Here’s a window into the business and compensation of real estate agents and brokers. Realtors’ demographics might surprise you. No surprise that the ones with the most experience do best.
Palm Coast, FL ̶ May 20, 2014 ̶ Reflecting the 11.5 percent growth in home prices last year, income and sales volume jumped for the third year in a row, according to the 2014 National Association of Realtors® Member Profile. The survey also found an increase in new and younger members to NAR in 2013.
The survey's results are representative of the nation's Realtors; members of NAR account for about half of the approximately 2 million active real estate licensees in the U.S.* Many non-member licensees are inactive or part time. Realtors go beyond state licensing requirements by subscribing to NAR's Code of Ethics and Standards of Practice and committing to continuing education. NAR members also have access to professional resources to better serve their clients' needs.
Lawrence Yun, NAR chief economist, said recovery in the housing market since the downturn continues to improve the earnings of real estate professionals. "Fueled mostly by rising home sales and prices, the median gross income of a Realtor increased to $47,700 in 2013 from $43,500 in 2012, marking a 9.6 percent rise and a sharp gain from $34,900 in 2011," he said. "Although the median number of transactions or commercial deals remained unchanged from last year at 12, this marked a continued return to pre-recession levels after bottoming out at seven transactions in 2008 and 2009."
There are two sides to every real estate transaction — one each for the seller and the buyer. As expected, median gross income and number of transactions generally increases with experience. Last year, NAR members in business for more than 16 years earned $70,200 and made 15 transactions. On the contrary, those with three-to-five years earned less than half that amount ($30,100) and had 10 transactions. Incomes also varied by license type, as members licensed as brokers earned $66,300 in 2013, while the median earnings for sales agents increased $1,000 from the previous year to $35,000.
Last year also brought an influx of new and younger members to NAR. Years of experience in real estate decreased to 12 years from 13 years in 2012; the typical tenure at a firm decreased to six years from seven years; and the age of members decreased to 56 years from 57 years. Three percent of all Realtors are under 30 years of age, 16 percent are between ages 30 and 44, and 24 percent are 65 and older.
The typical NAR member works 40 hours per week. Women represent 57 percent of all members, accounting for 53 percent of brokers and 62 percent of sales agents. More than three-quarters of all Realtors cite real estate as their only occupation, and 82 percent (up two percent from last year) are certain they will remain in the business for at least two more years. This share is higher than the previous two years, indicating the optimism that's seen in today's market.
Most members — 57 percent — are licensed as sales agents; 26 percent are brokers, 17 percent broker associates and 3 percent appraisers (some hold more than one license). Thirteen percent of members have one personal assistant, while 3 percent have two or more personal assistants.
Several factors limit potential clients in completing transactions. Members said finding the right property was the biggest challenge (33 percent) followed by obtaining a mortgage (25 percent).
"The survey indicates that inventory shortages, overly restrictive mortgage lending standards and the rise in home prices and interest rates last year had an impact on Realtors' ability to help their client find the right property," said Yun.
Similar to 2012, eight out of 10 NAR members focus on residential sales and 73 percent have secondary real estate real estate specialties. Of those members with secondary specialties, residential brokerage is the largest at 35 percent. Both residential property management and relocation were next at 17 percent, followed by commercial brokerage at 16 percent. Smaller percentages were also in counseling, land development, auctions and commercial appraisal.
Realtors continue to rely on repeat business and referrals. Repeat business accounted for a median 21 percent of activity in 2013 and is higher for those with more experience. For members in the business 16 years or more, repeat business was 42 percent of their activity. Referrals accounted for an additional 21 percent of all business.
NAR members understand the importance of a web presence and communicating with their clients through several channels. More than two-thirds have a personal website — operational for a median of eight years — and 91 percent report their firm has an online presence. Sixty-one percent of the respondents use social or professional networking sites — an increase of 5 percent from 2012 — and 12 percent have a blog. Realtors use a variety of communications methods when interacting with current clients or customers, with 94 percent preferring e-mail, followed by telephone at 90 percent and text messaging at 80 percent.
Compensation structures for Realtors and firm affiliation remained mostly the same from 2012. Sixty-eight percent of respondents are compensated through a split commission arrangement, 17 percent receive all of the commission and another 4 percent receive a commission plus a share of profits; 11 percent received some other form of compensation. Eighty-two percent of members work as independent contractors for their firms. The vast majority of Realtors receive no fringe benefits, although 33 percent are covered by errors and omissions insurance. Only 5 percent receive health insurance through their firm.
NAR members are well-educated (50 percent hold a bachelor's degree or higher), own a home (86 percent), invest in at least one residential investment property (39 percent), and bring a wide range of expertise, skills and experience to the profession. Only 6 percent began their career in real estate, with the majority having previous full-time careers in management, business or financial (19 percent) or sales and retail (15 percent). Forty-one percent of those fluent in other languages speak Spanish and 96 percent are registered to vote.
Respondents worked for a firm typically with one office and had been with that firm for six years. Fifty-seven percent of members are affiliated with an independent firm, and 38 percent are with a franchised company; 5 percent are other. Nine percent of Realtors report their firm was bought by or merged with another firm during the past two years, down for the second consecutive year and from 11 percent in the 2012 study.
The 2014 National Association of Realtors® Member Profile is based on a survey of 95,340 members, which generated 6,462 usable responses, representing an adjusted response rate of 6.8 percent. Survey responses were weighted to be representative of state-level NAR membership. Income and transaction data are for 2013, while other data represent member characteristics in early 2014. The study can be ordered by calling 800-874-6500, or online at www.realtor.org/prodser.nsf/Research. The profile costs $14.95 for NAR members and $149.95 for nonmembers.
*Data from the Association of Real Estate License Law Officials shows there are approximately 2 million active real estate brokers and sales agents in the U.S. out of nearly 3 million licensees. To be considered active, a licensee generally was involved in at least one real estate transaction in the previous year.