New real estate agents are piling up in the hot real estate market. Most find it difficult

Michael Mitchell in Boston is one of them. He signed up for a real estate course in June, after being released from a managerial position at a regional restaurant chain. He enthusiastically greeted the new profession, thinking that his skills and focus on customer experience, developed over 30 years in the restaurant business, would be transferable to the real estate industry.

He obtained his license in October, but has yet to reach a deal, as restrictions related to Covid-19 are limiting personal interactions with customers.

“I learned some aspects of the business, but it is difficult to connect with people … you have never met,” said Mitchell.

The number of members of the National Association of Realtors exceeded the number of houses on the market just once before, in December 2019, when the number of brokers fell slightly, but the stock of houses for sale decreased further. It happened again last October and has been going on ever since.

At the end of January, there were 1.04 million homes for sale. This represents a 26% drop from the previous year and the smallest ever recorded in 1982, according to the National Association of Realtors. Even in January, the NAR had 1.45 million members, 4.8% more than in the previous year.

It is easy to understand why so many people signed up for the real estate profession: the pandemic has eliminated millions of jobs, especially in service sectors such as restaurants and hotels. The booming housing market suggests that there is a lot of money to be made from selling homes. And in most states, it doesn’t take much more than taking a course and passing an exam to obtain a residential property license.

State licensing exams may include questions about property laws and market analysis. Approval rates vary by state. In Texas, almost two-thirds of test takers pass the first attempt, according to the Texas Real Estate Commission.

“There are very low barriers to entry, in terms of how easy it is to obtain a real estate license,” said Nick Bailey, director of clients at Re / Max Holdings Inc., a franchising real estate broker. “But the barriers to success are very high.”

Real estate sellers often prefer agents with years of experience and proven sales records. This means that newer brokers tend to represent home buyers, many of whom are struggling to get an offer accepted with so few properties for sale.

Consequently, most agents earn little or even no money at first, as they typically rely on commissions and are not paid unless the sale is completed. Realtors with two years of experience or less earned an average gross income of $ 8,900 from their real estate work in 2019.

But that number increases with more years at work: the average gross income of all NAR agents in 2019 was $ 49,700, compared to $ 41,800 in 2018, the association said.

The business is very fluid. The NAR, which represents the majority of active residential real estate brokers and brokers in the United States, said that about 15% of its members are renewed each year. Agents generally work as independent contractors and many work part-time.

The number of agents also tends to correlate approximately with the performance of the real estate market. The NAR rating rose to 1.37 million in October 2006 – just after the peak of the market – and hit rock bottom around 960,000 in March 2012, after the housing crisis. The number of NAR members has increased each year since then.

Real estate broker Redfin Corp.

, which hires agents as employees, said it underestimated demand after the epidemic. Redfin laid off 41% of its agents in April, when home sales plummeted. The company said it is now hiring 162 people a week in its brokerage business, up from 92 a week at the same time last year.

“It is by far the biggest hiring we’ve ever done,” said Redfin’s chief executive, Glenn Kelman.

Some new agents were initially successful. Lauren Hurwitz, of New Rochelle, NY, obtained her real estate license in August after being fired from a press relations job. It closed its first sale in February and has three more on contract. Her first client was a close friend whom she helped to buy a home. She won over other people through social media and word of mouth.

“I am seeing insane demand and very little inventory,” she said. “I know there is a lot of competition out there.”

Diana Dorel Gutierrez did her real estate exam last March, just before the test center closed due to the pandemic. When she joined a brokerage in the Phoenix area, co-workers warned that it would not be easy.

“They said, ‘You have no idea what’s coming. This is the worst time to be an agent [for buyers] and the best time if you are the broker ‘”, said Dorel Gutierrez.

But Dorel Gutierrez, who also works as a spiritual and relationship coach, has closed five deals so far. She found clients through social media, references and leads from the Zillow Group Inc.

Her colleagues call her and the other agents who joined the brokerage last spring as “pandemic babies”.

“If you can do that in this sector right now,” she said, “you can do anything.”

Write to Nicole Friedman at [email protected]