Black Friday for the Crossland Team

Austin Real Estate Agent

Sylvia at our Whiteboard - No Pending Closings at top. Yikes!

Yesterday was not a good day for the Crossland Team. In our office Sylvia and I have a whiteboard mounted on the wall where we write our listings and our pending closings. After yesterday’s closing, we have no more pending sales written on our board.

We have listings, but the showings are slow and we have no offers in the works and nobody threatening to write an offer on any of our listings.

We were discussing this morning when the last time might have been that we didn’t have at least one closing on the board, and we just don’t remember. But it must have been 2005 when we returned to the business after selling our former real estate company and then taking a hiatus/sabbatical. Since we’ve averaged 3 to 5 closings a month, there is always something up there on the board waiting to close. But not since yesterday – our “black Friday”.

What does this mean?

Well, we are certainly not in a panic. We expect the first part of 2009 to be very slow but we are optimistic that a lot of the negative economic news, though it will likely get worse before better, is nevertheless nearing a bottoming out point and things will pick up again by mid 2009 or at least between the mid to end of 2009. Luckily, unlike many Realtors, we are in a position to survive even a prolonged downdown. We did nevertheless set our productivity goals higher for 2009 than we did for 2008 and we expect to reach them. We set 2008 goals higher than 2007 and accomplished that against all odds, so we always push ourselves higher. This just isn’t the good start we wanted.

This issue did offer a stark reminder to me of how tough it is for those Realtors who live from closing to closing. We know many who have left the business completely, or who  are now working part time in other fields because they simply have no buyers or sellers to work with.

As I read of more layoffs in Austin yesterday from AMD, I thought to myself “when does a Realtor get laid off and how is it announced?

We don’t get “laid off” in the traditional since. There is no bright line, or sudden event that says “later dude (or dudette), you’re out of here”. The closest thing to a pink slip we get is an empty white board combined with a feeling of utter defeat and surrender. That’s when a Realtor quits. Many Realtors around the country and now in Austin are about there now, and have no idea from where the next closing commission will come.

What other occupation other than commissioned sales is like this? If the corporate world worked like this, instead of getting laid off, you’d still come to work each day at AMD, and work even harder than before and longer hours, but there would be no payday. Your paychecks would just stop, but you’d keep working. You’d also be free to leave anytime you want, but you really don’t want to leave, so you linger and just work even harder, and you hope something will happen each day.

I also wonder what happened to all the negative media attention that the Realtor commission structure receives during seller’s markets when home sales are up and values are increasing. During those times, the Realtor is made out in the media to be a greedy, overpaid, useless turd. Not worth a fraction of earnings he receives. And so each few months brings a story of the newest media “Discount Realtor” darling, such as Redfin, that will once and for all rid the world of the hapless Realtor.

But where is the media now, in places like Nevada, California, Florida, Arizona, running news features on the “silent suffering” and the “invisible layoffs” being experienced by the real estate industry and its agents. When Realtors evaporate and go away, the lost jobs are not counted in “job loss” reports you see on the news. And Realtors don’t collect unemployment or receive benefits. Realtors don’t get bailout money.

Realtors simply melt away and vanish, leaving the survivors behind to ride out the market. In Dec 2007, there were 1,338,001 NAR members. In December 2008 there were 1,197,529. That’s a loss of 140,472 “jobs” nationwide, or the equivilent of an industry laying off 10% of its workforce. We won’t see any headlines about that though. Perhaps it might be reported in a manner similar to reporting the weather, but certainly not viewed as a trajedy.

Personally, I think our ranks need to be thinned out substantially more. But it’s an easy-in, easy-out profession, so the dip in NAR membership will last only until the real estate market nationwide starts looking rosey again.

Real Estate sales is perhaps one of the riskiest and least stable occupations one could enter into. Even agents like me and Sylvia who have a steady business experience spurts and stops. We’ve had 3 closings in one day on numerous occassions, and we’ve had 5 or 6 week gaps between closings, but we always have at least one pending closing, until now.

But Sylvia has been in Austin real estate since 1988, and me since 1990. We’re not going anywhere. But it still pains me to see the top of our whiteboard absent a pending sale.I better get back to work right NOW!

Posted by Steve
7 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

Click Here to Leave a Comment Below

Tary snyder - 7 years ago

Your not the only ones right now!

Did you ever realize when we sell a New Builder house we help empoy about 30 sub-contractors in that sale??

When we sell a resale we also employ subs, title companies, surveyors, etc.

So, lets get back to work.

Tary

Reply
anonymous - 7 years ago

Steve,
Don’t forget there were also lots of Realtors pushing buyers to buy now before you’re priced out forever! Not all Realtors even act as good fiduciaries, and really try to help the buyer buy the best house at the best price. Not all Realtors care that the offer they are helping their buyer put together maybe over value by 5-10k, which only encourages the next seller nearby to ask for that much more and then even a little more.

Home builders and low interest rates certainly helped the bubble as well, and most Realtors went along for the ride.

-Anon

Reply
Sam - 7 years ago

Great post Steve.

For a guy that’s good with statistics I surprised at your statement, “In Dec 2007, there were 1,338,001 NAR members. In December 2008 there were 1,197,529. That’s a loss of 140,472 “jobs” nationwide, or the equivilent of an industry laying off 10% of its workforce.”

The aforementioned statement assumes that all 140,472 members of NAR quit being real estate professionals. Granted I would agree this statistic is a good indicator that a lot of agents have left the real estate profession, but it is flawed logic to draw a conclusion that all 140,472 quit real estate. I would be interested in how many just dropped their Realtor membership vs. left the real estate profession.

Good luck with getting those pending sales on your white board.

Reply
Steve - 7 years ago

Hi Sam,

> I would be interested in how many just dropped their Realtor membership vs. left the real estate profession.

Well, one can’t practice real estate without being a Realtor (except maybe in some very extreme exceptions, such as a small rural community that doesn’t have an MLS system.). Realtor membership is required in order to have access to an MLS, and MLS access is required in order to list homes or help buyers find homes.

One can in fact quit being a Realtor while still maintaining an active real estate license, but the license itself doesn’t provide access to the tools needed to practice the profession.

A related point to your comment would be “how many of the departing Realtors were formerly “producing” Realtors?”. That is, of those who quit, how many were actually making a living at it, even in a better market, before quitting? Certainly not all of them.

But perhaps the same could be said about a lot of laid off employees. How many laid off auto workers were, prior to layoff, doing work that generated profit for the company? Probably not many, or they would not be getting laid off.

Thanks for your comments.

Steve

Reply
Steve - 7 years ago

Hi Anon,

> Don’t forget there were also lots of Realtors pushing buyers to buy now before you’re priced out forever! Not all Realtors even act as good fiduciaries

Unfortunately, I have to agree with you. There are a lot of bad, self-serving Realtors out there. It’s up to the consumer to use a good method to select the Realtor they use. Most (70% according to surveys) choose the first one they talk to instead of interviewing many and having a set of criteria upon which their selection will be made.

In other words, bad, terrible Realtors can exist because so many consumers hire them.

Steve

Reply
Debbie M - 7 years ago

Everyone who is in business for themselves rather than employed has the same issues as real estate brokers in a recession.

Reply
Ray - 7 years ago

“I also wonder what happened to all the negative media attention that the Realtor commission structure receives during seller’s markets when home sales are up and values are increasing.”

If realtors are not doing well when the market isn’t so red hot then that doesn’t seem to promote their image. An ability to market and sell in a normal or even a down market would cause me to think that the 3-6% (which is a huge chunk of change) is worth spending. Any one can give their house away – and I see some portion of local realtors racing each other to the pricing bottom at the home owner’s expense . It’s no wonder a few more houses are being pulled from the market or going FSBO than in the good times.

Reply
Larry - 7 years ago

“In Dec 2007, there were 1,338,001 NAR members. In December 2008 there were 1,197,529. That’s a loss of 140,472 “jobs” nationwide, or the equivalent of an industry laying off 10% of its workforce.”

Indeed it is more than 10% job loss if you consider that several of those NAR members are not active Realtors. I know some that get the license only to avoid paying the Realtor fee and others that keep the license just in case, but they really have another profession.
And the opposite of what Sam said is also true. Several that quit real state will keep their license at least for the first year (just in case, if they change their minds).
So, in summary, I think 10% job loss is being optimistic.

Reply
Steve - 7 years ago

> I know some that get the license only to avoid paying the Realtor fee.

I think you might be confused about the order of operation with regard to licensure and Realtor status. One must have a real estate license to receive real estate commissions and act as a real estate agent. There is no requirement for licensed agents to become Realtors, though most are. To become a Realtor, you must first be a licensed agent. All Realtors are licensed real estate agents, but not all licensed real estate agents are Realtors.

So, a Realtor could quit NAR and keep an active real estate license, though they couldn’t do much with it without MLS access and Board of Realtor membership and they would therefore essentially be “out of the business”, even with an active license.

Steve.

Reply
Tony Tovar - 7 years ago

I’m a believer in saving when times are good and spending when times are bad. What I mean by this is the following. When times are good, there is cash flowing in all directions and when times aren’t so good, marketing yourself could be a lifesaver because so many choose to just wait and see what happens as oppose to going out there and standing out.

Steve, I love your “go get em'” attitude! The true mark of a successful business is one that can sustain itself during rough times. I see times like these as an opportunity to further advance your business and personal portfolio.

Once again, thank you for an enlightening post. In time, these times shall pass.

Best Wishes,
Tony Tovar
R.E.-R to be!

Reply
Ray - 7 years ago

Steve,

I do wish you continued success in your business and I appreciate that you do not censor posts from people, like myself, who may think of realtors (whether good or bad at what they do) as willing or unwilling members of cartels i.e, the various state real estate licensing commissions, created and maintained by lobbyists with the main goal of protecting the income of license paying members, and the incidental, somewhat ironic but most promoted goal of protecting the consumer.

I have Googled without useful result so I wanted to ask your opinion about an idea I have to provide a simple ‘security’ service for FSBO sellers of literally opening doors for people who have indicated (to a busy or not present owner) an interest to view the owner’s property and then locking up after their visit, maybe using a lockbox device. No other services will be offered. The seller would pay for the access security service which may include some kind of registration and the security person would not offer information nor solicit opinions or interest about the property. Do you think I would currently need a Texas real estate license to legally offer this service using part-time contract security agents?

Many thanks, Ray.

PS: I would also offer this service to brokers but somehow I do not think they would be interested!

Reply
Jim - 7 years ago

Ray, the great thing about realtors is that they’re only paid once the deal is done. Where else can you get that kind of service guaranty?

Lets say your security service charges $100/showing, and you get 20 showings and still no sale, so you just wasted $2000. That’s 1% of a median home price in Austin. Combined with other fees, like MLS-only agents, etc.. and you’ll end up paying almost as much as just hiring an agent, and that’s BEFORE you see any results.

Reply
Steve - 7 years ago

> Do you think I would currently need a Texas real estate license to legally offer this service using part-time contract security agents?

Hi Ray, you’d have to check with TREC, but it doesn’t sound like a service that requires a real estate license if no real estate services are being provided.

I’d also have to say that there is no demand for such a service so I doubt anyone would pay for it, in part for reasons outlined by Jim above. FSBOs want to do it on their own, which is why they are FSBOs.

Steve

Reply
Ray - 7 years ago

Jim and Steve,

Thanks for your feedback. You may be right about FSBO sellers wanting to do everything so maybe not too much demand in that case. I will have to try to survey some FSBO sellers and see if they see value in the service before putting too much energy into that idea. Price wise I do not know what I would charge but I would think that $2K for this service for a $300K home sounds a lot more enticing than 6% of $300K or $18K. Maybe you can give me an idea of the median number of showings for a decent realtor to sell a mid market home?

Reply
Steve - 7 years ago

We expect to have an offer on our listings by the 12th to 15th showing. If we have that many showings an no offer, the price and/or condition need adjusting.
Steve

Reply
Jim - 7 years ago

Ray, the problem with median #of showings is that # will be different for FSBOs, who often get tons of useless traffic from lookers who aren’t even interested in buying, so that $2k could be wasted showing the house to those with no intention to buy.

If you start adding up all the costs and headaches, you’ll end up spending almost as much as just hiring an agent, but without the benefits.

What if an owner of a competing house down the street start getting all his friends to come over to your house to use up your security tour dollars?

Bad idea. Agents act as filters who’ll only work with motivated buyers and sellers and cut out a lot of BS traffic (with a few exceptions). Most people think it’s worth it to pay more to get service and peace of mind.

Reply
Sylvia - 7 years ago

As far as “self-serving” Realtors that push buyers into a sale only wanting a paycheck…I don’t know how many Realtors are really out there doing that. As far as we’re concerned, we consider our buyers lifelong clients and and future sellers. We would not sell our buyers a home we would not want to list someday and we are very careful about the offering price because we don’t want them to be “upside down” when they sell in a few years. A huge amount of our business is repeat clients and referrals and we never want this to change.

Reply
Steve - 7 years ago

I’m happy to report that mine and Sylvia’s “white board drought” lasted only 18 days and we’re back in the groove again!
Steve

Reply
Tony - 7 years ago

YES! That’s what i’m talking about! 😀

Tony

Reply
Leave a Reply: