After gradually climbing for three consecutive years, the decline in existing-home sales in 2014 resulted in a slight reduction in REALTORÂ®Â business activity and income last year, according to theÂ 2015 National Association of RealtorsÂ®Â Member Profile. The survey also found that REALTORSÂ®Â are increasingly more comfortable using multiple communication channels, including social media, to connect and interact with their clients.
The surveyâ€™s results are representative of the nationâ€™s REALTORSÂ®; 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. REALTORSÂ®Â go beyond state licensing requirements by subscribing to NARâ€™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 clientsâ€™ needs.
Lawrence Yun, NAR chief economist, says business activity for a typical REALTORÂ®Â was slightly subdued last year because of lower sales and more members. â€śExisting-home sales didnâ€™t surpass year-over-year levels until October, which is likely the reason the typical member had 11 transactions last year versus 12 in 2013,â€ť he says. â€śSlightly fewer transactions resulted in the median gross income of a RealtorÂ®Â falling to $45,800 from $47,700 in 2013.â€ť
Adds Yun, â€śDespite the modest setback, median gross income last year was still the second highest since the downturn and up over 5 percent from 2012 ($43,500). Furthermore, NAR membership at the end of 2014 stood at 1.1 million, up 5.5 percent from 2013.â€ť
As expected, median gross income and number of transactions generally increase with experience. Last year, REALTORSÂ®Â in business for more than 16 years earned $68,200 and made 13 transactions. On the contrary, those with three-to-five years earned less than half that amount ($37,400) and had 10 transactions. Incomes also varied by license type, as members licensed as brokers in 2014 earned $65,300 ($66,300 in 2013), while the median earnings for sales agents decreased $1,100 from the previous year to $33,900.
According to the survey, a majority of REALTORSÂ®Â (91 percent) report their firm has an online presence and two-thirds have their own personal website â€“ operational for a median of seven years. Sixty-five percent of the respondents use social or professional networking sites â€“ an increase of 4 percent points from 2013 â€“ and 12 percent have a blog.
REALTORSÂ®Â also use a variety of communications methods when interacting with current clients or customers, with 93 percent preferring e-mail, followed by telephone at 91 percent and text messaging at 85 percent.
NAR PresidentÂ Chris Polychron says the surveyâ€™s findings reveal that REALTORSÂ®Â are continuously adapting to consumersâ€™ online and communication preferences to better serve their needs. â€śTo put it in perspective, only 35 percent of REALTORSÂ®Â used social media in 2008, and text messaging was the preferred method of communication among only 40 percent in 2010,â€ť he says. â€śAttracting potential clients online and communicating with them through various platforms helps REALTORSÂ®Â stay a step ahead â€“ especially as millennials become more active buyers in the years ahead.â€ť
Women represent 58 percent of all REALTORSÂ®, accounting for 53 percent of brokers and 63 percent of sales agents.Â More than three-quarters (77 percent) of all members cite real estate as their only occupation, and 84 percent (82 percent in 2014) are certain they will remain in the business for at least two more years.
Last year continued the recent trend of more new members to NAR. Although median years of experience in real estate remained at 12 years for the second straight year, more members (17 percent) reported they have been in the business for two years or less (13 percent in 2013).
The median age of members inched to 57 years (56 years in 2013), elevated from the 1999 to 2008 range between 51 and 52 years. Two percent of all REALTORSÂ®Â are under 30 years of age, 18 percent are between ages 30 and 44, and 25 percent are 65 and older.
â€śThe slight increase in median age last year is likely another example of the overall national trend of baby boomers delaying retirement and staying in the workforce later than previous generations,â€ť says Yun.
For the seventh consecutive year, the typical REALTORÂ®Â says they work 40 hours per week. Over half (58 percent) are licensed as sales agents, 26 percent are brokers, 18 percent broker associates and 3 percent appraisers. Sales agents are more likely to primarily specialize in residential brokerage. While only 18 percent of members have personal assistants, the use of personal assistants is more common among more tenured members, broker-owners and managers.
REALTORSÂ®Â are well-educated (50 percent hold a bachelorâ€™s degree or higher), have invested in at least one residential investment property (38 percent), and bring a wide range of expertise and experience to the profession. Only 5 percent began their career in real estate, with the highest share having previous full-time careers in management, business or financial (19 percent) or sales and retail (16 percent).
A majority of NAR members own their own home (85 percent), are married (71 percent), are registered to vote (96 percent) and were born in the U.S. (89 percent). Forty-eight percent of those fluent in other languages speak Spanish (41 percent in 2013).
Regardless of their experience, REALTORSÂ®Â says several factors limited potential clientsâ€™ ability to complete a transaction, with finding the right property (33 percent) followed by obtaining a mortgage (26 percent) cited as the two biggest challenges. Only 20 percent says there werenâ€™t any factors limiting their clientsâ€™ ability to close.
â€śAccording to our data, inventory shortages were prevalent in many parts of the country, all-cash purchases were elevated for most of the year and significant lender overlays and loan processing delays were repeatedly reported by members in our monthlyÂ REALTORSÂ®Â Confidence Index,â€ť adds Yun. â€śAs a result, itâ€™s no surprise finding the right property for their clients and helping them obtain a mortgage were cited as primary challenges for members and their clients â€“ especially for first-time buyers.â€ť
A majority of NAR members (80 percent) focus on residential sales and 71 percent (73 percent in 2013) have secondary real estate specialties. Of those members with secondary specialties, residential brokerage is the largest at 34 percent. Both relocation and commercial brokerage were next at 17 percent, followed by residential property management at 16 percent. Smaller percentages were also in counseling, land development, commercial property management and international.
As REALTORSÂ®Â gain experience, they also build a client network through referrals of past clients and repeat businesses. Repeat business accounted for a median 20 percent of activity in 2014 and is higher for those with more experience. For members in the business 16 years or more, repeat business was 40 percent of their activity and referrals were an additional 24 percent.
Similar to recent years, firm affiliation and compensation structures for REALTORSÂ®Â remained mostly the same in 2014. Sixty-nine 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. Percentage split-commission was more popular with sales agents (78 percent). Furthermore, members with less experience more often had percentage split-commission arrangements, as well as those who had lower personal earnings.
Eighty-three percent of members work as independent contractors for their firms. The vast majority receive no fringe benefits, although 36 percent (33 percent in 2013) are covered by errors and omissions insurance by their firm. Only 5 percent receive health insurance through their firm â€“ unchanged from a year ago.
Fifty-nine percent of REALTORSÂ®Â are affiliated with an independent firm, and 37 percent are with a franchised company; 4 percent are other. Respondents worked for a firm typically with one office (51 percent) and have been with that firm for five years (six years in 2013). Slightly more (11 percent) REALTORSÂ®Â reported their firm was bought by or merged with another firm compared to in 2013 (9 percent).
For more information on the report, visit www.realtor.org/prodser.nsf/Research.