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The 2009 Member Profile: Transactions and Distressed Sales

By Jessica Lautz, Research Economist

The National Association of REALTORS® regularly conducts a survey of its members about their business characteristics, demographics, income, expenses, and use of technology. The new 2009 NAR Member Profile* was recently released during NAR’s Midyear Meetings in May.

Last month in this column, we presented highlights of the 2009 NAR Member Profile, focusing on type of licenses held by REALTORS®, their primary business specialty and years of experience and trends in the use of technology. This month we look at some of the business activities of REALTORS®,
including amount of business (i.e., transaction sides), and the participation of real estate professionals in distressed sales.

The housing downturn has had an impact on the amount of business REALTORS® have conducted. With home sales down in 2008 and the U.S. economy in recession, there were fewer transactions
for the typical REALTOR®.

Also contributing to fewer transactions was the reluctance on the part of many consumers to make a purchase because they expected property prices to fall further. More than one third of REALTORS® reported that the most important factor limiting potential clients in completing transactions was their expectation that prices would continue to decline. In addition, potential buyers may have had difficulty obtaining mortgage financing. Consumer confidence is yet another factor. During 2008, consumer
confidence was at lower levels compared with previous years. A significant share of survey respondents cited consumer concerns about their job security.

Transactions

There are two sides to every real estate transaction – one each for the seller and the buyer. Brokerage specialists (both residential and commercial) had a median of seven transactions or commercial deals
in 2008 – that is down from a median of eight reported in 2007. Thirty-one percent of brokerage specialists reported that they had one to five transaction sides during 2008, compared to 27 percent booking that same number of sides in 2007. More than one fifth had six to ten transactions in 2008, up slightly from activity in 2007. Interestingly, the percentage of brokerage specialists reporting zero transaction sides declined – from 14 percent in 2007 to 12 percent in 2008.

REALTORS® also reported lower sales volume in 2008. The median sales volume for brokerage specialists (both residential and commercial) was $1.2 million. That figure is down from the $1.6 million in sales volume reported in 2007. Those residential specialists who are brokers or broker-associates had a higher median sales volume than did those who were sales agents.

Distressed Sales

Distressed sales are those sales of homes either in foreclosure or short sales. During the real estate boom, the share of “distressed sales” as a percentage of total sales was fairly low. In 2008, NAR began tracking these distressed sales. According to the 2008 NAR Profile of Home Buyers and Sellers,
some buyers are attracted to homes in foreclosures. In fact, 6 percent of buyers who purchased a home between July 2007 and June 2008 bought a home that was in some stage of foreclosure.

Foreclosures: With foreclosed homes adding to housing inventory, REALTORS® have looked to these properties for some of their clients. For the first time since NAR began conducting the Member Profile survey, the Association asked REALTORS® about their business activity with foreclosed properties.

Fifty-nine percent of brokerage specialists were involved in no foreclosure transactions, but 32 percent of REALTORS® reported one to five transaction sides with foreclosures; ten percent had more than five sides involving foreclosed homes or commercial properties. Among residential specialists, brokers
and broker-associates were slightly more likely to have booked some transactions for foreclosed properties.

Short sales: As with foreclosure properties, NAR asked REALTORS® for the first time about their dealings with short sales in 2008. Seventy-two percent of brokerage specialists indicated that they had no transactions involving short sales. But more than one quarter reported having booked one to five short-sale transaction sides. Only three percent had six or more transactions sides involving short sales in 2008. Similar to findings for activity involving foreclosure properties, among residential specialists broker and broker-associates were more likely to have booked short sales.

It’s important to remember that the Member Profile reflects data that is characteristic of 2008. Thus it is probably not surprising that the median number of transaction sides for both foreclosed properties
and short sales was zero. But over the most recent several months, distressed sales have accounted for between 35 and almost 50 percent of existing-home sales nationally. Increased transactions involving such properties will be reflected in next year’s Member Profile.

For more information

The 2009 NAR Member Profile contains a variety of information about REALTOR® business, income and demographic characteristics. To help you take advantage of this data and how to use it to manage your business and firms, sign up for our Research “Webinar” featuring members of the NAR Research Survey Team at 10:00 am on Tuesday, June 30, 2009. During the one-hour session, these NAR Research analysts will give you a ‘behind the numbers” view of the data and ways in which REALTORS® can utilize that information. For more information visit www.realtor.org/research.

* The 2009 National Association of Realtors® Member Profile was based on a survey of 99,533 members which generated 8,113 usable responses, representing an adjusted response rate of 8.2 percent. Income and transaction data are for 2008, while other data represent member characteristics in early 2009. The study can be ordered by calling 800-874-6500, or online at www.realtor.org/newresearch. The profile is free for NAR members; the cost is $125 for nonmembers.

For more information on the Member Profile, tune in to Research's Webinar on June 30th at 10am EST.  Research's survey experts will show you how you can make the most of this important survey.   Register for "Maximizing the 2009 Member Profile" Webinar >