The Spokane-area residential real estate market is bustling as home sales have surged, and the job market is soft, so throngs of people are choosing to become real estate agents, right?
Not this time around.
While hot real estate markets in the past usually have sparked increases in the number of real estate agents selling homes here, the number of licensed agents during the past five years has remained relatively flat, according to Washington state Department of Licensing statistics.
Some brokers here say agents costs in launching a career have risen so much that not everybody whos pondering a career in residential real estate can afford to enter the field, especially if theyre going sell homes part time. Also, brokers overhead costs have climbed, making them less willing to take onor keep onagents who dont produce consistently.
Part-timers cant afford to be in this business anymore, says Laraine Hunter, a broker at John L. Scott Citywide Inc.
As of June 7, according to the most recent data available from the state, 1,360 licensed, active real estate agents and brokers were working in Spokane County, slightly fewer than last year at this time, when 1,380 agents and brokers were licensed here.
Those numbers have changed very little in the past five years, despite surging home sales.
Through July this year, the Spokane Multiple Listing Service reported that 3,074 homes had been sold in the Spokane area through the service, up from 2,696 home sales during the first seven months of last year. Sales activity is poised to break the record for the second consecutive year; last year, the number of homes sold increased by almost 6 percent. So far this year, meanwhile, the average home sale price is about $130,000, up from a $120,000 a year ago.
The situation was quite different in the period between 1989 and 1991, when home sales jumped 27 percent here, and the ranks of Realtors shot up 47 percent to 1,100. Before that, in the late 1970s, the number of Realtors swelled to more than 1,700 during one hot real estate market.
Much of those past increases in the number of agents included stay-at-home spouses or retired people who wanted to work part time and make easy money in a strong market, says Joe Nichols, owner of Windermere Real Estate/Manito LLC, of Spokane. When the market softened in the next down cycle, however, the part-timers were the first to flee the profession, he says.
Now, however, brokers faced with rising overhead costs are less willing to take in real estate agents who want to work part time.
The brokers are being more particular about who they hire, Nichols says.
Among the rising costs are office space and computer technology, as well as broker insurance and association dues, he says. For a prospective new agent, Nichols says it costs about $2,500 to get into the business, including association fees, purchase of supplies, and the 60 hours of prelicense coursework required to become an agent.
Rob Higgins, president of the Spokane Association of Realtors, says that nowadays, agents also have to pay for such technology as cellular phones, personal computers, and individual Web sites. Higgins says a broker typically has a bank of computers that an agent can use and an adequate Web presence, but many of those who are successful in the profession have their own tools to supplement those provided by a broker.
Taking into account all of those factors, Higgins says, When youre working strictly on commission and dont know when that first check is coming in, it makes it a little more difficult.
The increased technology has become necessary as the role of a real estate agent has changed, John L. Scotts Hunter says.
In the past, she says, buyers relied on real estate agents for listing information. They still do to some extent, but with property searches available online and more information listed in advertisements, many buyers come to an agent with a good idea of what properties they want to see. That means Realtors need to be well-versed in marketing online and communicating via email.
Consequently, she says, The value is in negotiating skills and exposure of the property. Youre paying someone to negotiate a really good price in the fastest amount of time.
While the real estate industry isnt attracting great numbers of people in the current strong market, both Nichols and Hunter say the quality of worker entering the profession has improved.
Ive noticed were getting younger, more dedicated people in the industry, Nichols says. Theyre a sharper group of people, driving the people who are not working out of the business.
Hunter says some of the newer agents at John L. Scott had been laid off while working in other industries and came to real estate with a high level of professional skills, including computer skills.
Im not knocking the people who have been in the industry for years, she says. A lot of those people have upgraded skills and work very hard. We do have some real quality people coming from other professional backgrounds and bringing professional quality.