Real Estate is changing

Much has been written about the changes coming to the real estate industry as a result of the slowing market. But aside from the possibilities of a handful fewer brokerages, what you’ll see at the end of this lull likely will look quite a bit like what you saw at the beginning.

Maybe it shouldn’t be that way. But that’s the way things seem to turn out.

This is the time when there should be a premium on training, but many of the brokerages who will look most attractive to new agents (read: higher splits of the commission) offer limited training. Here’s a hint … if your broker doesn’t offer a class where you go through the contract line by line, find one who does. The contract is your lifeblood and that of your clients, and if you don’t know it you and they are better off with you not being in business.

This is the time when there should be a premium on mentoring, but most of the mentoring programs are financially weighted heavily in favor of the brokers, chasing many agents off to seemingly greener pastures.

This is the time when pricing should be the key consideration for sellers. But the influx of new agents blinded by dollar signs and oblivious to the market realities means sellers always will be able to find an agent for their listing regardless of the price.

This is the time when many observers believe technology and the Internet will put enough pressure on real estate commissions to drive down what agents charge, whatever amount that may be. But the reality is commissions likely will rise as only a smaller segment of the agent population proves able to successfully sell a home. The idea of disintermediation loses some of its sway in a slower market, where it’s not enough to plant a sign in your front yard and wait for the buyers to come.

When there were more transactions taking place, formal training often could give way (to some degree, at least) to on-the-job learning. But it’s all but impossible to gain the needed skills and maintain those skills with one transaction every few months. And experience has shown few agents make the effort to extend themselves and stay current on changes in the market.

There’s a fanciful notion that the slower market will clear out all the marginal agents - those with little ability, little motivative, little knowledge, etc. And true, many agents who entered the market in 2004 now are seeking full-time employment elsewhere (assuming they didn’t get their license to practice real estate part-time on the side.)

But the ranks keep refilling like sharks’ teeth … another row of brand new agents stands ready to start writing checks as those in front of them fall out of the industry. The supply of those ready to make their fortunes as real estate agents is nearly endless.

If anything changes, it will be a return to the historic failure rates of new agents. It’s often said 90% of new agents never make it through their first year. That figure dropped back in 2005 when even Tobey could have sold a house without my assistance, assuming he had passed the licensing exams.

These days, however, many who enter soon will realize they likely shouldn’t have done so.