Sunday, April 18, 2004

HOUSING BOOM: The Realtor thing

Hot real estate market has more trying to cash in as agents

By HUBBLE SMITH
REVIEW-JOURNAL




From left, Joanna Calhoun, Debbie Smith and Nancy Mosco look over the lot map at Echo Canyon development in northwest Las Vegas.
Photo by Gary Thompson.

Debbie Smith said her commission for brokering a couple of good real estate transactions in Las Vegas can easily exceed what she earned as an elementary school teacher in Los Angeles.

Smith, a 30-year-old Realtor with American Realty, obtained her real estate license last year in California and heard a lot of talk about the lucrative market in Las Vegas.

That's what brought her here in July.

"It wasn't just about the money," she said. "It was a new challenge. There's the chance to get ahead. It seems like you come out here and everybody's in the business. Realtors, title companies ... everything revolves around real estate and development."

Real estate agents are multiplying at a faster rate than most jobs in Las Vegas, attracted by a housing market that continues to post record numbers in all categories and is being fueled by the lowest interest rates in 40 years and in-migration of about 7,000 people a month.

Local experts in the industry estimate there are at least 12,000 people with real estate licenses in the valley.

The Greater Las Vegas Association of Realtors, the largest professional trade group in Nevada, admitted its 10,000th member earlier this year, tripling in size since 1991.

But what initially looks like a gravy train can turn into an apparition for many newcomers to the business, one experienced Realtor warned.

Perhaps one-fourth of real estate agents make six figures a year, said Lee Barrett, president of the Greater Las Vegas Association of Realtors and a Century 21 broker.

Competition for a limited number of listings in the undersupplied Las Vegas housing market can leave the rest of them fighting like dogs for leftover scraps.

"A lot of people get into it with blinders on because they've heard how successful it can be," Barrett said. "It's a lot of work. Most people that do $100,000 are agents working 60-hour weeks. It depends on how hard you want to work to make the money."

Smith said she's constantly on the phone, working weekends and nights.

"But I was doing that in teaching, too," she said. "Obviously, the time is your own and you can put as much as you want into it."

Southern Nevada's population increased 82 percent from 1991 to 2002 and the number of licensed Realtors increased 138 percent during that period.

Las Vegas is not alone in experiencing a boom in real estate agents. Strong housing construction nationwide has led to a surge in newcomers, a National Association of Realtors survey showed.

New agents entering the real estate industry accounted for three-fourths of the national association's 102,000 new members last year, the survey showed.

David Lereah, chief economist for the national association, said membership growth "reflects the historic level of home sales while other sectors of the economy experienced weakness."

About 5 percent of national association members, or 48,000, have been in the profession for just one or two years. The average member has been in business for 13 years, with a median of eight years for sales agents and 17 years for brokers.

For the first time, a majority (52 percent) of real estate brokers are women.

The survey showed the typical member is a 51-year-old married woman with a gross personal income of $52,200 who works 40 hours a week and often communicates with clients by e-mail.

Agents are usually affiliated with an independently owned, nonfranchised firm, where they receive training and education.

They complete 13 transaction sides a year, representing either the buyer or seller, equivalent to 6.5 full sales transactions.

Half of all Realtors practice as both buyer agency and seller agency, with disclosed dual agency for in-company transactions; 73 percent of members are compensated by a percentage of commission split.

The gross personal income of sales agents rose 15 percent between 2000 and 2002 to a median of $39,300, while the gross income of brokers declined 11 percent to $65,300.

"The decline in broker income results from a rise in the number of less experienced brokers, a decline in the number of hours worked and an increase in the number of brokers whose primary function is sales," Lereah said.

Larry Murphy, president of SalesTraq, a local housing research firm, said agent commissions are being squeezed by home builders who have buyers lined up to purchase new subdivision phases before they're even built.

Instead of the standard 5 percent to 7 percent, agents are lucky to get 1 percent to 2 percent in many cases, he said.

Realtors also face competition from discount realty companies such as Help-U-Sell, where owners take a more active role in selling their house at a significant savings in fees.

The average broker fee for a Help-U-Sell transaction in Las Vegas is less than $3,000, company spokesman Mike Henle said.

"With houses selling as quickly as they are now, the consumer generally feels there's absolutely no reason to pay a typical realtor higher commissions when the house is going to sell about as fast as they get the signs up," he said.

Although Smith said Realtors get knocked for not having much of an education, the national association survey showed that 90 percent pursued education beyond high school, compared with 69 percent for the U.S. labor force as a whole.

Only 6 percent chose real estate as their first career; 15 percent worked in sales before entering the field.

Barrett, a Las Vegas native who's been in real estate for 26 years, said a lot of people used to get into real estate after they retired or turned 40 and wanted to make a career or lifestyle change.

"Now we're getting more people under 30, we're getting graduates with marketing degrees right out of college. We never had that before," he said.

Real estate agents are required to take 90 hours of education at a school accredited by the Nevada Real Estate Division.

After undergoing a background check, including fingerprinting, they affiliate with a broker and then apply for their license.

Not everyone with a real estate license is designated as a Realtor.

The Greater Las Vegas Association of Realtors, founded in 1947, provides education, training and political representation for its members, who must also abide by a strict code of ethics.

Many don't realize what the business entails, Barrett said.

"It's like running a hot dog stand. You've got to figure out the minimum number of hot dogs you need to sell, how much volume you need to achieve your goals," he said.

The Realtor profile showed 15 percent conduct some business in a language other than English, which also shows a higher level of ethnic diversity than the national association survey would suggest.

Four out of 5 Realtors frequently use e-mail for business purposes, 50 percent use a digital camera and 70 percent have a home office.

"There's been continued growth in the use of technology," Lereah said.

Total existing-home sales, which include single-family, apartment condominium and co-operative sales, rose in 47 states in the fourth quarter of 2003 compared with the same period in 2002, the national association reported.

Nationwide, the seasonally adjusted annual rate for existing-home sales was 7.2 million units in the fourth quarter, up 9.3 percent from the 6.59 million-unit level in the fourth quarter of 2002. The fourth-quarter 2003 mark was second only to a record sales pace of 7.39 million in the third quarter of 2003.

"Clearly, the historic lows we've seen in mortgage interest rates this year are the biggest factor in record home sales, but the growing number of households entering the prime years for buying a first home will be driving the housing market for years to come," Lereah said.

The strongest increase was in Wyoming, where the fourth-quarter resale pace rose 32.8 percent compared with a year earlier. Nevada existing-home sales rose 32.6 percent from a year earlier. Alaska posted the third-highest increase, up 24 percent. Three states showed minor declines.

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