Thursday, November 17, 2005
What makes a Realtor a Realtor.
"Now that you all passed the Pre-licencing Course, let me make one thing perfectly clear ....". Jeremy Levers had been already one of the top Realtors in British Columbia for over twenty-five years by the time I first met him in October, 1987. A sturdy man in his mid-fifties with a thick, fascinating English accent , he was there in the Auditorium of the Real Estate Board of Greater Vancouver to teach one of the twelve Post-licensing classes mandatory to complete licensing. Whereas the purpose of the Pre-licensing Course had been to give us the basics of Real Estate and Contract Law, Mortgaging, Agency and Appraisal the Post-licensing Course was designed for the practical applications of them all - life on the street, it might have been called. "There are Realtors and there are Good Realtors: a Good Realtor is the one who will always sell a house, even in a slow market. But in order for you to do this, you have to discover the power within yourselves and that I cannot teach you".
1987 was a bad year indeed for real estate: with price dropping, interest rates still in the teens and the great crash of 1982 still in the mind of many, the last thing people wanted to do was to purchase real estate. And yet in 1988, when I actually began my real estate career, I managed to sell nine houses and two apartments ... not too shabby for a rookie ! Mr. Levers, a legend in real estate circles in B.C., could not have been more on the mark. No matter the market, demand for the services of real estate agents will always be there. And the difference in performance that accounts for twenty percent of all agents controlling eighty percent of the market will always be there as well, in any market. To be sure, I have never come across a "bad market" or a "good market" , a "soft market" or a "hard market". A market is a market is a market. What I have seen are "slower markets" where demand for products typically drops, and "faster markets" where demand typically rises. And, naturally, price fluctuations go in sync with demand.
Real estate sales to me is more a field of discipline than a profession. It is, furthermore, far less overcrowded than many people believe it to be. Take for example the Greater Vancouver Metropolitan Area, home to approximately two million people. If the Urban Studies Institute is correct (and they normally are), the average household is made up of four people. That makes 500,000 residential units to house all these many people. If the Instute, moreover, tells the truth (and they normally do) thirty percent of the people are tenants and seventy percent are property owners of all sorts of products - single family detached housing, apartments and row townhouses. This translates into 350,000 units that can be bought and sold at any given time. As, still according to the Institute, the average Canadian household changes residence every five years, the result is that there are 70,000 residences that can potentially be bought and sold every year. The population of the membership of the Real Estate Board of Greater Vancouver is about 6,000 realtors in any given year. 6,000 realtors handling 70,000 homes ..... and you think the field is overcrowded ?
I hear at times folks, who otherwise ought to know better, rendering opinions the likes of "real estate has bleak future growth prospects" or that the industry is being "replaced by technology". Quite aside from the fact that realtors - at least in Canada - and Real Estate Boards throughout the country are at the vanguard of technological innovations with the average agent owning both a laptop and a desktop in addition, of course to a Blackberry or Treo, as well as sporting at least one website of his own in addition, of course to the office website, real estate may have "bleak future growth prospects" in the Sahara Desert perhaps, but certainly not in Greater Vancouver where the average is 92 real estate transactions handled by real estate professionals every day !
I read blogs authored by people, who are supposedly educated and knowledgeable in the field of statistics and economics, complaining about the fact that Realtors do not contribute value to our society when, in fact, the average real estate transaction in Canada, according to a study conducted Clayton Research Associates, finds that the purchase and sale of homes through the MLS system generates an average of CAD $19,800 per transaction in additional consumer spending for fees paid to professionals such as lawyers, appraisers and surveyors, taxes and registration fees paid to governments at all levels as well as purchase of new appliances, furnishings and for renovations. Since there are about 381,000 resale transactions in Canada handled through the MLS system annually, as a result the resale market generates CAD $7.5 billion per year in additional consumer spending and helps create more than 101,600 jobs attributable to moving. That's quite a feat for an industry that contributes "nothing" to society.
And the commissions ... ah, the commissions ! Even taking the standard six percent across the board charged in the United States - which is more than what it is charged typically in Greater Vancouver - that is one of the lowest compensation paid for services in the economic basket of goods. Plaintiffs'lawyers in the United States, for example, charge a fee amounting to 33.3 percent of recoveries before cases are set for trial, and a whopping 40 percent when a trial date is scheduled. And that does not take into account appeals, for which fees are renegotiated. The typical stockbroker charges ten percent per transaction on the buy-sell of stocks, just like the average food broker. Architects charge a mix of fees and commissions depending on the project, with the latter averaging from six to ten percent. Ah, but you say, realtors commissions are six percent on $300,000 ! Here is my professional advice: cut your price in half, so you will pay half the commission ...
Real estate sales is a wonderful, wonderful discipline which brings you closer to people and makes you a better person mainly because it makes you understand your fellow human being and, consequently, yourself to a higher degree. It is a discipline I would encourage anyone to get involved into. The practice of real estate leads to the discovery of how other people live, think and feel and how they go about their lives. It exposes their emotions - joy, anger, frustration and exhilaration, it maximizes interaction among people and with fellow human beings on a spiritual level. It has been said that others are the mirror in which one's life is reflected. When we look into this mirror we get a clearer image of ourselves, a more focused reverberation of the ineherent possibilities of human consciousness. And by doing so, by deepening our insights and understanding of the journey of others we end up discovering our own inner self. The "power within yourself" as Jeremy Levers told us eighteen years ago.
Boy, was he right !
Real Estate Chronicle