Are Realtors Fleeing the Profession? The U.S. residential real estate industry is headed for a major realignment that will likely leave a slimmed down, more skilled agent population in its wake. As a 15-year veteran realtor with Avalon Group Realty in St. Petersburg, Florida, I’ve witnessed plenty of market cycles over the years. But the looming disruption from this unique combination of housing cooldown and revolutionary commission rule changes looks poised to reshape the makeup of our profession more drastically than any previous downturn.
The Data Signals an Inevitable Downsizing The stark overabundance of realtors compared to the number of actual home sales and listings has become unsustainable. Just look at the data illustrating the disparity:
- The Bureau of Labor Statistics reported there were around 72,000 fewer full-time real estate agents and brokers in the U.S. in 2023 compared to 2022
- Membership in the National Association of Realtors (NAR) has dropped by over 100,000 to around 1.5 million as of mid-2024
- In a survey of 2,000 agents by the Consumer Federation of America, a staggering 49% said they had sold one home or less in 2023
With so few deals to go around, simple laws of supply and demand indicate a culling of the overinflated realtor ranks is inevitable and likely underway already. This contraction will be further accelerated by seismic commission rule changes about to be implemented by NAR.
Are Realtors Fleeing the Profession? Publishing Commissions
New NAR Commission Rules Will Disrupt Industry In August 2024, NAR will enact new rules stemming from a legal settlement that will prohibit the publishing of buyer agent commission rates on MLS listings and property databases. This ends a longstanding practice of displaying the offered commission split to buyer agents.
Under the new rules, buyer agents will instead have to directly negotiate their compensation with the homebuyer client. No more simply accepting the offered split from the seller’s agent.
This transformation of removing pre-listed commission rates is expected to slash total commission revenues in the industry by up to 30%, according to estimates by investment bank Keefe, Bruyette & Woods (KBW). Suddenly having to justify compensation could price many agents out of the market.
Economic Analysts Forecast Steep Industry Downsizing When you combine the slowdown in housing activity with this looming disruption to longstanding commission practices, economic experts forecast a long-overdue realtor consolidation is on the horizon:
- KBW predicts a staggering 60-80% decline in the number of realtors, with hundreds of thousands potentially being forced to find other lines of work
- Researchers from CUNY and Yale estimated around 56% of agents would likely exit the field if one side’s 3% commission became subject to competition and negotiation
- A past study published in the RAND Journal of Economics calculated that a 50% compression in commissions would result in 40% fewer realtors
While this shakeout will inevitably be painful for many agents, the remaining realtor pool that emerges could ultimately benefit home buyers and sellers with a higher professional standard.
Are Realtors Fleeing the Profession? The Upside
The Upside: A More Skilled, Efficient Realtor Landscape There are some potential positive outcomes if a large portion of inexperienced or uncommitted realtors do make their exit from the industry:
More Experienced Agents: Those able to weather the storm and stay in the business will likely be the most tenured, skilled negotiators comfortable with presenting their value proposition to clients. The bargaining over commissions will raise the performance bar.
Less ‘Ghosting’ of Agents: Currently, prospective homebuyers can too easily flit between multiple agents, using their services before ultimately cutting them out of the deal. The new rules mandating a formalized commission agreement could reduce this “ghosting” of agents.
Commission Alternatives May Emerge: With excessive 5-6% total commission fees under pressure, there will likely be more opportunities for discount models and alternatives tailored to first-time/budget buyers to gain market share.
Overall, a realtor population that is halved or more from today’s bloated level should create a more competitive, efficient landscape of true, full-time professionals working in the consumer’s best interest.
Are Realtors Fleeing the Profession? Top Professionals
How Top Brokerages Like Avalon Group Realty Can Capitalize While the shakeout period will certainly be turbulent for many agents, these realities present an opportunity for leading, award-winning brokers like Avalon Group to elevate their standing and grow market share.
Thanks to our team’s 15 years of experience and consistent recognition for 5-star customer service, including top awards from national rating firms, we are well-positioned to adapt to the new commission reality. Our deep community connections and commitment to client satisfaction gives us a competitive edge.
By continuing to provide a truly premium, white-glove concierge experience through every transaction, we can differentiate ourselves from the crowd and attract buyers/sellers willing to pay a higher premium for a hassle-free, stellar realtor partnership.
Our success is built on:
- Extensive marketplace knowledge from over a decade and a half in the St. Petersburg/Tampa Bay region
- Tireless client advocacy from contractual negotiations through move-in
- Consistent 5-star ratings for communication, attention to detail and overall satisfaction
- A robust network of lending partners, home service vendors and other trusted providers
Rather than shying away from justifying our services and fees, we welcome the chance to show discerning clientele the tremendous value a best-in-class brokerage can provide.
Are Realtors Fleeing the Profession? The Future
The road ahead will be challenging for many realtors. But the changing landscape creates tremendous opportunities for standout brokers like Avalon Group to elevate our brand as the go-to local choice for truly exceptional professional representation.
Realtors who prioritize full-time commitment, ongoing training, and flawless execution for clients will not only survive, but thrive, as our industry is resized to its appropriate equilibrium. It’s an exciting new chapter that will regenerate the credibility of our profession.
Avalon Group Realty Sees Surge in Client Activity
While much of the residential real estate industry braces for the impending shakeout, our brokerage at Avalon Group has already been experiencing an uptick in client activity. As the market dynamics shift, we’ve seen a rising number of local homeowners and buyers proactively reaching out to get positioning for the next cycle.
On the seller side, many residents have taken notice of our exceptional home marketing and used our team’s expertise to capitalize on the red-hot housing prices over the past few years. Word has spread about the Avalon Group’s proven strategies to drive intense buyer demand and maximize sale prices for clients.
We’ve employed innovative digital marketing tactics and home prep/staging assistance to present listings in their best light. This attention to detail frequently generates multiple overlapping offers in tight timeframes. Our commission model is designed so sellers keep more of those top-dollar proceeds.
The Avalon Group has assisted dozens of area homeowners in successfully cashing out over the past 18 months and realizing remarkable windfalls on proceeds compared to just a few years prior. Many sellers had been eagerly awaiting the peak market conditions, and our team helped them optimize their timing.
As those sellers look to transition into their next residence, increasing numbers have been drawn to the Avalon Group’s buyer representation services. They’ve witnessed firsthand the value we create for clients and appreciate the invaluable insights we provide into neighborhoods, schools, community amenities and more.
Are Realtors Fleeing the Profession? Influx of Florida Buyers
The influx of new buyer clients hasn’t been limited to just those sellers, however. Buoyed by our reputation for skilled negotiation and unwavering client advocacy, savvy prospective buyers have been signing on with Avalon Group in droves to properly navigate the complexities of the current market.
Both local residents and out-of-state buyers have recognized that in an environment of higher borrowing costs and increasing inventory levels, having a true professional in your corner is paramount. Knowing how to craft offers that get accepted, secure favorable inspection terms, and optimize financing is absolutely crucial.
We’ve had buyers ready to walk away from properties, only to have our agents implement strategies that helped them still secure their dream home while protecting their interests.
With each successful closing, often under immense pressure and tight deadlines, word continues to spread about the seamless Avalon Group client experience from start to finish. Our differentiators shine through in complex transactions, generating a steady drumbeat of new client referrals.
Are Realtors Fleeing the Profession? Conclusion
From relocation assistance to cutting through red tape to identifying hidden gem listings, our full-service team leaves no stone unturned in pursuit of our clients’ goals. In this rapidly shifting housing landscape, having trusted advisors and advocates is invaluable.
As much of the real estate world braces for a rocky period, top brokerages like Avalon Group Realty are hitting stride. By delivering exceptional results and boutique concierge service, we continue attracting new clientele seeking that elite caliber of professional representation.
The housing market’s evolution has brought on new challenges, but also created immense opportunities. At Avalon Group, we’re seizing this pivotal moment by doing what we do best – guiding clients to dream outcomes with our trademark blend of expertise and white-glove service.
If you are looking for a St Petersburg Realtor visit https://avalongrouptampabay.com/
If you are looking for a Tampa Realtor visit our Tampa Office.
