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Another Type of Real Estate Market Correction

Departures

Consumers might not notice this readily, but a different kind of correction is taking place in the Southeast Michigan real estate market: agents are quitting the business.

The exodus in the mortgage industry began some time ago, maybe more than a year. With refi business falling off and purchases at a lower rate, mortgage pros were finding it hard to pay the bills. In recent months, we’ve seen large offices shut down and major players announcing their demise, as the entire mortgage industry faces tumultuous times.

But, until quite recently, Realtors seemed to be able to endure the slowdown, for the most part. I attribute this to a couple of factors.

  • First, many Realtors sell homes as a part time job or a second source of income after retirement. The earnings they gain from selling homes is a bonus, or welcomed additional income. When times get tough they are less effected by a reduction in earnings.
  • Many Realtors have a spouse who is the primary bread winner, providing medical insurance and other traditional benefits.]

For the first time since Dmitry and I entered the business in 2001, we are seeing experienced and outstanding full time agents leaving the business. Many of them have joined the exodus from Michigan, put their homes up for sale, and moved on to new careers in cities that are not facing the economic challenges that we are facing here.

I am sure I should not be saying this out loud, but this trend upsets me. Like many of the good agents I see leaving, Dmitry and I have only one source of income to support our family: selling homes. As we have long told our sellers, “we are as motivated as you are to sell your home.” But I worry less about us personally than I do about the choices that could be left for consumers as experienced professionals leave the area.

Admittedly, the Metro Detroit real estate market has more Realtors than it needs. The market can afford to lose some agents. But this business is not necessarily the perfect model of capitalism, rewarding those who are best at their jobs. If it were, I would not have seen some of those agents who I considered to be excellent at this job leave Michigan recently.

Often Realtors are rewarded for being in the right place at the right time, or just for showing up. Consumers hire their Aunt Tilly to assist with a purchase without concern that Tilly has never been to Oakland County, let alone sold a home here.

This is all part of the consumer’s right to chose. However, I am left thinking that consumer would be better served with a few less choices. I don’t say that because I want less competition. I actually would just like to see the level of professionalism in this industry elevated. I am all for increasing the continuing education requirements for retaining a license in Michigan. The 6 hours we need now is inadequate, as is the 40 hours of coursework we take in order to handle most people’s largest financial transaction of their life. Of course, with the challenges our state faces at the moment, I admit that a change in real estate licensing law is not the highest priority.

My thought for the consumers who read this post: choosing your Realtor is one of the most important decisions you will make in buying or selling a home. Make an informed decision. There are lots of us out there, but we were not all created equally.

[tags]metro detroit real estate, metro detroit realtors, metro detroit real estate market, oakland county realtor[/tags]

About Maureen Francis

SKBK Sotheby's International Realty, 248.430.4450

Comments

  1. Amen!

  2. MF – we are seeing the same type of correction, but we have not seen any of the great agents skipping the business here (yet). Rick and I are in the same position as Dimitry and you and sometime I have to admit that I feel at ease that I have my architecture degree and Rick his accounting one…..just in case.

  3. Bob, are you seeing the same thing?

    Ines, we are seeing really good agents go. Completely leaving the state. These are some really good agents who have been doing this for a long time and well. I have done transactions with them and know that they provided their clients with excellent representation.

  4. I have not heard of agents leaving the state yet. We do have some great people leaving the industry, not only agents but lenders too. We desperately need a cleansing in our industry, but unfortunately some of the more scrupulous agents have deeper pockets. Its a shame, but reality.

    Your final paragraph says it all…not all agents are create equally.

  5. Maureen:

    California has seen a small net gain in real estate licensees from 2006 to 2007. Yet anecdotally, I have seen some competent agents exit the business because they were not making enough money to support themselves or their families.

    I have not yet seen many uprooting and leaving San Diego. Fortunately, other employment is available.

    For great buys in four season real estate though, we’ll have buyers give you a call!

  6. Thanks Roberta, and thanks for stopping by. You hit it on the head with the job situation. Michigan definitely has a job shortage so that is why people are going elsewhere.

  7. http://www.signonsandiego.com/news/business/20070821-1144-realtors-leaving.html

    The figures are from NAR so must be taken with lot’s of salt since they have completely missed their predictions with the housing/credit crash. (The real numbers are probably much higher than what NAR represents.)

  8. Yeah leaving the profession…You aren’t kidding when you say

    “I actually would just like to see the level of professionalism in this industry elevated. I am all for increasing the continuing education requirements for retaining a license in Michigan. The 6 hours we need now is inadequate, as is the 40 hours of coursework we take in order to handle most people’s largest financial transaction of their life.”

    Two of the three realtors I knew in Metro Detroit are back to dancing the tables and other ‘service activities’ down in Warren at some strip club where they used to work. Sorry I don’t remember what it was called. They admitted to it after discussing with me their financial problems from the slowdown. The third is the one I used to sell my own house in Royal Oak in March.. a real professional. Had more experience (in the relevant (profession) ; ) She still is a realtor. She wouldn’t do the dancing anyway.

    Critically… What is it that attracts/attracted the trashy strippers to your profession? How did they get in so easily?

    Ill tell you why: “Often Realtors are rewarded for being in the right place at the right time, or just for showing up.” In other words easy money. Just like the attraction to ‘dancing.’

    Its hard to tell which realtors are serious and which are the opportunistic ex-table dancers, but I was able to distinguish between the two with some time and effort spent talking to them about their approaches to the market and selling my house. You are soo not going to be taken seriously as professionals until you require a little more skills and legal education to enter the ‘profession’.

    I don’t hold your profession in such high esteem. most beginning raltors basically seem like clerks to me with ‘sales personality’. As time goes on they become progressively more valuable. With the number of true, educated, professionals leaving Michigan in the last year or so I really can’t spare too many tears for realtors. Hope you can sort out your profession if I can later get a job in and move back to oakland coounty.

    For those who won’t be dancing, ramen is cheap and yummy
    http://www.ramenramenramen.net/

  9. Russ,

    You certainly have run into some different Realtors. I can’t say I know anyone that dances professionally let alone dances and sells homes. I guess you and I run in very different crowds. But we all know that jobs are tight in Michigan right now.

    I am also glad that you appreciated the services of the Realtor that you found. I have always felt that a consumer needs to do their own due diligence before engaging the services of a Realtor. We are not all created equally. I think that the Realtor a consumer choses is the most important decision that they make in the whole process.

    As for the public perception of my chosen career path, I agree. It is not the highest. Some of that is our own doing. That is one of the reasons that I volunteer to be on our Board of Realtors grievance committee, which helps consumers and Realtors deal with their complaints against Realtors. It is a self governing body and we all take our commitment to it very seriously..

    As for the easy money and being in the right place at the right time, a bit of it is true. But consumers don’t see the other side. Frankly, I have had a number of well paid professional jobs (commercial lender for a large bank, consultant for Price Waterhouse, advisor to the governments of Ukraine and the US on privatization issues, etc) and I can honestly tell you that being a Realtor is the toughest of these. As much as I enjoy what I do, I feel an incredible responsibility to my clients. We’ve invested so much time in our own educations in this field. Still, we are judged by a few bad apples. Yes, I chose a field that requires me to be basically at work almost all the time. I’ve spent the majority of most of my few vacations since I started, negotiating contracts and keeping deals together. I’ve sacrificed hours of family time for people who would later go on to buy a home directly from a builder who offered them a better price if they would cut me out of the transaction. I guess you might call that the cost of doing business. But the perception that there is easy money is vastly overstated and implicitly incorrect.

    I hope you find a suitable job. I hate to see people having to leave.

  10. I traded my tassles in for Supra Keys and Brochure boxes. Those little tables just didn’t hold me anymore. Thank God there was such an easy job to slide into!!!

    Russ, I see your point…I believe it is too easy to get into this industry. In MD, we need 15 hours of Continuing Ed classes. I don’t think that’s enough. We are not practicing law, but we sure are handling a bunch of legal documents. If not handled properly, there is a lot of liability hanging out there.

    I hate to see good people go…but I am not at all upset seeing the rank and file decrease.

  11. Bob,

    I am having trouble getting the vision of your gyrating tassles out of my head.

  12. I have to admit I have not seen the really good agents leaving…yet. I can see why you would be concerned, I would be too. As a sole provider I can certainly understand. I have to wonder though, if they are picking up and moving to other markets, isn’t it like starting over to develop a network? Not an easy choice either.

  13. Maureen,

    Great blog and comments. It will be interesting to see what happens in my area this month when our annual association renewals come in. We are expecting a lot of drop-outs.

    As you say, real estate consumers seem to defy logic, hiring the first agent they run into when they are looking to buy or sell a home. Of course, this does little to reward the top notch professionals for providing great service.

    Maybe we could tattoo our URL’s on table dancers bellies (or other body parts). :-)

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