Whatcom County real estate agents must perfect their game in slowing market
As the local housing market has slowed and stabilized in the first half of 2007, local real estate agents are experiencing a shift in how they approach their livelihood.
Despite a modest increase in average Whatcom County home prices, the total number of Whatcom County homes sold in the first half of 2007 declined compared to the same time frame in 2006, and the number of days houses stayed on the market has increased.
Some real estate agents have responded by getting out of the game entirely, but there hasn’t been a major decline in active licensed agents overall. Others are experiencing income drops and tougher deals to close.
Most local experts agree that to stay in the game, real estate agents will need to brush up on traditional selling skills, embrace new technologies and continue accessing education and training.
From a sellers’ to a buyers’ market
In the last five years, a number of trends combined to create a boom in the real estate industry, both nationally and locally. Interest rates were historically low, lending standards eased and potential buyers started thinking they had to invest in real estate — a mentality that Jeff Brew, a team leader with Keller Williams Realty, said led to a lot of “accidental investors” in the market.
Meanwhile, many future agents took advantage of the boom and began getting real estate licenses — a somewhat facile process compared to other types of schooling.
Brew called this large splash of new agents a “feeding frenzy.”
“I liken it to the dot-com boom,” added Keller Williams Operations Manager Lisa Colburn.
Brew said 2004 saw a huge increase in active agents, and the number hit epic proportions in 2005 — the height of the boom, Brew said. But just because becoming a real estate agent is easy, doesn’t mean remaining one is, he said.
At David Hutton’s local real estate school, students pay $395 for a five- to six-week or a 10-week course. Back when Colburn got her license in 2003, she took a six-week, $500 class and her license cost less than $1,000.
“The ease of entry is the ease of exit,” Brew said — meaning the ones who approach the profession with a lack of seriousness are the ones most likely to be unsuccessful.
“What people don’t understand is that it doesn’t take much to break into the business, it’s what comes after — the research and the systems,” Colburn said. “Anybody who doesn’t have a felony conviction — and even some who do — can become a licensed real estate agent.”
Since then, Brew said he has seen agents getting out of the game fairly quickly.
With the current market’s slowing, or stabilizing — as many agents refer to it — Colburn said non-professionals are being weeded out from professional agents.
However, the number of licensed real estate agents remains steady, both at the state and local levels.
While Washington state’s Department of Licensing does not track historic localized counts of licensed real estate agents, Glenn Crellin, director of Washington State University’s Washington Center for Real Estate Research, said the number of licensed agents statewide has steadily climbed during the last five years.
Sue Stremler, executive officer of the Whatcom County Association of Realtors (WCAR), said the organization’s membership has climbed to “tremendous heights” in the last three years. After a decline in licenses in 1996, the number of agents hasn’t stopped climbing, she said.
Although WCAR has lost numerous members in the last two years, they have been replaced for the most part. Two years ago, WCAR had close to 900 members and has experienced a slight decline to around 840 current members, she said.
Enrollment in Hutton’s pre-licensing real estate classes have also remained steady.
So why hasn’t the number of agents dropped significantly with the slowing market?
“It takes a while for that story to filter down to folks making the decision (to become or remain an agent). A lot figure that real estate is an easy-money business,” he said.
Five percent to 7 percent sales commission can be an enticing prospect to new agents, and some will wait out the housing slowdown before folding their cards, he said. Some will work as agents part time.
But Crellin said he thinks the number of new licenses will slow down in the next few years.
“There are more coming into the business than can be sustained,” he said.
Adjusting to new market conditions
Some local firms are already experiencing a decline in agents, though that doesn’t necessarily mean those agents have stopped practicing.
At Keller Williams, the number of active agents dropped from 140 last year to 111 currently.
With the sellers market, it was easy for agents to find motivated buyers, but now that the market has shifted, agents need to have a good grasp on the basics of selling — how to find buyers and sellers, communicate well and build relationships, said Marsha Lockhart, Keller Williams broker.
They need to know not just how to close a deal, but how to be the person that people go to for real estate needs. Having the support of a firm that offers training and skill-building opportunities helps with this, she said.
Stremler said that in the 17 years she has been with WCAR, the industry has changed dramatically, and agents who want to stick through a slowdown will need to adjust to these new realities.
Stremler said the average newly licensed agent is younger, typically with business degrees as opposed to persons who want to dabble in the profession or retirees that made up the bulk of new agents back in the early 1990s.
The use of the Internet is one of the major changes, she said.
“(Agents) have to keep up now with clients who can sit and look at houses on the computer over the weekend and decide whether or not they want to go look at it,” she said. “With the computer came a whole new breed, and it was very difficult in the late ’90s for seasoned Realtors to keep up … it was a big upset, and some still won’t use computer technology.”
But use it they must, as the slowing housing market increases competition between agents.
Stremler said the current conditions could force agents to rely more on their working spouses for financial support as their incomes dip. While the costs associated with becoming an agent are fairly low, the costs associated with becoming a successful agent are on the rise. Those costs can include desk fees, business cards, advertising, mailings, a computer or laptop, a camera, a website, a decent car and an appropriate wardrobe — all of which she said she hopes real estate schools address when teaching students about how to be financially stable and successful.
Successful agents stay positive
Stremler painted a portrait of a successful agent as someone who stays positive, who sells themselves even in line at the grocery store, maintains good ethics and garners positive word-of-mouth, as well as continues education. An agent who can nurture these traits will succeed in a slowing housing market, she said.
The ones who won’t are those who lack self-motivation, a positive attitude, and good communication skills, she said.
Lockhart said she thinks the industry will lose a few more agents before stabilizing. The agents who remain will need to be savvy businesspeople, though, she said.
Brew and Colburn echoed Stremler’s assertion about agents needing to evolve with the industry, particularly in the growing use of and emphasis on the Internet.
“In the old days, a potential homebuyer went to a Realtor and said ‘sell me a house,’” Colburn said. “Now, clients are much more savvy — they know more about the process and the housing market and have more choices.”
Colburn said she’s known a few homebuyers who have almost totally completed a deal with use of the Internet, e-mail and faxes before even seeing a house in person.
With a changing industry in Whatcom County, the resounding consensus seems to be that in order to stay in the game, they need to get their game on.
Local real estate market — by the numbers
Local real estate by the numbers, according to Lylene Johnson’s July 5 real estate report. Johnson is an agent with the The Muljat Group South office. She has been tracking Whatcom County sales data and identifying trends for three years.
• 5.4 percent: the decline in the total number of residential units sold in the county during first half of 2007
• 99: the average number of days it took to sell a house in Whatcom County during the first half of 2007
• 70: the average number of days it took to sell a house in Whatcom County during the first half of 2006
• $293,694: the median home price in Whatcom County during the first half of 2007, up 4.9 percent from the same time in 2006
• $345,429: the average home price in Whatcom County during the first half of 2007, up 3.1 percent from the same time in 2006