Real estate has always been a profession that on the surface seems easy and lucrative. It isn’t until one get’s into the business that they see how hard it is, how much work is involved, and that lucrative profits aren’t what they thought. They don’t realize the tremendous expenses involved with selling real estate. They also fail to realize how much training is involved, and how much time it takes to really learn the market, and to learn how to read people. Only a small percentage of agents make it in this business.
For years we’ve known there are way too many agents in the business. There is always room for good people who are sharp and dedicated but by and large many are not cut out for real estate. We’ve shown that sales numbers are down to below 2003 levels, and very close to 2002 levels. See Chart
We can assume there were too many agents in the business back in 2002 because there always is. Lets look at the history of agent numbers:
These numbers were provided by the Realtor Association of Greater Fort Myers and the Beach, Inc. They do not reflect all agents in various boards as agents can select a primary board and belong to other boards as a secondary member to gain MLS privilidges. These numbers were primary board totals only. Cape Coral, Sanibel, Bonita/Estero and Naples would show similiar increases in numbers over the years as well.
We know that sales are down to about halfway between 2002 and 2003 levels, so we can look at the number of agents today compared to the level back in 2002 and 2003. When we do this we see that if we average the two, we should have about 2,496 agents. Based on this, there are approximately 57.58% too many agents in the market wondering why they have no business.
The truth is, they have no business because they simply aren’t needed. Most agents don’t have the experience, education, skills, or commitment to make it in today’s market. What happens when the market turns is the good get stronger and the weak die off. It sounds cruel, but it’s what the public demands.
Keep in mind we probably have 70-80% too many agents, we’re just talking about the 58% or so compared to the over supply of agents we had back in 2002-2003.
When the market is good, some sellers want the least expensive agent or company because they’re not convinced of the value the agent brings to the table, and they’d be right much of the time because they weren’t always selecting the highest quality agents. If the agent screwed up the deal, there were 5 other buyers in line waiting to buy the property. This isn’t true today.
Now we call it a "Flight to Quality." Sellers want the best and most experienced agents. They want someone with a track record of selling in both up, down and sideways markets. They want aggressive marketing, possibly including Internet, TV, radio, direct mail, and newspaper advertising. They know that there is an over supply of homes on the market. Here’s a startling fact. Only 1 in 19 homes on the market is selling each month. This means that if a subdivision has 19 homes on the market, statistically only 1 will sell.
All sellers want to be that 1 sale, and yet that means 18 others won’t be. This is why sellers are picky now about who they chose to work with.
Buyers should be equally picky. There are great buys out there now, and it’s a good time to buy with excellent selection and low rates. However, you don’t want to overpay when you don’t have to. Buyers want an expert negotiator who also knows the market. This only comes from knowledge and market experience, combined with life and people skills.
You’ll never know who the good negotiators are, so ask lot’s of questions. Make sure the agent you’re working with will be around when you really need them. If they’re part-time or working another job to make ends meet, you’re probably not interviewing an agent who’s successfully worked in all kinds of markets. The great agents are successful in any market, so look for an agent that is busy.
We’ll take a look this time next year and see how many agents are out of the business.