In recent years, skyrocketing home prices and healthy sales commissions undoubtedly looked like Shangri-La to area Realtors. Now however, rising interest rates and a slowing economy mean the real estate industry must relocate from cloud nine to a more modest residence in the real world.
What Goes Up...
"Real estate is a cyclical business – more so than most," explains Nelson Janes, Executive Director of the Sacramento Association of Realtors (SAR). "You can count on the market changing approximately every eight years. Due to the closing of (military) bases and some other factors, Sacramento went through a slow market for a number of years in the early ‘90s. Then the city had a boom for the past five years, with double-digit appreciation. Now the market is balancing again."
So, what does it all mean to prospective Realtors in Northern California? According to Mark Warmack of the Cook School of Real Estate, the need for real estate agents is still great. "Although the market is experiencing a price adjustment slightly downward, people need a real estate agent more than ever," he contends. "Understanding the market you are in is crucial, and real estate agents are trained to handle the nuances of the industry."
Statistics confirm Warmack’s claim. Although 77 percent of home buyers use the Internet to search for homes, 93 percent of them still use a real estate agent. Consumers now have a vast amount of information on home buying and selling literally at their fingertips, but they continue to rely on an agent’s experience and expertise to guide them through the completion of a real estate transaction.
While traditional Realtors typically share a six-percent commission, companies like Help-U-Sell cater to the desire of many consumers to cut sales costs. Help-U-Sell allows consumers to handle sales and marketing activities themselves (like hosting open houses, for example). The company’s real estate professionals deal with the remaining details for a flat fee. "Consumers want what Help-U-Sell offers," explains Maurine Grisso, a Help-U-Sell regional director for Sacramento and the Central Valley who also operates her own office in Santa Rosa. "As the largest set-fee brokerage in the nation, we are answering the consumer’s need to save money while being more involved in the sale of their home."
Nationally, employment of real estate agents is expected to grow nine to seventeen percent through the year 2014. The profession is attractive to many because of its ease to enter and potential for high earnings. While sales commissions are the main source of earnings for agents and brokers, the median salary for a real estate agent in Sacramento is about $46,000; in San Francisco, it’s $50,400. However, newcomers’ earnings are very irregular and they should expect to work for months before securing their first sale.
So, what does it take to get started as an agent? First, you need a California real estate license. Prospective agents must pass an examination that tests knowledge of basic real estate transactions and laws affecting property sales. Preparatory courses, which can be completed in a month, are offered online and at numerous private schools and colleges. The Cook School charges $250 to enroll in Real Estate Principles, the required course for licensing. RE Principles can also be completed using self-study materials available for under $100. Two additional courses, Real Estate Practice and one elective, must be completed within 18 months of license issuance. A sales agent’s licensing fee is $120. The Department of Real Estate provides detailed information on the requirements and licensing process online at dre.ca.gov.
To become affiliated with a broker, beginning agents must interview just like any other job and receive an employment offer. After that, success depends on many factors, such as patience, strong networking and sales skills, and perseverance to deal with the competition from more seasoned agents. Real estate professionals must also become Web savvy to stay current and competitive. Sacramento Realtor of the Year, Perry Georgallis, believes that follow-through and people skills are also essential. "At this point in time, agents have to really earn what they make. It’s a rewarding industry if you work hard and are dedicated to knowing your job and serving your customer."
Beyond the Call
Going beyond the call of duty is undoubtedly a requisite to becoming a top real estate agent. "Your practice grows based on your reputation and word-of-mouth referrals," advises Janes. "Hours put in by outstanding agents go way beyond nine to five, as does the effort to provide caring and expert service on an individual basis."
One of the ways agents become experts is through organizations like SAR, which provides continuing education, updates on industry trends, statistics, listing tours, networking opportunities, leadership development opportunities and means of civic involvement in the community. Their Professional Standards Program requires adherence to a strict code of ethics and standards of practice.
Some entering the business may opt to work part-time in the beginning, but according to Erik Hoberg of Rancho Murieta Homes and Land, the road to success requires a full-time commitment. "Building a strong knowledge base is very important in this business. It goes well beyond just having a license. A successful agent wears many hats during the process and puts in many hours. Sometimes I’m a counselor. Sometimes I’m a designer. Tapping into your customers’ needs requires experience and around-the-clock dedication."
Ultimately, the decision to pursue a real estate career should not hinge too much on current market conditions. The recipe for success is contingent upon a sincere commitment to learning the business, growing a customer base and understanding that the market will fluctuate with the times. "Real estate is a rollercoaster ride," Hoberg admits. "There are highs and lows. If you can deal with that reality while building relationships and growing your knowledge, success will come."
High-Value Assessment for APPRAISERS
Another hot profession in the world of real estate is that of the property appraiser. A report by Money magazine and Salary.com ranked the position of appraiser eighth out of the top ten professions in America. Why? Even when the market slows, appraisers are needed whenever a property is sold mortgaged, insured, taxed or developed. That is job security at its best.
California has four levels of licensure for appraisers. More stringent licensing requirements go into effect in January 2008. The Office of Real Estate Appraisers has complete information online at orea.ca.gov.