Realtors used more technology, cited inventory constraints before COVID-19

By |2020-07-20T20:47:48-07:00July 21st, 2020|Real Estate|

Even before the real estate industry was confronted with the coronavirus pandemic, Realtors had already begun to make sizable increases in their use of technology and online tools to accommodate clients and advance their businesses.

According to the National Association of Realtors’ 2020 Member Profile, an annual report that outlines members’ behaviors and characteristics over the preceding year. Research gathered for this report was obtained before the coronavirus outbreak and before subsequent nationwide stay-at-home orders were instituted.

NAR’s report revealed that more than nine in 10 members use a smartphone and a computer daily, while just about all members regularly e-mail clients and the majority of members use social media apps to communicate with clients. Text messaging is the preferred means of communication for Realtors® (94%), closely followed by email (91%) and telephone calls (89%), according to a NAR news release.

“As members have become more reliant on their smartphones and the internet to stay in touch with their clients, they’ve also found that some of these social media sites are another avenue to reach potential homebuyers and sellers,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights in the news release.

Seventy percent of members said they have a website for business use, reporting they have typically had their site for five years. Agents were typically the most active on Facebook, LinkedIn, and Instagram.

Income of Realtors

In 2019, 37% of Realtors were paid under a fixed commission split. Median gross income for Realtors was $49,700 in 2019, up from $41,800 in 2018. Income was generally proportionate with experience, as members who had worked 16 years or more in the industry earned a median gross income of $86,500 – up from $71,000 in 2018.

The NAR report found that the total median business expenses for Realtors® were $6,290 in 2019, up from $4,600 in 2018.

Business Characteristics of Realtors

The overwhelming majority of members are sales agents, who for the most part specialize in residential brokerage. On average, members have nine years of experience in the real estate industry. Seventeen percent of Realtors have less than one year of experience, continuing a downward trend (22% in 2018) and suggesting members are remaining with real estate as a career choice for a longer duration. The number of members with more than 25 years of experience was 17%, up marginally from 15% the previous year. Broker-owners, managers, and appraisers had the most experience, while sales agents were generally the newest to the industry with a median of six years of experience, according to the report.

Sixty-five percent of those surveyed stated they have sales agent licenses, down from 68% in 2019. Twenty-two percent hold broker licenses, and 15% have their broker associate license. Seventy-three percent of members indicated they specialize in residential brokerage. Brokers generally work in business specialties including commercial brokerage and property management. Broker associates tend to primarily specialize in residential brokerage, while sales agents are more likely than other licensees to specialize in relocation.

Eighty percent said they were certain they will remain active in the industry for two more years, consistent with responses from previous years.

Business Activity of Realtors

Insufficient inventory has hindered the real estate market in recent years, leading residential specialists to reference “difficulty in finding the right property” as the top reason why potential clients may not complete a given transaction. Still, the typical member recorded a higher sales volume in 2019, with a median of one additional transaction than in 2018, the news release added.

“Low inventory continues to be a problem,” Lautz said in the news release. “Pre-pandemic, housing supply was the number one hurdle holding back potential buyers, but we continue to be faced with a great deal of pent-up demand but not enough homes.”

For the seventh consecutive year, difficulty finding the right home exceeded housing affordability as the greatest factor limiting potential clients from buying. Housing affordability continues to be the second-most important factor in limiting potential clients.

The typical member-generated 15% of their business from past clients and customers, a marginal increase from 13% the previous year. More experienced members noted a greater share of repeat business from clients – a median of 39% for those with 16 years or more experience, compared to no repeat business activity for those with two years of experience or less. In general, Realtors earned 20% of their business from referrals, an increase from 17% last year. Referrals were the most common among agents with more experience – a median of 29% for those with 16 years or more experience, compared to no referrals for those with two years of experience or less, according to the news release.

Office and Firm Affiliation of Realtors

Realtors’ office and firm affiliations changed little from the previous year. Fifty-two percent of members indicated they are affiliated with an independent company, while 87% said they are independent contractors at their respective firms.

Forty-two percent of members worked at a one-office firm and 24% worked at a firm with two to four offices. The typical agent had been with their current firm for four years. Mergers and consolidations affected about one in 10 Realtors® in 2019. Most members reported that they were independent contractors, with firm-provided benefits proving uncommon. Of agents receiving benefits from their firm, errors, and omissions (liability insurance) were most commonly cited.

Demographic Characteristics of Realtors

The typical profile of a Realtor has not changed since NAR’s last market survey, as members continue to come from a wide variety of demographic groups and career backgrounds, the news release said. In most cases, Realtors previously held a career in management, business, or finance (17%) or were employed in the sales or retail sector (17%). Members often are made up of various age, ethnic, language, education, and income characteristics that define their local communities.

The typical Realtor according to the news release was a 55-year-old, white woman who attended college and was a homeowner. Sixty-four percent of all Realtors were women, a decline from 67% in 2018. Only 5% of members said real estate was their first career. Seventy-three percent said that real estate was their only occupation.

Realtors’ marital status was largely unchanged from the previous year, as 69% were married, while 16% were divorced and 10% were single or never married. The average member household had two adults and no children.

Eighty percent of Realtors were white. Hispanics/Latinos accounted for 10%, followed by blacks making up 6% and Asian/Pacific Islanders accounting for 5%. Among those who had two years of experience or less in real estate, 33% were minorities.

Eighty-two percent of members said they were fluent only in English. This share has remained largely flat since 2003 when the question was introduced. Agents under 50 years old were most likely to be fluent in another language. Spanish was the most common second language for members. Among all Realtors, 13% said they were born outside of the United States, according to the news release.

Survey Methodology

In March 2020, NAR e-mailed a 93-question survey to a random sample of 169,038 Realtors. Using this method, a total of 12,464 responses were received. The survey had an adjusted response rate of 7.4%. The confidence interval at a 95% level of confidence is +/- 0.87% based on a population of 1.4 million members. Information about compensation, earnings, sales volume, and the number of transactions is characteristic of the calendar year 2019, while all other data are representative of member characteristics in early 2020.

Source: NAR