advanced degrees"?" Degrees alone won't do anything. It's who's behind them that matters. Generally speaking, though, having the skills associated with additional education can be very helpful in a business based on entrepreneurial, negotiation, financial analysis and interpersonal skills. Although high school dropouts can be more intelligent and successful than Harvard Phd's, certainly raising real estate industry standards from where they are now could not hurt :) Lastly, advanced degrees may indicate experience in fields complementary to real estate, such that marketing, strategy or wealth management experience could be directly parlayed into the responsibilities of an agent who can leverage those experiences to differentiate him/herself from the crowd AND, more importantly, deliver real value for his/her clients.

ab_11218 - I see your high school drop outs and raise you a person who asked at the beginning of the exam, "where do we put our names again?"

Riversider - Your post is very timely given the recent Obama/Las Vegas rift and the fall of the RE market due to the MBS fisaco. But sadly, we humans have a bad track record when it comes to learning from our mistakes.

Honeycrisp, I agree that it ain't the degree that is the reason for the probable success, but rather what that degree likely embodies. The typical degree-getting over-achiever is more intelligent, harder-working, and more motivated than the high school dropout. Add to this the (IMO relatively small) tidbits that education gives, yeah you're going to be on a higher footing.

Personally, given that the pricing is the same, I'd rather work with an intelligent, hard-working broker. Maybe the Palin-loving Tea Partier likes their brokers dumb like their presidents, but I'd personally rather have a broker (and president) with the intelligence of a rocket scientist if it ain't gonna cost me more. I'm pretty sure many other people feel that way, and between that and the higher-quality service you provide, I'm also pretty sure that you (and many othere here) are not the average $36K broker.

That being said, despite your efforts, I just don't think you'll be "raising real estate industry standards" much. You'll work hard, you'll be successful, you'll provide value to your clients, but at the end of the day the "dumb, lazy unethical broker-to-be" will still look at the industry and think they can do it too. It's just too attractive a profession for an "anyperson" with dollar signs in their eyes. For every successful value-providng Honeycrisps that comes out, two dozen jimhones's crawl out of the woodwork. It's the nature of the profession, methinks: these people have no hope of becoming a doctor, after all.

I totally agree, inonada ... I realize that we (my team and I) can only do so much. On the client side, at least we can raise expectations of what service and value COULD look like.

To your point though, realizing this very limitation, we have launched and are now offering agent-side services that will help fulfill our mission: "Elevate the level of discourse in Manhattan Real Estate, and in the process, transform the role of the broker to one of a trusted advisor." If we are to stay true to this mission, we need to expand our thinking to the brokerage community, which is what we're beginning to do :)

Wish us luck!

Was there that much hate for brokers/agents before 1997?
When there is a bubble in any industry and the demand for workers increase, of course the quality will decrease. I remember there was a time when I was always very happy after getting off the phone with a tech support person because not only do I get my problems fixed, I also learn some new tricks/short cuts. Now, I'm afraid to call tech support.

I personally have met many agents who are rude and incompetent. However, just like people in the banking industry, there are also many very good ones who provide an important service for those who need them.

Best of luck, HC! Keep posting on SE, and keep up on the blogging with the artfully-placed link on SE. No doubt there are many others like me who are silent readers, and when the time is right and we're looking to buy, we'll be looking to someone trusted from online interactions.

nada, i'm not sure of that. i took the nyu real estate course in 1986, but because i had a very good commercial RE connection (ESG). going with ibanker boyfriend to tokyo derailed those plans.

BUT, anywho, i'd be interested in the profession. and i'm actually thinking about it. i think there is a huge potential. the problem in the recent years is that "super brokers" were rewarded with buildings. dolly doesn't have to work that much for her coin when she has the horribly underachieving manhattan house nonetheless selling under her understudies. and obviously there are even better examples. i'm too lazy to think about them now.

Look, in every profession, the best are rarely on top. In any given year, life is a little skill and a lot of luck. Over a lifetime, that skill starts accounting for more and more. However, it still don't mean squat compared to luck when you're looking at the very top of a field in terms of "success".

Take Bill Gates. Is he smart? Absolutely. Is he the smartest guy at Microsoft? Unlikely.

The difficulty with RE for someone "smart" is that when you are "smart" in typical "smart" field, you are afforded a lot of leeway because it is valued. If you work at Google, being very intelligent is afforded a great deal of value because the guys running the place are very intelligent, and look where that sort of thing took the company.

In RE, I just don't see people valuing intelligence as highly. If you ask Babs Corcoran about what it takes or what makes a great RE broker, I doubt raw intelligence is at the top of her list. Now this may be because it's not that important, or it may just be a function of how the industry has evolved.

One of the most important things I've learned in terms of career is that people think however they happen to be is "best", regardless of what it might be. It's just a natural bias people have. So if you're "smart", putting yourself in an environment where the people running the place are people "willing to do what it takes, smarts is good but doesn't get stuff done" puts you at a relative disadvantage to those who have that as their relative advantage.

Does this mean you shouldn't do RE? Absolutely not. I actually was thinking earlier today, "Maybe AR should become a broker". If nothing else, it might get hfscomm1 off your back about being a non-productive member of society, but I somehow doubt that. I think the most important thing for someone career-wise is to really be interested in doing whatever it is that they'll be doing. Your prolific posting on this site demonstrates that. Once you get past that, you just want to put yourself in a position where your likelihood of success is maximal, and I think this means putting yourself in an environment full of like-minded people.

So I say you should go for it!

aboutready
about 1 hour ago
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.... i'm too lazy to think about them now.

typical

Yah, but wouldn't that make her ideal for RE? After all, Hugh_G said:

"And make no mistake, even long-time realtors, if you can get them to be honest with you, will tell you that realtors are inherentl LAZY people."

Laziness can be a great quality. Much better than squirming around your entire life, doing this or that for no apparent reason, no?

Many laws of physics are based on principles of laziness.

Didn't Benjamin Franklin say "Laziness is next to Godliness"?

Unlikely to be a dying breed, but there will be a relationship between # of brokers and # of transactions and prices of homes sold. In addition, various factors will reduce fees paid to brokers including technology, but most important because people's expectations about home appreciation have been reset and therefore they will be paying much more attention to transaction costs and negotiating accordingly, so this leaves open more alternative or discount brokerage models.

Hi Vintage

I am an independent broker and have been since 2001, when I started (I was, of course, initially a salesperson but I created an LLC and, through that LLC, hired a lawyer/broker to create a brokerage from that LLC -- allowing me to work for myself from the beginning). I backed up into the field through academia – specifically, a love of architecture and urban planning. I absolutely LOVE my job and my lifestyle as a broker. To give you a sense of my income, I am married to a Biglaw senior associate and generally make an amount similar to him (some years, more). Based on just what I've said thus far, you can probably tell that I echo those who feel it's crucial (for success) to actually enjoy real estate (property, architecture, history, etc) and object to those who feel brokering is a "wife job."

Beyond that, however, I would tell you that I have found "success" in carving out a niche for myself. I, for instance, only do buyside, prewar, UWS deals. In the last nine years, I have only done one deal below 66th st and only rarely will I take on a listing (and, if I do, I always rope in a co-exclusive agent). I treat my job like an academic discipline and study the architects, floorplans, and history of the buildings on the UWS. My undergraduate degree is from Columbia and so I still use their amazing archival resources – when I’m not pounding the pavement, I’m in the rare books room looking at original offering plans.

For years, I have heard brokers tell me that I'm nuts for operating the way that I do but, at the end of the day, I really believe I do what I do better than most and, I believe that's why I'm financially more successful than most and certainly happier with happier customers than most.
So if you want to do this, go for it! Do it your way, carve out a place for yourself and learn your specialty better than anyone else. I know it may sound crazy but it really can work!

Best of luck!

Hi Vintage

I am an independent broker and have been since 2001, when I started (I was, of course, initially a salesperson but I created an LLC and, through that LLC, hired a lawyer/broker to create a brokerage from that LLC -- allowing me to work for myself from the beginning). I backed up into the field through academia – specifically, a love of architecture and urban planning. I absolutely LOVE my job and my lifestyle as a broker. To give you a sense of my income, I am married to a Biglaw senior associate and generally make an amount similar to him (some years, more). Based on just what I've said thus far, you can probably tell that I echo those who feel it's crucial (for success) to actually enjoy real estate (property, architecture, history, etc) and object to those who feel brokering is a "wife job."

Beyond that, however, I would tell you that I have found "success" in carving out a niche for myself. I, for instance, only do buyside, prewar, UWS deals. In the last nine years, I have only done one deal below 66th st and only rarely will I take on a listing (and, if I do, I always rope in a co-exclusive agent). I treat my job like an academic discipline and study the architects, floorplans, and history of the buildings on the UWS. My undergraduate degree is from Columbia and so I still use their amazing archival resources – when I’m not pounding the pavement, I’m in the rare books room looking at original offering plans.

For years, I have heard brokers tell me that I'm nuts for operating the way that I do but, at the end of the day, I really believe I do what I do better than most and, I believe that's why I'm financially more successful than most and certainly happier with happier customers than most.
So if you want to do this, go for it! Do it your way, carve out a place for yourself and learn your specialty better than anyone else. I know it may sound crazy but it really can work!

Best of luck!

I am an agent and it is becoming harder and harder to collect a full commission with all the online tools available. I think the owner should pay half the commission. (regarding rentals) and the client pay the other half.