New real estate agents join the hot housing market. Most find it difficult

Michael Mitchell in Boston is one of them. He enrolled in a course on real estate in June after being run at a regional restaurant chain. He greeted the new profession enthusiastically, thinking that his skills and focus on the customer experience developed over 30 years in the catering business would be transferable to real estate.

It obtained its license in October, but has not yet reached an agreement, as Covid-19-related restrictions limit face-to-face interactions with customers.

“I’ve learned some aspects of the business, but it’s hard to connect with people … who you’ve never met,” Mitchell said.

The number of members of the National Association of Realtors has exceeded the number of homes on the market only once before, in December 2019, when the number of agents decreased slightly, but the inventory of houses in sales decreased by more. It happened again last October and has remained so ever since.

At the end of January, there were 1.04 million homes for sale. This fell 26% from the previous year and the lowest recorded until 1982, according to the National Association of Realtors. Also in January, the NAR had 1.45 million members, 4.8% more than the previous year.

It’s easy to understand why so many people would sign up for the real estate profession – the pandemic wiped out millions of jobs, especially in service industries like catering and hospitality. The booming housing market suggests that you can make a lot of money selling houses. And in most states, it doesn’t take much more than taking a course and passing an exam to get a residential real estate license.

State licensing exams may include questions about real estate legislation and market analysis. Pass percentages vary by state. In Texas, nearly two-thirds of test participants pass the first attempt, according to the Texas Real Estate Commission.

“There are very low barriers to entry, in terms of the ease of obtaining a real estate license,” said Nick Bailey, client director of Re / Max Holdings Inc., a real estate brokerage franchisor. “But the barriers to success are very high.”

Home sellers often favor agents with years of experience and proven sales records. This means that new agents often represent home buyers, many of whom are struggling to accept an offer with so few properties for sale.

As a result, most agents make little or no money at first, as they usually depend on commissions and are not paid until the sale is over. Real estate agents with two years or less of experience earned an average gross income of $ 8,900 for their real estate work in 2019.

But that figure increases with more years of work: the average gross income of all NAR agents in 2019 was $ 49,700, compared to $ 41,800 in 2018, the association said.

The business is pretty fluid. NAR, which represents the majority of active U.S. residential real estate agents and brokers, said about 15 percent of their membership happens each year. Agents usually work as independent contractors and many work part-time.

The number of agents also tends to correlate roughly with the performance of the real estate market. NAR ranks rose to 1.37 million in October 2006, shortly after the market peak, and dropped to around 960,000 in March 2012, following the housing crash. NAR members have increased every year since.

Redfin real estate broker Corp.

, which hires agents as employees, said it underestimated demand after the pandemic attack. Redfin fired 41% of its agents in April, due to falling home sales. The firm said it is now hiring 162 people a week in its brokerage business, up from 92 weekly at the same time last year.

“It’s by far the biggest hiring we’ve ever done,” said Glenn Kelman, executive director of Redfin.

Some new agents have been successful early on. Lauren Hurwitz of New Rochelle, New York, obtained her real estate license in August after being fired from a media relations job. It closed its first sale in February and has three more on contract. Her first client was a close friend whom she helped buy a house. He has gained others through social media and word of mouth.

“I see insane demand and very little inventory,” he said. “I know there’s a lot of competition.”

Diana Dorel Gutiérrez took her real estate exam last March, just before the test center closed due to the pandemic. When he joined a brokerage in the Phoenix area, co-workers warned it wouldn’t be easy.

“They said,‘ You have no idea what you’re for. This is the worst time to be an agent [for buyers] and the best time if you’re the agent on the list, ”Ms. Dorel Gutierrez said.

But Ms. Dorel Gutierrez, who also works as a spiritual and relationship coach, has closed five offers so far. He has found clients through social media, referrals and contacts from Zillow Group Inc.

Her colleagues call her and the other agents who joined the brokerage last spring “pandemic babies.”

“If you can do it in this industry right now,” he said, “you can do anything.”

Write to Nicole Friedman to [email protected]