New data from the National Association of Realtors suggests that real estate agents may not be the competitive threat investors have believed them to be. Realtors and real estate investors have been feuding for decades. They have had a natural distaste or distrust of each other since the moment they step into the business, and sometimes even before. The savviest real estate investors, of course, see the benefits of cultivating relationships with Realtors, and many work with them on a daily basis. Now, the numbers prove that the rest of the pack shouldn’t be that worried about competition from Realtors either.
A newly published Member Profile report from NAR breaks down exactly how much the association’s members are making, how many deals they are really doing, and where they are dropping the ball. Partnering with real estate agents to do more deals is good business. When that isn’t possible, rather than emulating their blunders as some out of touch journalists have suggested, real estate investors can be encouraged and find ways to pick up their slack and do better.
There are reportedly around 2 million real estate agents in the United States. Only 50% of those are real Realtors. NAR’s data shows the average Realtor only closed twelve transactions in each of the last two years. Twenty two percent of NAR members closed at least one commercial transaction side last year. Surprisingly, only around 40% of Realtors dealt with a short sale or foreclosure.
While the National Association of Realtors claims Realtor deal volume and income is up, the average gross income for a Realtor last year was under $50,000. The average gross income for those in the business for two years or less was a mere $8,500. The average annual dollar volume of business for 2013 was just $1.8 million, less than many individual homes. Eighty percent of these real estate professionals work full time.
The most buzz about this new report in the media has been focused on how little Realtors use the internet. Despite industry news sites full of talk about technology summits, drones, virtual open houses and even wearables like Google Glass, less than 70% of Realtors say they have had a website for at least 5 years. 39% do not use social media. Only a miniscule 12% have a real estate blog.
On average, Realtors are spending less than $10k on business expenses, with the bulk of that amount going towards car payments. Numbers show Realtors generating about 20$ of business for referrals and repeat business, leaving as much as 60% to 80% coming from online marketing and other lead generation sources.
To go from zero to establishing a presence as a Realtor takes thousands of dollars and a substantial amount of time. It can be a great career, with a lot of flexibility, but to barely earn $8k a year after all that suggests a low ROI, compared to becoming a real estate investor.
According to the latest data on flipping houses, real estate investors are averaging more than the entire gross annual income of Realtors in each average deal. Even flipping one home a month on the side part time, and taking a two month vacation each year, investors can make 10 times as much as the average Realtor putting in 40 hours per week.
While there are many real estate investing strategies to consider flipping houses, clearly offers the potential for lower startup costs, faster paychecks and far greater annual incomes.
This report shows incredible and easy opportunities to win in real estate investing against the ‘competition’ from pursuing distressed property deals to online marketing with better websites and real estate blogs. With a little effort an investor ought to be able to generate significantly more than 2-3 referrals, and repeat client deals per year, even without getting out of bed.