Why Some REALTORS® Make More Money

By Jessica Lautz

In mid-May, the National Association of REALTORS® (NAR) released its latest 2014 Member Profile. The Profile highlights the changes that have occurred among members as the housing market constantly changes based on inventory, home prices, and perception of the market.

For the third year in a row, the income among NAR members has increased, from $34,900 in 2011 to $43,500 in 2012 to $47,700 in 2013. However, the median income among all members does not tell the full story. Seventy-eight percent of members reported that real estate was their only occupation at the time. This dynamic stratifies income widely, with 18 percent earning less than $10,000 a year and 24 percent earning more than $100,000 a year.

A comparison of business characteristics also shows that those who earned more in 2013 shared some interesting similarities: 85 percent of those who earned $150,000 or more have a website, received 70 percent of their business from referrals or repeat business from past consumers and clients, and work 50 hours a week. In comparison, those who earn $10,000 to $24,999 only receive 32 percent of their business through repeat clients and referrals and typically work 30 hours a week in real estate. As the real estate business is largely commission-based, higher income levels are strongly associated with more real estate transactions.

The typical member had 12 real estate transaction sides in 2013, which is the same as the previous year. However, the transaction sales volume increased from $1.5 million to $1.8 million. The increase in sales transaction volume while transactions remain flat can be attributed to the rise in real estate prices that was seen in many areas of the country. As inventory tightened, prices increased, but REALTORS® report the tightened inventory is also limiting potential clients from completing real estate transactions. One-third of members reported that the most important factor limiting potential clients from completing a transaction was the difficulty in finding the right property. This is followed by the difficulty in obtaining mortgage financing.

As tightened inventory led to an increase in home prices, it also brought new professionals into the marketplace hoping to earn a living in real estate. The share of members who reported being in real estate for less than one year increased to 9 percent in 2013 from 5 percent in 2012. The typical years of experience has decreased one year to 12 years, the typical tenure at a firm has decreased to six years from seven years, and the typical member age has decreased one year to 56 from 57 years old. The dip in member income may also indicate some members are approaching retirement, after increasing incrementally from 2007.

Looking to the future, the survey indicates new members are likely to stay in the field. Overall, 82 percent of members are very certain they will remain active in real estate during the next two years. This is true for 75 percent of members with less than two years of experience as well as 82 percent of members with 16 years of experience or more.

Jessica Lautz is the director of Member and Consumer Survey Research for the National Association of REALTORS®.
Reprinted with permission from RISMedia. ©2014. All rights reserved.