Last week I invited you, my readers to participate in a “State of the Industry” survey. Many of you participated — in fact, enough of you did that we had a statistical confidence level of 95.5% with only a 4.5% margin of error. In other words, our survey results are more accurate than most of the political polls you read and hear about these days.
So let me share with you the results of the survey and some of my interpretations regarding those results and ask you what you think (You can post a comment below, or send me an email, or both.)
Reader Profile. Not surprisingly, my readers tended to be a level above the average agent. On average, they’ve been in the business for over 14 years and completed 11 transactions last year, or nearly twice as many as the average Realtor®. Less than 3% had less than five years experience.
In terms of client mix, our readers were pretty evenly divided, with about 40% reporting an even mix of buyers and sellers and about 30% leaning more toward buyers and another 30% toward sellers.
Company Profile. Almost 10% of you run a solo practice, while the balance are split pretty evenly between independent and franchise companies. The average commission split of our agents was 74% and that includes the 10% that are solo practitioners who keep 100%, no doubt skewing the results upward a bit.
Our average agent paid various fees to the broker of $237 per month ($259 per transaction) effectively decreasing the average split by 4.24% for an adjusted average commission split of 69.76%. In other words, our average agent is giving 30% of every transaction to their broker.
And what does that 30% get them? Not much. Nearly half get very little or no training at all from their brokers. Only 5.7% indicated they got any business from their broker. How sad. In other words, the companies, while charging their agents a lot, are doing very little to further the business of their average agent.
Income Profile. Roughly a fourth of our readers earned more than last year, while half earned less. Another fourth earned about the same as last year. A full third did less than six transactions in the past twelve months. When you consider that our average reader did twice the industry average transactions last year, that does not bode well for our industry in terms of income.
Biggest Challenge. Nearly half the agents (44.7%) reported their biggest challenge was having enough clients. No other challenge was even close. Poor market conditions was a distant second (31.2%) to having enough clients, because many would-be clients were unable to get financing. That means that three out of four agents today struggle with a lack of clients or the ability for would-be clients to qualify.
Outlook. We, as Realtors®, are a very optimistic bunch. We tend to see the glass as half full as opposed to half empty. Maybe it’s from the constant brain washing from the National Association of Realtors®. Maybe it’s just our nature. Either way, I think you’ll have to agree that this is a little strange.
When asked, 39.7% of you are optimistic or very optimistic about the next twelve months. Nearly 30% (28.5%) are neutral, while only 32.3% (less than a third) are pessimistic or very pessimistic. On the surface, that looks really good. But here is where it gets really intriguing.
I deliberately added a question that would give us an accurate baseline. I asked you, “How do you see yourself in comparison to other agents you know?” The reason for the question was to establish a true “normal”, or an amount by which our combined outlook varies from reality.
As you know, statistically, the average or mean is always the 50% point. Picture the apex of a bell curve. In other words, as many are above 50% as are below it. And if most of you feel like you are better off than the average agent, and we survey enough of you, the amount by which you all say you are above the average shows the amount that the survey is biased, because, by definition, the average of the responses should be 50%.
In our case, the survey skewed optimistically by nearly 20% (18.5%). That means that in order to have an accurate reading, we must downwardly adjust the optimism numbers by that amount. That gives us an adjusted number of 21.2% who are truly optimistic as opposed to 50.8% who are truly pessimistic about the next twelve months. In other words nearly two and a half times as many of us are truly pessimistic and yet we feel compelled to put on the happy face. Why?
The curious thing is this: Why are we so greatly prone to optimism? And not by just a little bit, but by almost 20% or a fifth! Is it just our nature? Or is it something else? Could it be our continually receiving overly-optimistic data from our National Association of Realtors®? I honestly don’t know. But I’d truly like to hear your opinions, so please weigh in by leaving a comment below.