Minnesota real estate agents vastly outnumber houses for sale

0

Jonathan Schonning used to train people to clean houses. Today he sells them.

Lured by the prospect of five-figure commissions and greater control over his career, Schonning is one of more than 20,000 people who have paid $63 to take Minnesota’s real estate licensing exam during the pandemic.

“I have more flexibility in my schedule now, but I work seven days a week,” he recently said. “Even when my wife and I went to Miami, I was submitting and accepting offers while I was sitting on the beach.”

Even though commercial agents vastly outnumber home listings, there are now more licensed real estate agents in the state than at any time since 2006, according to the Minnesota Department of Commerce, which licenses agents and brokers in the state.

That total number – around 22,000 – is only partly the product of renewed interest in the profession after the economy was shut down by COVID-19 two years ago. The other factor is turnover, which has been a constant in residential real estate for many years.

And that turnover is intensifying as the supply of homes for sale plummets. Last month, there were just 2,700 home sales in the Twin Cities metropolitan area, a 15% drop from February 2020.

“It’s especially hard for new agents to hang on to,” said Chris Galler, CEO of Minnesota Realtors. “And it’s a business where it’s really hard to stay if you don’t make certain transactions.”

In a regular housing market, less than half of all newly licensed agents make it past their first year in the business, Galler said. Today, their chances are even worse. He predicts that three out of four new agents will drop out after just one year.

“Now that the economy has picked up, a lot of them are saying, ‘It’s a lot harder than I thought, so I’m going to move on to something that offers a steady paycheck,'” he said. he declares.

Schonning has already defied the odds. He got into real estate in early 2020 while on furlough from his longtime job at a commercial and residential cleaning company. Last year he completed 22 deals, and so far this year he has completed four sales and has six pending. If he maintains this pace, he will sell more than 40 homes in 2022.

“Luckily I know a lot of people and that helps,” Schonning said. “You take it as a challenge and make sure you maximize every interaction you have with people to make sure that when they choose to work with someone, it’s going to be you.”

Peter Brickwedde, head of government and external affairs at the Department of Commerce, said barriers to entry for estate agents are relatively low. In Minnesota, candidates must complete 30 hours of training before taking the test. But only about 60% of applicants pass the test.

He said the number of real estate licenses fluctuates depending on the economy, but real estate is still a popular option for people in times of personal and economic transition.

But today, even seasoned agents struggle to close deals.

“As a new agent, it’s hard to compete,” said Anthony Adams, who moved from Dallas to the Twin Cities, where he worked for several years in the accounts payable department of a national company that manages facilities for laundry in apartment buildings and other businesses. buildings.

At the height of the pandemic, Adams watched his team slowly cut in half as his colleagues were laid off or lost hours. Meanwhile, her brother was leading a thriving real estate career in the Twin Cities.

Adams decided to give it a try. He returned to the Twin Cities in late June and got his real estate license in November. Since then, he has only been able to make one deal. There are plenty of buyers, he says, but not enough listings.

“I’m here for the long haul,” he said. “Because I want to branch out into other parts of the industry, including investment and development.”

The latest influx of agents, Galler said, includes a noticeable increase in the number of middle-aged people leaving established careers. Many, he speculates, are simply exhausted after dealing with so much uncertainty and the lack of control that comes with corporate work.

“After the pandemic, a lot of people realized that the money they were making wasn’t as valuable as their time, and that’s how I felt,” said Austin Jones, who left a long career in the world of telecommunications. Until last summer, he was sales manager at T-Mobile, but he was frustrated with his inability to make more money and move up the corporate ladder.

Unlike many workers during the pandemic, his problem wasn’t a lack of work. He was working way too much. Its stores were chronically understaffed and it was nearly impossible to fill vacancies. So even on his days off he had to work those open shifts, sometimes filling in for those who called in sick. Because he was salaried, his income did not change.

And the stress of trying to enforce masking and social distancing rules was almost intolerable.

“Being in retail during the pandemic was horrible,” Jones said. “People were ruthless towards employees, and as a store manager, I handled all the escalations.”

In August, he decided he’d rather deal with frustrated homebuyers, and in October, he moved into real estate full-time. He’s still working constantly and now spends over $3,000 a month on advertising and marketing, but he’s confident the investment will pay off.

“It’s a lot of expenses that you’re not used to, and you’re not making money right away,” he said. “But I’ve always been a pincher and a saver, and I was ready.”

In real estate, agents only get paid if they sell a house. And these sales commissions, which are usually 6% to 7% of the sale price, are shared with the other agent, if there is one, and the agent’s broker.

After a first year of gangbusting in the business, Courtney Wylie quickly realized that while those commissions might seem huge, they don’t last long. Especially if you don’t have a shutdown for a few months.

For years, Wylie paid the bills as a bartender. Conventions were also extremely lucrative, filling his pockets with cash after just one shift. But when the pandemic shut down all those places, Wylie decided it was time to be his own boss and start working toward his goal of selling enough real estate to fund a community center for children.

She was licensed in early 2020 and immediately closed her first sale, giving her instant credibility with buyers. In her first year with the company, she made a dozen sales. But in 2021, as the number of agents increased and the number of homes on the market dwindled, his offers plateaued.

Knowing that there could be multi-month gaps in her commissions, Wylie says she is doing better at managing her budget. And she’s constantly promoting, often via social media, but even wearing a T-shirt that says “I’m a real estate agent” on one side and “Call me” on the other.

“I have to be creative,” she said. “You can’t throw a rock without hitting an agent.”

Share.

About Author

Comments are closed.