By Dale Buss
Simone Bouterse left advertising to become a real-estate agent nearly three years ago so that she could get out from behind a desk. The job has been "a little more challenging than I anticipated," says the 34-year-old Seattle resident, "but then that's the nature of being a self-employed person.
As a typical buyer's agent, Ms. Bouterse picks up all her expenses and is basically self-employed. Her agency allows her to use a desk and computer and provides phone service, office supplies and a "bare minimum" of advertising space each week. She has no quota from the agency, but needs to drum up her own customers.
"You have to constantly find business and keep your pipeline full with potential business so you don't run into dry spells -- especially when your income is 100% based on commissions," she says.
Ms. Bouterse admits she's concerned about her future as well as navigating day-in, day-out demands. The Seattle-area real-estate market is fragile and subject to a downturn if rates nudge up by not even a point, even in her niche of first-time buyers, she says. And right now, major local employers, such as Boeing Corp. and Microsoft Corp., are being cautious about hiring and spending.
While Ms. Bouterse is doing slightly better than at this time last year, she's wondering if she'll survive long-term. "I'm not so much worried about the next six months but about two years from now," she says. "I know I've put in a good foundation, [but I'm] apprehensive because undoubtedly interest rates are going to go up."
The Economy Takes a Toll
In the past few months, the stubbornly sluggish economy finally appears to be having an effect on the housing market, starting with a cooling of very upper-end sales in metro areas from New York City to Austin, Texas, to southern California. And while the leveling off hasn't yet begun to cause a shakeout among real-estate agents, it has left many of them -- especially newcomers like Ms. Bouterse -- feeling exposed and concerned about what will happen next.
Yet, like Ms. Bouterse, more corporate employees are viewing residential real-estate sales as a viable career alternative, and newly minted college graduates are signing up to learn the ropes as well. In the last two years, membership in the National Association of Realtors (NAR) grew about 11%, to 840,000, after a long period of stagnation, says a spokesman for the Chicago-based trade group. Membership in the Texas Association of Realtors has increased by about 25% in the past three years. Prudential New Jersey Properties, with 660 Realtors in 28 offices, has expanded its sales staff by about 10% over the last year, says Bill Keleher, chairman and chief executive officer of the East Brunswick, N.J., agency.
A Powerful Engine
To be sure, residential real estate remains a powerful engine of the American economy. Interest rates are the lowest in two generations, and investing in real estate is particularly attractive in view of the stock market's dismal performance in recent years. Moreover, Realtors tend to be optimistic, knowing that in a commission business a significant payday can be just one sale away.
The fever pitch of past months may be easing, but real-estate professionals insist the market remains strong, albeit slightly slower. Where buyers previously "might be in a situation with 10 other competing offers," says Ms. Bouterse, who works for Windermere Real Estate, "now, there might be only two other offers for the same property, and you can afford to wait for more than five hours after a home comes onto the market. I can actually tell my clients to go home and sleep on it!"
The fact that there's money to be made, plus the job's independence, is alluring to corporate employees. "More of [them] are talking to us because they have friends or relatives in the business who've been doing extremely well," says Mr. Keleher. "I've been pleased with the quantity and quality of the people making career decisions for real estate. I've seen a lot of them break the mold and do better in faster time than people expected."
Jim Fite, president of a Century 21 agency in Dallas, has noticed the same trend. His company is attracting professional people who are "tired of corporate America and want to control their own destiny," he notes.
In 1999, about 10% of brokers and agents had chosen real estate as their first career; by last year that portion had dwindled to 7%, according to the NAR. In Chicago, most of Sussex & Reilly's 100 Realtors, for example, are college graduates, many of them MBAs and "some who were making $150,000 with prominent law firms," says co-owner Sean Conlon. "They've all made a career change and are bringing a very sophisticated, corporate approach to our business.
And corporate career switchers are more desirable to agency owners and managers than they once were, says Pat Kaplan, head of Kaplan Real Estate Group in Portland, Ore. "Fifteen years ago, I looked for nurturers: school teachers, health-care people, and shied away from middle-management types because I found that a lot of them were very used to having their staffs do the work for them," he says. "Now the customer doesn't want to pay for handholding anymore; they want fast and efficient."
What's Ahead for You?
To be successful in the field requires commitment, say veterans. In a slowing market, "the marginal players -- the part-timers and those not as committed to the business because they aren't primary wage earners -- are the ones who back off and feel the brunt of it," Mr. Keleher says. "The better, more experienced, more committed agents generally pick up that slack."
Indeed, experienced Realtors have the advantage, with top agents often grabbing a major share of sales in an office because of their abilities and financial resources. At times, "10% to 15% of the brokers in an office of 30 people may be doing 90% of the business," says Pat Gorman, managing director of IPI Skyscraper Mortgage, a Purchase, N.Y.-based mortgage broker. "They are pressing their advantage by doing things that others can't do, such as hiring legions of assistants to handle open houses."
"I'm not seeing people leave the business yet, because the top people making top money will continue making top money," Ms. Gorman adds. "It's the ones who are in it part-time or who don't really make that much or who don't focus on it 100% that are getting hurt."
Jane Fairweather, a veteran Realtor in Bethesda, Md., describes the business as "a funnel: It's wide at the opening, and lots of people can get in, but few people come out the other end. It's a tough business to make a living in and even harder to thrive in. This kind of a market drums out agents" as buyer demand eases.
Young Entrants
The median age of first-time buyers was 31 in 2001, compared to 32 in 1999, while the median repeat buyer was 41 in 2001 compared to 45 in 1999, reports the National Association of Realtors. As homebuyers become younger, now may be a good time for younger people to enter the business.
Agency owners are seeing more new graduates seeking work as interns or low-paid, salaried assistants to experienced brokers. "We've seen a tremendous increase," says Hall Willkie, president of Brown Harris Stevens, a New York City agency. "Because it's a commission business, it's been difficult to break into, and most people need to have a specific income when they finish their [higher] education. But more and more attractive, intelligent young people are coming to us, and that's a real change."
Harris Stevens launched a paid internship program recently. One intern, 22-year-old Philip Massano is a 2002 graduate in marketing and Spanish from the University of Connecticut. "A lot of real estate is marketing, and how many people in New York City speak Spanish?" he explains. "Besides, real estate is doing well right now. My feeling is that people always need to live somewhere, so [demand] should always be there -- whereas other industries are having a lot of layoffs."
And for recent graduates, the ability to use the Internet as a tool for prospecting and communicating with customers comes naturally. Some agencies also are training new agents online, giving young recruits an instant advantage over many older peers.
-- Mr. Buss is a journalist and editorial consultant based in Rochester Hills, Mich.
