Home prices are increasing and there are fewer homes on the market. With that in mind, how are home prices and the number of homes being sold affecting Realtors’ income?
Greater San Diego Association of Realtors
With low inventory in the current market triggering multiple offers on properties, the workload for Realtors has increased in this competitive landscape but that does not necessarily mean they’re seeing bigger pay days.
The national median gross income for Realtors was $34,900 in 2011 compared to $34,100 in 2010, according to the National Association of Realtors. The salaries don’t reflect the business expenses of Realtors -- an average of about $4,500 in 2011. The typical brokerage specialist handled 10 transaction sides -- one half of the commission split between the broker and the agent -- in 2011 compared to eight transaction sides in 2010.
As with just about every industry, there are plenty of factors that create variances in Realtor salaries. One of the biggest factors is years of experience. Realtors with 16-plus years of experience had a median income of $50,200 in 2011 compared to Realtors with two years or less experience who had a median income of $8,700, according to the National Association of Realtors.
Specialization and professional designations also can play a role in salary levels. Certified Residential Specialists (CRS), who makes up less than 3 percent of the national Realtor population, earn nearly three times more than their counterparts, handle more than three times the transactions and see gross sales that are three times higher.
The most important income factors, especially in competitive markets like the one we’re in now, are experience, professionalism, knowledge of the market, persistence and strong relationships with peers and clients.
The most successful Realtors are extremely hard-working, are respected by their peers and work closely with buyers and sellers to help them achieve their goals. These Realtors stand out in a tight market and will see tremendous success in the year ahead.
Pacific Sotheby's International Realty's
The fact that fewer homes are on the market as "active" is an indication that the number of sales in San Diego is increasing. If you look at the number of sales and the number of listings in 2012 versus 2013 for the same period, you will see an increase in both categories in most areas of San Diego County. The big difference is the listings come on and sell quickly, so it creates the illusion that there is less opportunity.
What we actually have is an oversupply of buyers and an undersupply of houses for them. Agents who are following a solid business plan, and doing what is necessary to obtain listings are watching their income skyrocket for several reasons. First, they are receiving faster commissions as there is a shorter time period from the time a listing is secured to the closing. Secondly, the shorter time period also allows for lower marketing expenses to carry the listing and expose it properly. Lastly, higher sales prices thus a higher commission. Sale prices in most areas of the county have increased 10-15 percent in the last year, which correlates to a 10 percent-15 percent pay increase per transaction for the agent.
This is the most healthy and robust the market has been in years -- but you have to be willing to go out and earn it. It's not a market for those that aren't willing to put 100 percent in to succeed.
Realtors who have been working steadily through the last several years are prepared and positioned properly. They are thriving now and many will have their best year in recent memory. They built a strong client base through the tough times giving them the advantage of knowing who would be ready to act when the market rebounded. They have confidence and business savvy based in part on their successful management of recent challenges along with the benefit of lessons learned. They have the experience and knowledge to educate and advise their clients prudently. This market, like all others, has tremendous opportunities for those with knowledge, persistence and the crucial ability to manage expectations.
With fewer homes available, Realtors representing buyers need to do all the behind-the-scenes work to qualify and educate them so they are able to put their very best foot forward when pursuing a property they truly want. It's like painting a house; it's all in the preparation. If done properly and painstakingly, the job itself goes smoothly and turns out beautifully. Sometimes a bit of flexibility on the buyer's part in working with the sellers on possession or other details of the offer can make all the difference. Price is not the only term in a real estate contract. A good Realtor reaches out and finds out other ways to make an offer more attractive to the seller.
Sellers can benefit from a good Realtor in properly staging, positioning and marketing their home in a way that not only gets them the best possible price but allows them to move on to their next phase in a smooth and seamless manner. When it is more of a seller’s market, an opportunity exists to structure the transaction favorably to them and to better meet their needs moving up, down or even out of the marketplace. When there are multiple offers in a hot market, the real art is in knowing which one to choose. A good Realtor will have insights and experience that make the correct choice far more likely.
Enough cannot be said about the reputation of your Realtor. San Diego is a big city with many distinct neighborhoods and the heart of a small town. Successful Realtors are active and visible daily in the communities they serve. When your Realtor is known and respected by their peers, you as a client will have an advantage in a tight market and they in turn will have a solid year financially all the while helping buyers and sellers realize their personal goals. This will be a challenging yet not impossible opportunity for those new to the business. It will be a great year for the pocketbook of the seasoned Realtor willing to work long hard hours, be persistent and capitalize on the relationships they have built with their peers and clients over time.
The shortage of homes for sale in the San Diego County market is drastically impacting the income of Realtors, as there is limited opportunity to perform our services. The positive news is that when inventory does come available, the majority of homes are traditional sales resulting in a shorter, more reliable escrow period. With prices on the rise and incredibly low mortgage rates, the number of buyers wanting to purchase increases dramatically each day. Market stability is beginning to encourage sellers to capitalize on current market trends to sell smaller (often attached) homes in favor of larger (often detached) homes. Understanding market conditions helps to set reasonable expectations for all parties in a real estate transaction, including Realtors.
Century 21 Award
This is an exciting time for buyers, sellers and Realtors. For the first time in seven years buyers are in a position to purchase an appreciating asset with prices finally on the rise and with interest rates at an all time low. With price appreciation, less homeowners owe more than their property is worth. Nationally, for every 5 percent of appreciation, 1.3 million homeowners are no longer underwater. This has allowed sellers to sell their homes and be in a position to move up. For Realtors, even though inventory is low, demand is at an all-time high and more homes are being sold in San Diego than last year, which results in more opportunities for Realtors to earn a living.