Over the last several years, the real estate industry has bounced back from the impact of the recession and hot markets should mean fat paychecks for brokers and agents alike.
Steve Shull, a retired NFL linebacker who has provided tips to real estate agents for more than two decades, wonders if that is true.
“This should be high time for agents,” Shull told The Real Deal, “and I don’t think it is.”
Home prices in New York are much higher than they were a decade ago (despite a recent slowdown in the luxury market) and annual apartment leasing volume in Manhattan has tripled, according to appraisal firm Miller Samuel.
However, many agents aren’t so sure that the brokerage business is better off than it was a decade ago. On the contrary, Schull said he sees “agents struggling more and more to make a living.”
According to the U.S. Bureau of Labor Statistics, average pay for real estate brokers in the greater New York area fell continuously between 2011 and 2015 even as Manhattan sales prices rose.
Adaptation of technology can be one reason some of us are left behind when it comes to earnings.
Real estate agents increasingly struggle to cope with technological advancements and low-cost competition. And insiders say the market is only going to get tougher for brokers.
“Agents who have been in the industry for a while need to work a little harder now,” said Bianka Yankov, a broker and CEO of the Spire Group. “It’s not just hitting us right now. Change has been coming for a while.”
Listing portals haven’t replaced brokers — and they probably won’t. But they changed the job, at least outside of the luxury market.
Traditionally, agents have been “gatekeepers” who sold access to information, Yankov said. Now they are often “advisors” who help clients navigate information they can access by themselves online.
Moreover, potential clients who want to hire a broker now have more low-cost options to select from. For example, Redfin advertises a 1.5 percent listing fee (as opposed to the usual 3 percent) and its brokers charge lower commissions.
Discount brokerages are nothing new, but Shull noted that some of these companies now are backed by millions in venture funding and have money and revenue to expand their footprint.
One of the biggest challenges for agents is “articulating worth,” Shull said. Why should people hire a
As of 2016 there were 63,142 brokers and salespeople in the five boroughs, according to The Real Deal’s Data Book, up almost 20 percent from 53,193 in 2013. During the same period, the number of Manhattan new apartment leases increased to 55,758 from 45,606, according to Miller Samuel, but the number of sales transactions (which tend to be far more lucrative for brokers) fell to 11,459 from 12,735. In other words: there are more brokers fighting over each listing. And it doesn’t help that a few large, well-connected firms have been hogging new development exclusives.
An increase in competition, partnered with the influx of online listing portals and discount brokerages, has led to “broker commission compression,” explained Andrew Heiberger, CEO of Town Residential. Lower pay and job insecurity weigh on people. “There is broker anxiety,” he said.