Realtor licenses decline amid slowdown

As economic pressures have hit the real estate sector, the number of Springfield-area Realtors has dropped, according to data from the Greater Springfield Board of Realtors.

During the last five years, board membership peaked in January 2008, with 2,360 active Realtors, but that number has dropped 30 percent as of March 1, when GSBOR reported 1,744 members.

GSBOR President and Murney Associates branch manager/broker Jeff Parker said the biggest challenge facing agents is balancing the expense of licensing with a lower dollar volume in sales.

In Greene County, for example, both the number of homes and the average sales price fell in fourth-quarter 2009, according to the quarterly economic report posted at www.gsbor.com. During that quarter, 916 homes sold with an average price of $134,100, compared to 991 homes sold and an average price of $134,900 in third-quarter 2009. Comparatively, four years ago there were 1,226 homes sold, with an average price of $145,500.

At Murney, Parker said, it’s primarily part-time agents that are leaving the business, while full-time, seasoned agents are sticking with it.

“Market correction is good for the Realtors who are full-time in the business who are making a living, (compared to) people who are dabbling,” he said.

Art Maxwell, sales manager at Coldwell Banker Vanguard Realtors, agreed.

“The people in our office who have been in it for quite some time, who run it as a business and who are dedicated to it as a profession, are still doing quite well,” he said. “Of course, they’re not doing as well as in the 2004 and 2005 market, but still making a very good living at it.”   

Murney Realtor Diane Nicholas, who did about $15 million in real estate transactions in 2009, said that in addition to licensing fees, agents are spending more to market their listings. She said she now spends nearly 20 percent of her income on marketing and advertising, compared to 10 percent to 15 percent five years ago.

License retention
There are costs to obtaining a Realtor license, including a $50 registration fee with the Missouri Real Estate Commission, and accreditation classes. All told, Parker said, it costs about $500 a year for national, state and local board membership, along with a monthly fee of $45 for access to the GSBOR’s multilist service.

Realtors who need to switch gears until business improves can explore transferring their licenses to a referral company, which most of the major real estate firms have, Parker said.

While the transfer allows the license to remain active as long as the individual renews with the state and maintains continuing education requirements, the Realtors are no longer considered members of the board and don’t have listing or selling privileges.

And while they won’t have to pay the board or MLS fees, they will be able to earn money by giving referrals to agents who are board members.

Coldwell Banker’s Maxwell said his company allows only full-time agents to maintain active status. If a Realtor begins practicing on a part-time basis or wants to step back, that person’s license is moved to Coldwell Banker’s referral company, Vanguard One.

He said there are about 25 agents whose Realtor licenses are with Vanguard One, a 20 percent increase from a year ago.

Maxwell said some people realize the real estate profession isn’t a good fit or have found it’s not as easy as they thought it would be, but they want to maintain an active license in case they find a few people who want to list or sell their homes.

“We want to keep professionals working, so if they’re committed to something else more so than they are real estate, then the holding company is a good option,” he said, noting that they can earn a percentage of the fully active agent’s commission for the referrals, and they won’t have to retake the licensing courses or exam if they decide to return to full active status.

Another option for agents who want to keep their licenses but step back from the business is to place them in inactive status with the Missouri Real Estate Commission, Parker said. While it will save fees, there are no listing, selling or referral privileges, and if the inactive agent decides to get back in the business, they’ll have to take a real estate course to reactivate their licenses.

Time for a change?
Murney’s Nicholas said agents who decide to stay in real estate should be prepared to spend plenty of time educating both buyers and sellers about realistic expectations. On one hand, she said, some sellers don’t accept that the homes they bought four or five years ago won’t sell for the same price in today’s market. And on the flip side, buyers need to understand that while there are some good deals out there, they might not be able to buy houses at a $30,000 to $40,000 discount just because that’s happening in other markets.

Jeff Kester, broker and owner of Re/Max House of Brokers – which does not have a referral company – said if agents are just waiting for the market to gain momentum and aren’t willing to change or improve the way they do business, it might be best for them to consider a different career.

“Gone are the days when a person could just hang a shingle outside a door,” he said, noting that Realtors must specialize in specific segments – foreclosures, short sales or first-time buyers, for instance  – and invest time nurturing personal relationships in those niches to survive.

“Now, more than ever, is the time for serious real estate businesspeople to continue to drive their business,” he said. “That large housing boom that we had from 2003 to 2007 where people just said, ‘Oh, I’ll be in real estate,’ ... has passed.”