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Has the Housing Slump Cut the Demand for New Real Estate Agents, Training?

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By Christopher Boyce

RISMEDIA, February 19, 2009-(MCT)-At the end of each of the two- and three-week real estate courses he has taught since 1986, Bob McCauley has stood at his lectern, handing out certificates to students-and on a tape recorder, played the graduation march.

But lately, the march has been played to a smaller audience. McCauley’s courses have had about five students, unlike the 20 to 30 he had just a few years ago.

“We’re competitively priced, but it’s the same all around,” he said.

McCauley, co-owner and teacher at Independent Career Institute in Maryland Heights, isn’t all that surprised that his real estate classes are shrinking. He has always seen more students in boom times and fewer in a slow real estate market. But the dip has never been this bad. Since mid-2007, McCauley has had to lay off the three teachers he employed.

Mark Barker, chief executive of Career Education Systems, has seen the same trend in real estate classes at the company’s three locations in St. Louis, Kansas City and Wichita, Kan. He said demand for the school’s classes usually followed peaks and valleys in real estate sales with about six months of lag time.

Slow house sales also have chased some professionals away from the real estate industry, said Paul Bishop, managing director of research at the National Association of Realtors, the trade group that represents a large number of professional real estate agents.

Nationally, membership in the association was down about 11% in January from a year ago, according to data from the association. Missouri’s membership is down about 12%, while Illinois’ membership fell about 11%.

Experts say Realtor membership is a good measure of the industry because a significant portion of career real estate professionals are Realtors, even though membership is not a requirement for a license to sell property.

This decade, the number of Realtors grew every year except in 2007 and 2008. In the same years, the number of existing house sales declined, the association said.

Several industry veterans say most people leaving the profession are those who jumped into real estate when the market was hot in 2005. Many who leave the profession simply can’t withstand the slow sales many rookie agents experience, Bishop said. Statistics he gathered show that although the median income for Realtors in 2008 was about $42,600, those with two years of experience or fewer earned about $10,500. Meanwhile, Realtors with three to five years’ experience earned about $34,600.

David Funk, director of the real estate program at Cornell University, says most people understand the ups and downs of real estate and are making adjustments with their lives. He said many professionals were taking this time to get advance degrees in real estate in hopes of returning to the profession when the economy improves. Funk said Cornell had had an increase in applicants to the school’s two-year master’s degree real estate program in the past two years.

With experienced agents leaving the field, teachers such as McCauley say now may be the best time for brokerages to develop inexperienced agents.

Because most students are sent to schools by their future brokers, McCauley and other school directors are pushing the benefits of training in a slow market.
“It’s time to start recruiting so that when it turns around, these people who are hustling to get money are going to do really well,” he said. “The ones who start when things get better, they’re going to be behind schedule.”

Barker agreed, saying it takes most agents four to six months of startup time before they get any momentum.

“The interesting thing about it is, over the last 45 days, we’ve seen the brokers ramping up their recruiting efforts,” he said. “Most believe they are fairly close to the bottom of the cycle. You don’t wait until the market comes back before you start gearing up, because then you miss the opportunity for those new agents to make sales.”

As brokerages begin looking for new blood, they may benefit from the current number of available workers. Carole McCabe, regional vice president of Coldwell Banker Gundaker, says she believes the current economy is producing a pool of highly skilled workers who, she hopes, will consider careers in real estate because it takes relatively little schooling and money to get started.

Antione Crain is among those who have recently chosen to try their hands at real estate.

Crain, 26, of Hazelwood, graduated from McCauley’s school in January. Crain has been working as an independent contractor for the past four years, leading marketing and promotional tours for various companies.

Crain plans to sell real estate part time for now, but he says he may do it full time if sales heat up. He said this was the right time to join the profession.

“I just have an understanding of how cyclical the business is,” he said. “It’s best to get in when it’s down, because it’s eventually going to turn around.”

If things don’t turn around soon, though, Crain may be joined by his former teacher. McCauley said if his class sizes didn’t improve, he wouldn’t be able to afford the school’s office space — and it’s back to life as a real estate agent. “It’s an emotional thing,” he said. “I created this beast, and I’m hanging on for dear life. I want to keep it as long as I can and as long as it’s cost effective.”

Copyright © 2009, St. Louis Post-Dispatch
Distributed by McClatchy-Tribune Information Services.

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