Real estate meltdown trickles to real estate agents

2008 August 19

Michigan agents drop 16.5% in 2007; big firms close offices

August 19 2008 - It’s a sign of the times when real estate offices have For Sale signs posted out front.

While thousands of Michigan homeowners have suffered through the real estate industry meltdown, real estate agents also have fallen on hard times. They have left the industry in droves since 2004.

Those left are trying to make ends meet with overall business cut in half, a credit crunch that constricted the number of buyers and technology changes that have more than 84% of buyers shopping for homes online.

Real estate agents’ numbers in the state fell 16.5% last year, as 12,718 brokers and salespeople exited the business, according to figures from the Michigan Department of Labor and Economic Growth’s licensing division.

Of the 64,305 brokers, associate brokers and salespeople now licensed in Michigan, only about half are actively selling, said Kelly Sweeney, chief executive of Weir Manuel in Birmingham.

Membership figures from the Michigan Association of Realtors bear that out. The association has fewer than 28,000 members, down from 34,000 in 2005, said Bill Martin, chief executive of the association.

Most in the business agree that this slowdown is harsher than one in the early 1980s, when a recession was made worse by double-digit interest rates.

“The difference was Michigan was able to pull out of it on the strength of the auto industry” in the ’80s, Martin said. “This time, our ability to pull out of it has been somewhat diminished by the Big Three losing market share.”

Sweeney said the industry has about twice the number of agents, offices, mortgage brokers and others that it needs.

As foreclosures have grown throughout the state, some real estate companies have closed or consolidated offices.

Weir Manuel merged a small office into a larger one. Real Estate One, which had 2,000 agents in 2004, is down to 1,499. It closed and consolidated offices in the past two years and went from 34 to 27 company-owned offices, said Dan Elsea, president of brokerage services for the Southfield-based company.

Century 21 Town & Country just sold an office in St. Clair Shores after a consolidation effort last year that closed five offices in metro Detroit, said President John Kersten. The company is down to 700 agents from its peak of 1,100 in early 2006.

Coping strategies

Many real estate agents who left the business say they don’t want to talk about it. Some put their licenses in holding companies instead of letting them expire, so they can start again when the market recovers.

Flo Abke, owner-broker of Realty Executives in St. Clair Shores, said she knows a talented agent who had to leave for a job at Starbucks.

Abke, who was with Century 21 in Eastpointe for 20 years before the office closed in 2006, opened her own office two years ago and has found it to be a challenge.

“I go home every night thinking of how I can get my houses sold and make sure everyone in my office is OK,” she said. “I have worked hard to make sure I haven’t had to cut pay.”

Amanda Callahan, an agent with National Realty Centers in Livonia, also has mixed feelings about the industry she joined seven years ago when she switched from the restaurant business.

“Every single transaction is a struggle,” she said.

Callahan said her income dropped by 50% in 2006 and another 50% last year. She survives by being frugal.

Yet the shakeout in the real estate industry could help consumers. Given that so many agents have left the business, the ones who remain tend to be the most aggressive about sales, which helps sellers unload their homes.

Mark Zawaideh, 33, who works for Coldwell Banker Schweitzer in Northville and operates as Mark Z & Associates, is one agent who has seen a jump in business.

He’s sold 60 houses so far this year, up from the 40 to 50 homes he was selling three years ago.

“If you talk to a few hundred people a week, you are going to do some business,” he said. “Right now you have to get creative.”

He said some agents have teamed up to split costs. Zawaideh figures he spends $100,000 a year for his staff of a secretary and buyer specialist, plus advertising and other expenses.

Still recruiting

With agents’ numbers falling, it is harder to entice new talent to enter the industry, several brokers say.

Lori Chmura, president of the Middleton Real Estate School in Southfield, said she’s seen enrollments fall in her beginning courses and continuing education.

For the beginning classes, enrollments are off 75%. Other schools have closed or cut back classes, she said.

Kersten of Century 21 said he hopes to get his agent count up again as sales have started to creep up.

“Right now, there are a lot of people from other industries who are not working and they have a lot of talent that could translate well into real estate,” Kersten said.

Thom Christ just joined Weir Manuel’s Rochester office. He retired from an executive position with a transportation holding company in December. He got his license in June and is hopeful about the market.

“People will always need to sell their homes, and it is a tremendous market for the buyer who is either a first-time buyer or upgrading their home,” Christ said.

But Christ said new agents would need some financial backing to get into the business now. Agents work on commission, but have many expenses to get going, including advertising, multiple listing service and board dues and a share in the office overhead.

George Smale, manager and associate broker for Coldwell Banker Schweitzer in Grosse Pointe, said novice and veteran agents alike have to change their mind-sets.

“You have to work harder, make more calls. Whatever the market, good agents are going to do good business,” Smale said.

Real estate meltdown trickles to agents
by GRETA GUEST | FREE PRESS

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