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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Doughboy who wrote (15107)11/15/2003 3:01:18 AM
From: Elroy JetsonRead Replies (2) of 306849
 
The current situation of limited competition is not good for real estate agents or for home buyers and sellers. The high percentage commissions attracts far too many people to work as agents. Most rarely see a commission.

In California, in 1989 one of every twelve Californians had a real estate license. It is better now but becoming like 1989 quickly. The agent's mean income in CA is something like $26,000 per year. The mean income for agents working full-time is around $65,000.

A select few well known agents essentially "sell their name" to less successful agents and "partner" on listings bring in an income of hundreds of thousands. Of course this indicates that the mean is probably closer to $50k when you exclude the stars.

If commissions were say 3% or 4% I'm convinced each working agent would earn the same. They would just handle more sales as there would be fewer agents and less of their time would be spent obtaining listings.

Industries with limited competition benefit only owners of the largest firms. The dominant firms are different in each region. In Los Angeles they are:

1.) Cendant/NRT Inc. dba Coldwell-Banker, dba ERA dba Century 21 which owns and operates 692 sales offices, and is the franchisor to another 12,000 offices;

2.) Berkshire Hathaway/Home Services Inc. dba Prudential California Realty dba nine other names, is number two. The total number of offices is not published.

Another two firms which dominate in other regions are:

3.) General Motors/GMAC Realty which also owns the mortgage brokerage, Ditech Funding, which advertises those wonderful home loans for 125% of your home equity. Total mortgage portfolio of $72 Billion. Someone's going to be the bag-holder on those.

4.) Long & Foster which owns 160 offices centered around the Washington D.C. area.

A more complete listing can be found on this webpage.

realsure.com
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