RE Agents - how is lack of inventory affecting your income?

87 Replies

@Russell Brazil @Dawn Brenengen @James Wise @Jonna Weber @David Greene @John Thedford @Nathan G. @Joel Owens @Jordan Moorhead @Brie Schmidt and hopefully a whole lot of people that I've missed -

I am curious - how has the lack of inventory affected your RE income? I can see how this can turn out two ways:

1. House prices are super high and everything gets sold, so agents are doing well;

2. Houses are scarcer than hen's teeth, and there's not much to go around so agents are having a rough time of it.

I ran some quick math numbers in my area yesterday and making a whole lot of assumptions (for example, only 40% of all local agents were party to a sale, everything that was available gets sold, etc) the math didn't seem to pencil out very well for agents right now. Houses are selling for a lot more money but there's nothing out there to sell. I asked my agent, who's a broker and part owner of the local KW (which is the firm that I have my RE license with but I'm inactive) and he says that he's doing pretty well but is mostly doing broker stuff and hardly selling anything, partly because there's nothing to sell. I've read a couple of anecdotal stories where agents said they were making minimum wage right now because of the lack of inventory (including one in the WSJ I posted yesterday). I figure that the best agents everywhere are probably still doing well, but I would still like to know how the historically low inventory affects income.

Originally posted by @JD Martin :

@Russell Brazil @Dawn Brenengen @James Wise @Jonna Weber @David Greene @John Thedford @Nathan G. @Joel Owens @Jordan Moorhead @Brie Schmidt and hopefully a whole lot of people that I've missed -

I am curious - how has the lack of inventory affected your RE income? I can see how this can turn out two ways:

1. House prices are super high and everything gets sold, so agents are doing well;

2. Houses are scarcer than hen's teeth, and there's not much to go around so agents are having a rough time of it.

I ran some quick math numbers in my area yesterday and making a whole lot of assumptions (for example, only 40% of all local agents were party to a sale, everything that was available gets sold, etc) the math didn't seem to pencil out very well for agents right now. Houses are selling for a lot more money but there's nothing out there to sell. I asked my agent, who's a broker and part owner of the local KW (which is the firm that I have my RE license with but I'm inactive) and he says that he's doing pretty well but is mostly doing broker stuff and hardly selling anything, partly because there's nothing to sell. I've read a couple of anecdotal stories where agents said they were making minimum wage right now because of the lack of inventory (including one in the WSJ I posted yesterday). I figure that the best agents everywhere are probably still doing well, but I would still like to know how the historically low inventory affects income.

 I'm stupid good at making money, so nope, not bothering me.

Way less total revenue to go around with way less houses for sale. But, all that revenue is pooling in the top tier of agents. So you have 2 different types of agents in this respect right now; 1) The bottom 90% of agents are getting absolutely hammered and making no money. 2) The top agents, particularly in the top 1% or 2% are having a record couple of years. I fall into the latter. 2020 was a record year for me, and Ill probably match that record in the first 6 months of 2021. We'll see how the rest of the year turns out, but at the pace Im currently at Ill be somewhere around the #40 agent in Maryland or #30 in DC for individual agents depending on which jurisdiction I decide to report my location for. 

I would think that agents are balanced out being that although there are less homes selling there is the increase in price which make sup for the lack of inventory for those that do sell listings. 2-3% of a $600,000 home equals out to more inventory and you sell two $300,000 homes. 

On a side note, most agents that are investors I'd imagine have other side income and investments. If you own a home, this is a great time to cash out so I wouldn't imagine income as a whole being negatively affected. 

Originally posted by @Daniel Molina :

I would think that agents are balanced out being that although there are less homes selling there is the increase in price which make sup for the lack of inventory for those that do sell listings. 2-3% of a $600,000 home equals out to more inventory and you sell two $300,000 homes. 

On a side note, most agents that are investors I'd imagine have other side income and investments. If you own a home, this is a great time to cash out so I wouldn't imagine income as a whole being negatively affected. 

 That's just it, though - the inventory is so depleted there's no way the higher prices make up for the lack of inventory. At least not in my area. The inventory is over 50% lower and the total sales is similar; home prices haven't doubled here to make up for the lack of product. 

Inventory is moving fast in my market but it's moving through the top 10% of agents. The bottom 60% of all agents have sold $1 million or less and that's in a market with an average price of almost $300,000. In other words, a lot of agents haven't sold anything yet, or just enough to keep gas in the tank.

2020 was a banner year for us. I made so much money I almost felt guilty. Almost. I just ran numbers and we're already $2 million ahead of this same time last year. It's going to be a good year for those of us that are established.

@JD Martin not tagged but I will share my thoughts. I have been an agent for the last 3 years. I think besides being a top 1% agent or being part of the average it has a lot to do with your client base.

If you specialize in listings, you might be doing ok, if you mostly work with clients looking for condos, you should be doing certainly pretty well. If you have been in the business for a while and have a client base that bought from you and will eventually sell with you, you should be ok. However, if you mostly have clients trying to buy townhomes or sfh you are in trouble.

I was personally doing really well until end of March/beginning of April, at that point, even though I was preparing my clients and setting expectations on non contingency offers, I have been working a lot for “free” showing lots of houses, writing lots of offers, and losing time and time again.

I decided to reset and change my focus for clients that have realistic expectations and are able to realize if it is better for them to wait or for example move from the townhome to the condo space.

If the current market persists I can definitely see newer agents struggling to survive.

@JD Martin it's certainly frustrating but like @Russell Brazil I had one of my best years ever last year and by the end of June this year I will have sold more than 2018. Unless I really mess things up 2021 will be my best year ever both for real estate sales AND rental acquisitions. There is always a way to crush it, you just need to shift with the market.

Originally posted by @Jordan Moorhead :

@JD Martin it's certainly frustrating but like @Russell Brazil I had one of my best years ever last year and by the end of June this year I will have sold more than 2018. Unless I really mess things up 2021 will be my best year ever both for real estate sales AND rental acquisitions. There is always a way to crush it, you just need to shift with the market.

 This isn't unexpected, as a lot of the people I tagged are likely top agents in their area anyway. However, I didn't have any other good way of getting other agent feedback, so I'm curious to know what you all see on the agents that were not already the top 1-10% in their firms to begin with...

We have little inventory, crazy bidding wars, and lots of agents not making any money. I am fortunate that I own 16 SFR and all but 3 are free and clear. I have been raising rents to keep up with the market. Tenants are screaming all of the way. I see NO signs of a slowing market in this area. We are being flooded with newcomers from the northeast. I do not expect any changes for at least a couple of years.

Where I live in GA properties can get 15 offers within 48 hours of listing. Lots of CA buyers moving here and from the upper cold belt states.

I get probably 5 pieces of mail a week wanting me to sell my house and sometimes calls. I say no thanks. They say name your price I say NO. We have probably one of the nicest subdivisions in the whole county. Some people are paying all cash no appraisal and then sellers have clause where they can stay for 2 months after the sale so they can find something. Huge demand, low interest rates, little inventory available for residential.

I don't sell residential but commercial. I do have friends in the top percentile for residential and they control the inventory. One of my friends sold their house listed at 225k and it sold for 260k with multiple offers within 24hrs of listing it. It was a small rancher single story well suited for a senior and that is who bought it. They had been outbid on 15 properties over 2 months so were amazed to get the house.

On the commercial side I am busier than I have ever been. Easily will get to double comma commission this year. Last year some 1031 exchanges were put off with corona and developers and tenant with builds in process were halted for months and months. Lending froze a little bit and product dried up on the market but lasted just a few months. Still had a good year last year.

This year it's a perfect storm with low interest rates, 1031 delayed properties now have sold and they are buying replacement, my business grows naturally year over year without these other metrics, Biden trying to go after 1031 has investors worried and making moves now just in case.

For me I am buying value add reposition properties.

My clients tend to buy the jewelry box properties with credit tenants and long term leases. Had clients close today on a Walgreens and then another on a Panera Bread. Advance Auto closing soon. Have 2 more Walgreens under agreement.

I love NNN. No residential, no showings, etc. All can be done from the office. Since it's my brokerage I get the whole fee versus other brokers and agents at a lot of commercial firms have to give half away and then remaining 3 people on the team split the rest on varying percentages based on seniority levels. So they often have to do 6 to 10 transactions to my one to make the same money.

I can’t speak for all markets but I’m in Raleigh/Durham... inventory is lower than it was last year which means there are less homes active on the market and they sell quicker BUT the total sales volume per month has been HIGHER because of more transactions and higher prices. More commission to go around. Most agents I know are doing well. Buyers can be really tough. “Gotta list to last”

Originally posted by @Joel Owens :

Where I live in GA properties can get 15 offers within 48 hours of listing. Lots of CA buyers moving here and from the upper cold belt states.

I get probably 5 pieces of mail a week wanting me to sell my house and sometimes calls. I say no thanks. They say name your price I say NO. We have probably one of the nicest subdivisions in the whole county. Some people are paying all cash no appraisal and then sellers have clause where they can stay for 2 months after the sale so they can find something. Huge demand, low interest rates, little inventory available for residential.

I don't sell residential but commercial. I do have friends in the top percentile for residential and they control the inventory. One of my friends sold their house listed at 225k and it sold for 260k with multiple offers within 24hrs of listing it. It was a small rancher single story well suited for a senior and that is who bought it. They had been outbid on 15 properties over 2 months so were amazed to get the house.

On the commercial side I am busier than I have ever been. Easily will get to double comma commission this year. Last year some 1031 exchanges were put off with corona and developers and tenant with builds in process were halted for months and months. Lending froze a little bit and product dried up on the market but lasted just a few months. Still had a good year last year.

This year it's a perfect storm with low interest rates, 1031 delayed properties now have sold and they are buying replacement, my business grows naturally year over year without these other metrics, Biden trying to go after 1031 has investors worried and making moves now just in case.

For me I am buying value add reposition properties.

My clients tend to buy the jewelry box properties with credit tenants and long term leases. Had clients close today on a Walgreens and then another on a Panera Bread. Advance Auto closing soon. Have 2 more Walgreens under agreement.

I love NNN. No residential, no showings, etc. All can be done from the office. Since it's my brokerage I get the whole fee versus other brokers and agents at a lot of commercial firms have to give half away and then remaining 3 people on the team split the rest on varying percentages based on seniority levels. So they often have to do 6 to 10 transactions to my one to make the same money.

WEll my wife who is an agent is doing so well we will be buying a NNN this year just for her income IE cost seg and ease of ownership.

I will ping you Joel.

As others have stated established agents are doing well.. and Listings are simply money in the bank forget about wholesaling just get listings.. that should be the focus of an agent these days.  some years listings are a liability not now. 

My Wife who is a top % producer will do over 25 million in sales in 2021 ..  to be fair 15 million of that we own  LOL..  ( IE our new Construction))  So she turns down listings right now or refers them out I have talked her into at least getting referral fee's from other brokers in her office  She does not want to have a team she has been there done that.  Her slow year was 2019.. 

My Daughter in Vegas is having a banner year.. concentrating on the high end  1 mil plus  she has 9 years in the business and like I tell all these wanna be wholesalers if you gut it out in the industry and get to were my daughter is ( almost all referrals now) its a great business  Her mom does help her close and keep deals together even to this day. And on occasion she will even ask me LOL. 

I am also curious how the newer and middle 60% are doing.  What are you top and designated brokers seeing in your offices?

I ask because I often screen tenant and tenant buyer applicants that are new or newer agents.   Right now I flinch, concerned about their prospects. Surely the herd must be culled? Hundreds of agents chasing dozens of listings here. 

Side note- I'm kind of working with a creative bird dog agent for the first time.  Necessity brought out the creativity of an energetic young bi-lingual agent investor and I responded.   He's only into residential multis for now, but he may be trainable.

New agents, get out there and shake the bushes and have a specialty or focus would be my little $.02

Originally posted by @JD Martin :

@Russell Brazil @Dawn Brenengen @James Wise @Jonna Weber @David Greene @John Thedford @Nathan G. @Joel Owens @Jordan Moorhead @Brie Schmidt and hopefully a whole lot of people that I've missed -

I am curious - how has the lack of inventory affected your RE income? I can see how this can turn out two ways:

1. House prices are super high and everything gets sold, so agents are doing well;

2. Houses are scarcer than hen's teeth, and there's not much to go around so agents are having a rough time of it.

I ran some quick math numbers in my area yesterday and making a whole lot of assumptions (for example, only 40% of all local agents were party to a sale, everything that was available gets sold, etc) the math didn't seem to pencil out very well for agents right now. Houses are selling for a lot more money but there's nothing out there to sell. I asked my agent, who's a broker and part owner of the local KW (which is the firm that I have my RE license with but I'm inactive) and he says that he's doing pretty well but is mostly doing broker stuff and hardly selling anything, partly because there's nothing to sell. I've read a couple of anecdotal stories where agents said they were making minimum wage right now because of the lack of inventory (including one in the WSJ I posted yesterday). I figure that the best agents everywhere are probably still doing well, but I would still like to know how the historically low inventory affects income.

I am just starting but I am competing against agents that barely know how to use their email. I just leverage automation, systems, and delegate everything else to VAs. Last year was my first full year, and I was ranked 75th in Columbus, Ohio for production. That is also competing against teams which I do not have. My hope is that all the soccer moms (and dads) go out of business and I can get their 6 deals a year too.

Originally posted by @Remington Lyman :
Originally posted by @JD Martin:

@Russell Brazil @Dawn Brenengen @James Wise @Jonna Weber @David Greene @John Thedford @Nathan G. @Joel Owens @Jordan Moorhead @Brie Schmidt and hopefully a whole lot of people that I've missed -

I am curious - how has the lack of inventory affected your RE income? I can see how this can turn out two ways:

1. House prices are super high and everything gets sold, so agents are doing well;

2. Houses are scarcer than hen's teeth, and there's not much to go around so agents are having a rough time of it.

I ran some quick math numbers in my area yesterday and making a whole lot of assumptions (for example, only 40% of all local agents were party to a sale, everything that was available gets sold, etc) the math didn't seem to pencil out very well for agents right now. Houses are selling for a lot more money but there's nothing out there to sell. I asked my agent, who's a broker and part owner of the local KW (which is the firm that I have my RE license with but I'm inactive) and he says that he's doing pretty well but is mostly doing broker stuff and hardly selling anything, partly because there's nothing to sell. I've read a couple of anecdotal stories where agents said they were making minimum wage right now because of the lack of inventory (including one in the WSJ I posted yesterday). I figure that the best agents everywhere are probably still doing well, but I would still like to know how the historically low inventory affects income.

I am just starting but I am competing against agents that barely know how to use their email. I just leverage automation, systems, and delegate everything else to VAs. Last year was my first full year, and I was ranked 75th in Columbus, Ohio for production. That is also competing against teams which I do not have. My hope is that all the soccer moms (and dads) go out of business and I can get their 6 deals a year too.

 The stupidity of 60%-70% of the agents out there is astounding............For me it's like 99% of the agents I co-broke with are bottom feeders because I work the low income areas. So you get me and like 4-5 other investor studs in these areas. The rest are just complete idiots doing 1-5 low income deals per year as they can't break into the $200,000+ homes in the burbs due to their stupidity. It's comical really, these people are making less than $10k year in Real Estate. 

Originally posted by @Steve Vaughan :

I am also curious how the newer and middle 60% are doing.  What are you top and designated brokers seeing in your offices?

I ask because I often screen tenant and tenant buyer applicants that are new or newer agents.   Right now I flinch, concerned about their prospects. Surely the herd must be culled? Hundreds of agents chasing dozens of listings here. 

Side note- I'm kind of working with a creative bird dog agent for the first time.  Necessity brought out the creativity of an energetic young bi-lingual agent investor and I responded.   He's only into residential multis for now, but he may be trainable.

New agents, get out there and shake the bushes and have a specialty or focus would be my little $.02

Steve having grown up in a real estate brokerage business and owning 3 of them.  there is always in good times or bad  in a brokerage

20% of the agents will bring in 80% of the revenue.. whats tough now will be those trying to break into the industry right at the moment..

Commercial brokerage is much harder to pierce but more consistent inventory and unless  with bigger pay checks in smaller markets. 

Originally posted by @Remington Lyman :
Originally posted by @JD Martin:

@Russell Brazil @Dawn Brenengen @James Wise @Jonna Weber @David Greene @John Thedford @Nathan G. @Joel Owens @Jordan Moorhead @Brie Schmidt and hopefully a whole lot of people that I've missed -

I am curious - how has the lack of inventory affected your RE income? I can see how this can turn out two ways:

1. House prices are super high and everything gets sold, so agents are doing well;

2. Houses are scarcer than hen's teeth, and there's not much to go around so agents are having a rough time of it.

I ran some quick math numbers in my area yesterday and making a whole lot of assumptions (for example, only 40% of all local agents were party to a sale, everything that was available gets sold, etc) the math didn't seem to pencil out very well for agents right now. Houses are selling for a lot more money but there's nothing out there to sell. I asked my agent, who's a broker and part owner of the local KW (which is the firm that I have my RE license with but I'm inactive) and he says that he's doing pretty well but is mostly doing broker stuff and hardly selling anything, partly because there's nothing to sell. I've read a couple of anecdotal stories where agents said they were making minimum wage right now because of the lack of inventory (including one in the WSJ I posted yesterday). I figure that the best agents everywhere are probably still doing well, but I would still like to know how the historically low inventory affects income.

I am just starting but I am competing against agents that barely know how to use their email. I just leverage automation, systems, and delegate everything else to VAs. Last year was my first full year, and I was ranked 75th in Columbus, Ohio for production. That is also competing against teams which I do not have. My hope is that all the soccer moms (and dads) go out of business and I can get their 6 deals a year too.

For everyone that goes out of business someone replaces them.. its takes a big fat economic recession to winnow the licensed agent pool.

Hi Jay,

Sure when looking at NNN reach out to me. I only do written agreements these days with exclusive because of demand and time constraints.

I am more of a one on one client type shop. The commercial listers have large teams, constant meetings, and all of that. I have never been the big corporate machine type person. I am more the Rodney Dangerfield type....:) 

As to agents last downturn over a decade ago many of them went to work at Wal-mart or Costco part-time because their sales dried up. I find often as soon as agents get some success and have not been through investment or career cycles they blow lots of the money they make because they have not seen that kind of money before. When the music stops they are over leveraged on non-income producing debt and typically are in trouble. I live very conservatively for the money I make. I would doubt anyone on my street with the smaller houses 2,500 sq ft makes my type of money. Of course could get the mcmansion in the subdivision but a lot of space I simply do not need.

Having lots of agents is like having a bunch of badly behaving kids sometimes. You have to really love managing people to find joy in that...lol

I enjoy doing my own thing with clients one on one and can make a ton of money with that business model and keep my life simple and fun.