Record Breaking Real Estate Market Attracting New Agents
The bull real estate market is attracting people from diverse backgrounds to the industry. Real estate schools are filling classrooms in record numbers across Arizona.
There are 150 approved schools in the state and approximately 600 new agents are getting licensed every month in Arizona. Arizona has more than 72,000 agents as compared to 50,000 a few years ago, according to the Arizona Republic. California added 113,307 agents since July 2000 totaling 427,389 agents—nearly two percent of the California workforce. In March 2004, the National Association of Realtors hit a new record of 1,118,201 members. As of December 2004, NAR membership grew to more than .6 percent of the United States work force– up 37 percent over the last 10 years.
Many credit the current bullish real estate market for the increase in real estate agents. Real estate has always been an attractive career. It is relatively cheap and easy to get into compared to other professions. The Arizona Department of Real Estate requires an aspiring real estate agent to be at least 18 years old and complete 90 hours of education. A test administered by the real estate school must be passed, which is followed by a state exam. Once the state exam is passed, a six-hour contract class is required. Next, the new agent will need to be fingerprinted and sign an affidavit regarding their background. Finally, they apply for their license at the Arizona Department of Real Estate and in order to practice real estate a broker must be designated who will be ultimately be responsible for the new agents actions. Real estate can not be practiced without a designated broker. The estimated cost to get started is: 90 hour class $400, state exam $90, contract boot camp $35, state license $60, recovery fund $10, association dues $300, multiple listing $110, lock box card $82.
Many new agents are attracted to the industry because of the ability to make great income without limits. Many tell me they got into the industry for the perceived flexibility of their time. The industry attracts many part-timers and agents getting into it just to save fees on their personal real estate investing. The business has attracted many 40+ former professionals that have been laid off or are tired of their corporate cubical jobs. The United States Bureau of Labor Statistics reports that the average yearly earnings of real estate agents in 2003 were $45,640.
The business is easy to get into, however many hopeful agents find it difficult to succeed. Real estate is a career and should be run like a business and many new agents lack the skills required to run a business. If a new agent lacks time management skills the profession that appeared to be flexible in the beginning can easily become consuming, stealing away evenings, weekends and holidays away from their family. The required real estate classes do not prepare an agent to succeed, so it’s important to join a company that provides training and support on an ongoing basis to ensure success.
How does this dramatic rise in the number of real estate agents entering the real estate industry affect the market? When there is an abundance of agents, the real estate pie gets split into smaller slices. Many agents will continue to do well, but the average agent will sell less and make less due to the abundance of agents competing in the market. Margins on commission become tighter as a result of the competition, which results in lower profits making the field possibly less attractive.
Real estate is a rewarding profession however, and if it is treated and run like a business it will continue to be rewarding regardless of whether it is a bull or bear market. The best investment for an aspiring real estate agent is education and training. In addition, find a mentor to guide you and help you learn from their experience and hold you accountable for a successful career.