Why I Decided to Leave Residential Real Estate Sales?

On September 14, I let everyone know that I am leaving the residential real estate business.  There have been a number of reasons for me to make this move.  Primarily, it is the nature of the real estate business.

Residential Real Estate is a very unusual business.

1.  It is considered a field with a lower barrier to entry.  In other words, you don’t need much to become a real estate agent.  Until October 2007, all you need is to take one class and to pass the real estate exam.  After October, you will need to take four classes and pass the test.
One of the great sample questions on this exam is:  “Does Yellow make a room bigger?” – Think about it.  I’ll put the answer at the bottom.
And whatever you do, don’t get me started on continuing education!

2.  There is no grading or promotion of agents due to time in the job.  An agent who passed the test yesterday, in all likelihood, will still quote you the same commission rate to sell your home as one who’s been doing it for 20 years.  In fact, many new agents will try to hold the line harder on the commission rate.  Obviously, they need the money more than someone who’s been doing multiple deals a year.

3.  What’s the difference between a real estate agent and a Realtor®?  A Realtor® is a member of the National Association of Realtors®.  How important is this?  If you join the local association, which automatically includes membership in the California Association and the National Association of Realtors®, you have access to contract forms and the magical lock box system.  Also Realtors® have a code of ethics.  Of course, if you’re ethical, you probably don’t need it.  And if you’re not ethical, you probably aren’t going to pay any attention to it.

4.  70% of all Realtors® sell 0-1 homes per year.  80% of Realtors® sell 2 or fewer.  Most clients don’t ask the right questions.  And most new agents have been coached in how to respond to the questions.
“How long have you been in the business?”
Possible answer:  “So long, I can’t even remember.”  Or some other answer that avoids the question completely.
Another alternative is misinterpreting the question.  Possible translation:  When did you buy your first home?
“How many transactions have you done this year?”
See above answer.  There’s no real translation.  But since real estate agents are sales people, I’m sure there will be some quick two-stepping to keep the client.

5.  Every real estate agent is working in direct conflict to the client’s best interest.  The real estate agent needs to make a living.  She needs to close sales.  The client may need more time to find the right home, not pressure from an agent to make a decision and move forward.
As the market has softened, many agents were originally ignoring this.  Agents were/are continuing to encourage clients to push the price, make competitive offers, and keep the prices moving up.
No one knows where the market will go.  But if the bottom of the market is suffering, isn’t that going to work it’s way up to the more expensive homes?
I don’t feel comfortable pushing people to purchase homes in the current market.
People moving up, may be okay if the prices have settled.  If you are moving from a home in the lower, unpopular, price range to a higher more competitive price range, you may get hurt.

There are many more issues that I’ll continue to address over the next few days.  So stay tuned.

Eventually, I will get off this topic and on to other more interesting things – I promise.

Oh, and the answer to the question:  Does yellow make a room bigger?  It may make it look bigger, but it certainly doesn’t affect the square footage of the room.  So, the answer is NO.

© 2007 by Judy Kane