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Daily Real Estate News | May 10, 2007 | REALTOR® Income Dips as Newbies Flood Business
Members of the NATIONAL ASSOCIATION OF REALTORS® made a median income of $47,700 in 2006, according to the association’s new member survey. That’s a drop from $49,300 when the survey was last conducted in 2004.

The decline can be attributed to the 23.2 percent jump in membership since 2004, says Paul Bishop, NAR’s manager of real estate research. NAR currently has 1.3 million members, accounting for about half of all real estate licensees in the United States.

“With rapid member growth in recent years, newcomers now account for nearly a quarter of all REALTORS® and are diluting median income,” he says.

REALTORS® who’ve been in the business for two years or less earned a median of $15,300, while those with three to five years of experience earned $44,200, according to the survey. For six to 15 years, the median was $64,600, while members in the business for 16 years or more earned $76,200.

“Since most agents work on a commission and become successful over time through training, repeat business and referrals, income in those early years can be quite lean as agents establish themselves,” Bishop says.

Income was significantly higher for members who are licensed as brokers; these REALTORS® earned a median of $73,700, compared with $34,600 for salespeople, the survey shows.

Other Survey Highlights

Here are some additonal key findings from the 2007 NAR Member Profile:

Split commission. Seven out of 10 members say they’re compensated through a split commission arrangement, 17 percent receive a full commission, and another 3 percent receive a commission plus a share of profits.

Referrals grow with experience. One quarter of all business is from referrals or repeat business from previous clients, ranging from 7 percent for newcomers to 41 percent for respondents with at least 16 years of experience.

Men earn more. Men earned a median income of $58,600 in 2006 and were more likely to be brokers, while women earned $42,000 and were more likely to work part time. Among REALTORS® working as full-time sales agents, men earned a median of $61,300, while women earned $54,400. Full-time male brokers made $94,000 last year, while the median income for women brokers was $80,300.

40-hour work weeks. The typical member is 51 years old, works 40 hours per week and has been in the business for seven years. Thirteen percent of NAR members have been in the business for one year or less, while another 13 percent have been in the business for 26 years or more. Only 10 percent work fewer than 20 hours per week and 30 percent work 20 to 39 hours per week, while 15 percent work at least 60 hours per week.

Sales volume dips. In 2006, typical residential sales members sold one of their own listings and five of someone else’s, while other agents sold four of that member’s listings. The median sales or leasing volume was $1.9 million, down from $2.2 million in 2004.

Optimistic about the future. Members generally are optimistic about the future, with 80 percent saying they are confident they'll remain active in the business during the next two years; only 5 percent were uncertain.

Not the first career. Only 4 percent of members report real estate is their first career. The majority come from a variety of other fields, including management, business or financial, 20 percent; sales or retail, 15 percent; office or administrative support, 10 percent; education, 6 percent; and homemaker, 5 percent. Twelve other categories were each 4 percent or less.

Most have a home office, Web site. Three-quarters of members specialize in residential brokerage, six in 10 have a Web site, and one in five has at least one personal assistant. In addition, 74 percent maintain a home office for business purposes. The typical REALTORS® received four inquires from their personal Web site, which accounted for 3 percent of their business. Half of all members communicate with their clients by e-mail more than 50 percent of the time.

At least one designation. Many hold at least one professional designation, with the most popular being GRI (Graduate, Realtor® Institute), held by 18 percent of respondents; ABR® (Accredited Buyer Representative®), 13 percent; and CRS® (Certified Residential Specialist®), 8 percent. Smaller percentages hold one of 13 other designations.

Residential tops specialties. Although three-fourths of all NAR members specialize in residential real estate, 27 percent have a secondary specialty in relocation, 18 percent in commercial brokerage, 18 percent land development, 16 percent counseling, 11 percent commercial property management, 8 percent residential property management, 4 percent residential appraisal, 4 percent international, 2 percent auction, and 1 percent commercial appraisal.

Cell phones are lifeline. Ninety-three percent use cell phones daily or nearly every day, 91 percent use e-mail, 88 percent computers, 27 percent PDAs, 23 percent digital cameras, 23 percent wireless e-mail, 14 percent instant messaging, 13 percent GPS devices, 2 percent blogs, 1 percent podcasts, and 1 percent RSS feeds.

Independent brokerages most common. Half of all members are affiliated with an independent, nonfranchised firm; 34 percent are with an independent franchised company, 11 percent with a franchised subsidiary of a national or regional corporation, and 6 percent with a non-franchised subsidiary of a national or regional corporation. Less than 10 percent report their firm was bought by or merged with another firm since 2005.

No health benefits. Eighty-three percent of members work as independent contractors. Seven out of 10 receive no benefits from their firm, although 24 percent are covered by errors and omissions insurance; 93 percent must obtain health insurance elsewhere.

Ethnic breakdown of members. Eighty-seven percent are Caucasian, 6 percent Hispanic, 4 percent African American, 3 percent Asian, 1 percent Native American, and 1 percent other (respondents could choose more than one category). Fifteen percent of NAR members are fluent in a language other than English, and 10 percent were born outside the United States. One out of three members report they have clients who are foreign nationals.

Well-educated, politically active. Forty-four percent hold at least a bachelor’s degree compared with 26 percent for the U.S. labor force as a whole. They participate in the political process more than other segments of the population, with 95 percent registered to vote in comparison with 66 percent for the United States as a whole. Indeed, 90 percent voted in the last national election and 81 percent in the last local election.

Own vacation homes. Four in 10 members own other residential properties in addition to their primary residence. While most of these are investment homes, 17 percent own at least one vacation home. In addition, 11 percent own at least one commercial property.

About the Survey

The 2007 NATIONAL ASSOCIAITON OF REALTORS® Member Profile is based on a survey of 140,000 members, which generated 10,774 usable responses, representing an adjusted response rate of 7.9 percent.

Income and transaction data are for 2006, while other data are representative of member characteristics in early 2007. Some data is not directly comparable with previous surveys due to changes in the questionnaire design.

The study can be ordered by calling 800/874-6500, or online at www.REALTOR.org/NewResearch. The cost is $50 for NAR members and $125 for nonmembers.

— REALTOR® Magazine Online