Racing for the Same Dollar
In this country we are very lucky to have a superb body of professionals in the real estate industry. On the whole, these are individuals who exhibit a remarkable set of qualities:
- Highly-developed sense of ethics
- Excellent self discipline and organisational skills
- Close attention to detail and follow through
- Well-above-average communication skills
- Proactivity and solution orientation
- Ability to work in isolation or as part of a team
- Courageous and determined in the face of risk
So why are so many of our real estate professionals struggling to make even a subsistence living from their profession? Why is there such “churn” of people into and out of the profession?
Well recently I discovered something that is so shocking that it deserves to be publicised in the widest possible manner.
In Australia we have some 55,000 real estate sales people, and yet only around 140,000 homes are sold each year. That’s less than 3 homes per agent per annum, and with top agents selling 10 a month or more, you can imagine how many are left for the rest.
Even if we calculated on the basis of net commission (that is, minus the agency’s share, and minus the agent’s costs) of a miserly $55,000 per annum before tax (not even enough to support a family) the net commissions from 140,000 homes would support only around 11,500 agents.
So the great shame is that at least 44,000 real estate agents in Australia are actually broke. The great shame is that agency principals are still taking on new agents, even while they know that in most cases they will fail because the market cannot support them.
With the cutthroat environment that this creates, the surprise is that these remarkable people manage to continue to behave professionally, and continue to strive to succeed in the industry they love.
My question is, what are we going to do about this to bring the industry back to sanity, ensure that those engaged in it are thriving, and retrain those who are willing to move on?
My Answer to the Crisis in the Real Estate Profession
It is very clear that the various real estate institutes (such as REIWA and other States’ professional bodies) are powerless to cull numbers of agents. To do so would be to completely strip those bodies of the monies from subscriptions and training that is essential for survival. They’d be cutting their own throats.
Likewise it is clear that no licensee can afford to cull agent numbers. To do so in the current environment would be to dramatically reduce their local profile (fewer agents out and about in the suburbs) and consequently reduce the agency revenue. They would also be cutting their own throats.
So the answer must come from within.
I propose that agents are finally given the skills to win all possible referrals in an area, win all possible listings in an area, and wipe out all competition in an area. This will effectively “lock out” of the industry those agents who are not willing to learn the skills, and force them to choose alternative careers.
The good news is that these “locked out” agents are not to be pitied, because if they wish, they too can use those same advanced skills to excel in any industry, and probably make more money, more easily, than if they’d remained in real estate.
I like a win/win, don’t you?