By Jessica Swesey
Inman News
“[While the law [of competition] may be sometimes hard for the individual, it is best for the race, because it ensures the
survival of the fittest in every department.” —Andrew Carnegie
The United States now has more Realtors than the state of Montana has residents. The National Association of Realtors pegged its total membership at an unprecedented 952,000, and that number grows every day like a well-watered houseplant.
Real estate welcomed loads of new faces in the last couple of years as home sales and prices broke record after record and housing kept the national economy afloat. But there are only so many home sales to go around and when the market cools—as many experts predict it eventually will—real estate may not be able to feed as many mouths.
NAR’s latest forecast calls for 5.76 million home sales this year, with the national median home price at $168,600. If each transaction had a buy-side agent and a sell-side agent and those sides were evenly distributed among the 952,000 Realtors, each Realtor would negotiate about 12 home sale sides this year.
If each sale involved a $168,600 median-priced home and a 6 percent commission split equally between the two sides, each Realtor would earn about $5,058 per transaction and gross $60,700 per year.
But that division of the commission pie ignores the split, or desk fee payment, between the broker and the agent. It also doesn’t account for marketing and selling costs, overhead outlays, income taxes or other expenses.
Add top producers, dual agency, discount commissions, for-sale-by owner sales and other competitive factors and those numbers quickly start to become much less certain.
Indeed, real estate brokerage begins to look like an overcrowded bus with riders’ arms and legs dangling out the windows and overworked tires about to burst from too much weight. Factor in a rise in mortgage interest rates and some passengers will have to exit.
“Over the long term, the industry cannot economically sustain such a large number of real estate agents,” RealtyU CEO Stefan Swanepoel said. “I would suspect that the figures will soon plateau and start to dip once the current real estate surge loses momentum.”
The sheer large number of Realtors has widespread implications. NAR’s size has enabled its political action committee to become the second top donor in American politics. Since 1989, the association has given nearly $23 million to federal candidates and political parties, according to the Center for Responsive Politics. In the 2002 election cycle, NAR contributed more than $4.4 million, making Realtors no small voice on Capitol Hill.
Companies that sell advertising, marketing and other products and services to Realtors also benefit from the large numbers of licensees and the competition among them for business.
In total, about 2.28 million people in the country have real estate licenses, according to the Association of Real Estate License Law Officials. That number dipped slightly from approximately 2.31 million in 2002, but only because significant decreases in such states as Massachusetts, Montana and Nebraska offset large increases in Florida, Arizona, California, New Jersey, New York, North Carolina and Texas, among other states.