Technology TransactionsBrokerage Industry Reaches A Turning Point
In a few days thousands of real estate professionals will congregate in Chicago for the annual convention of the National Association of Realtors. The theme this year is "profiting from innovation" but I"m not sure that"s really the core concern at this moment of most attendees.
It takes years of advance planning to put on a convention as large as the Chicago event, and no doubt the theme was established long ago. But no one could reasonably have predicted terrorist attacks in New York and Washington or anthrax in mailrooms along the East Coast. Given such events -- as well as an emerging recession -- I suspect most conventioneers will want to focus on a more-immediate issue than innovation: What will happen to my business in the coming year?
It"s been a decade since the last recession, and many people in real estate have no experience with a buyer"s market, declining home values, or reduced unit sales. These are things happening now in selected local communities, and such conditions could spread in the coming weeks and months as a result of lay-offs and economic downturns.
It"s fairly plain that there is a "tipping" factor which even a small downturn in unit volume can produce. That is, if unit sales fall 3 percent it"s likely that far more than 3 percent of all real estate brokers and salespeople will either become less active or inactive. Since less activity or no activity does not require one to surrender a license, this is a difficult matter to track.
The catch to a small decline in unit sales is this: The decline will not be uniform among all practitioners. Active, successful licensees who have built up a referral base and business history may see less business but they will have an ongoing income. Licensees who do one or two "sides" a year -- a large percentage of those "active" in the business -- will face significant barriers.
According to The 2001 National Association of Realtors" Member Profile the median gross income among all NAR members was $47,700. Interestingly, 15 percent make less than $10,000 a year and 39 percent make less than $35,000.
In the last recession, existing home sales went from 3,346,000 in 1989, to 3,211,000 in 1990, and 3,220,000 units in 1991 -- a drop of 3.7 percent over two years.
In the same period, NAR membership declined about 1.5 percent in 1990 and nearly 6 percent in 1991. And even though unit sales increased in 1992 to 3,520,000 units, NAR membership continued to drop in 1992 and 1993 -- in fact there was no significant member growth until 1999.
In today"s terms, a similar loss of members, and the loss of member dues, would be significant to associations, MLS systems, online sites dependent on client volume, state regulatory agencies, and others.
So why go to the convention? Conventions are great places to share ideas and find better ways of doing things. And given the current economic environment, there"s a lot to learn...and re-learn.
[----------]
Will You Be In Chicago?
If you will be in Chicago please stop by and say hello after my seminar. I will be speaking on Friday, November 2nd, from 4 to 5 PM in room S406a, McCormick Place, South Building. The topic will be "Markets Without Boundaries: Building Real World Profits With Online Marketing."
[----------]
For more articles by Peter G. Miller, please press here.