I notice a lot of price reductions coming in on almost all listings, from all companies. I've also noticed some realtors are hanging up their licences, and deciding not to continue in the business.
It is very expensive to be a realtor. The general public doesn't always recognize the business expenses involved in being a realtor. Yes, there is a gross commission paid by a seller to a listing realtor. Often, a buyer's agent is also involved in a transaction, and so that gross commission is immediately split between the two agents involved. The company that the agent works for also takes a portion of the commission.
There are also Board/MLS fees, there are company fees if a realtor works for a franchise company, there are also the print ad publication costs in local venues, the costs of internet advertising, plus any extra print media marketing (other magazines, aside from predictable local ones, brochures/flyers, professional photography, etc.), and the individual realtor pays for all of this -- companies pass along all costs to their realtors, plus take a portion of the commission.
If someone made 1000 gross commission, then, they might only net 100. I once heard of a realtor who made a 17,000 commission, gross, and retained (net) 1000 (after all expenses were paid, the realtor got paid). I don't think the public understands this.
I remember a realtor of many years duration saying that the U.B.C. Sauder School of Business, which maintains the real estate course materials/testing, in B.C., should alert all people wanting to go into the business that they need at least 100,000 in the bank, to carry themselves, while they get started. An interesting perspective! One can see, though, in a downmarket moment, with all of the costs involved to generate a livelihood income stream, that some realtors would decide to hang up their licence, and to look for work with a steady paycheck.
The last time B.C. experienced a downturn in the market (between Fall 1994 and Spring 2000, with 1995 and 1996 being the two "worst" years), there were 9 real estate companies and 89 realtors in my small area, at the end of 1994. By the end of 1999, we had shrunk to 3 companies and 34 realtors. Sellers and realtors, then, in a downmarket scenario, do suffer. It is a cyclical business, however. We now have eight companies and approx. 65 realtors. We may be experiencing the beginning of attrition in the business.
In the last downturn, there had been an increase in prices, between 1992 and 1994 of approx. 60%. By 1999, prices had gone down 30%. They had not suppressed, though, to the original pre-rise level. Subsequently, between 2003 and 2005, another 60% increase in pricing was experienced. Some feel that we have lost 30%, to date. It is an up and down business, it does follow cyclical models, it never returns to the original low...a good way to imagine it is a lurch/fall back/spring forward momentum. Important, though, to be able to ride out the low periods, somehow still intact, and that's the trick, indeed.
How may I help you to discover special Salt Spring Island & the Southern Gulf Islands? Call me!
