A long time ago, back in the late 1980s, a California real estate license was like a permit to print money. It seemed all you needed was a phone, a couple of signs and a ballpoint pen from some title company.
The scenario: List a house. Maybe put up a sign, maybe not. Get an offer, maybe full-price and maybe higher. Sign the papers.
But recession and depreciation have replaced the frenzy. Most agents of the ’90s would gladly trade their cellular phones for a return to those days of yesteryear.
And plenty of the agents of yesteryear have traded-careers. Some simply were crushed by the market. Some took advantage of other opportunities. Some were lured by a steady paycheck and benefits, and others chose to sell something a little less volatile.
Some didn’t get to choose at all. “We have cleaned house in a lot of our offices,” said Michael Lyon, president of Lyon & Associates Realtors. “We encouraged our non-producers to find a new industry.”
Lyon & Associates has eight offices, with more than 380 agents and about 50 employees. Although he has more agents than he had a year ago, Lyon said about 10 percent were “encouraged” away during that period.
Numbers don’t tell the whole story, but it’s clear that the real estate dropouts are mounting.
The Sacramento Association of Realtors has 4,265 members, according to the trade group’s executive vice president, Jim Sandman. That number has declined steadily since it peaked at 5,452 in 1990.
In Sacramento County, the number of real estate licensees has declined from 9,654 to 9,089 in that period, and entire offices have closed, including The Prudential Silver Oak in Fair Oaks and the downtown Rich & Associates.
Statewide, the number of licensees has held steady since 1990, despite huge drops in Southern California.
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Some of those figures can be deceiving. Few brokers or agents hold news conferences to announce they are quitting. Part-time agents come and go. And people keep moving into the business.
“We have about a 25 percent turnover annually,” Sandman said. “Compared to many professions, real estate is relatively easy to get into.”
And, apparently, to get out of. “Some people just didn’t make it. They couldn’t adjust to the new conditions,” said Patty Gillette, Century 21 broker and president of the SAR.
Gillette has lost 13 of 45 agents-“full-time people who were making a living at this”-since December 1991. Many of the casualties, she said, were people who got into real estate during the late ’80s.
“Those were the days when people thought, `Buy a house, sell it in three weeks and make a million,’ ” Gillette said. “When all you had to do was put a sign up and you’d get an offer or two … how hard is that?
“When people offer more than the listing price, what do you learn about negotiating?”
Agents and brokers alike got spoiled when things were great, she said, and didn’t do the “hard stuff.”
The “hard stuff” is the basic skills-understanding marketing, financing and price movements. Knocking on doors and sending out newsletters. Knowing how to research. Learning how to negotiate. Most importantly, she said, offering good service and educating clients.
“When the market reached its crest and started down, lots of people refused to acknowledge it,” Gillette said. Those who couldn’t adjust either “weeded themselves out,” she said, or eventually were told to try a different career.
In the fall of 1989, Lyon cut his support staff and increased the scrutiny on agents who stopped being productive. He also turned the company more toward entry-level houses after years of “not even being a factor in that market.”
“This is my fourth recession. You get pretty good on your fourth one,” said Lyon, a former president of the local association. “Before, we waited too long to cut back.”
Lyon said most of the agents who left were “not failures, but were victims of things that failed around them. Some had been in the business too long and didn’t have the energy to change. Some had spouses who lost jobs and just couldn’t get along without a steady income base.”
And he expects the casualties to increase. “The real numbers will show up in January and February,” when memberships are not renewed, he said. “We could see 20 percent of the agents disappear.”
Meanwhile, Gillette and Lyon have expanded their operations.
“We have been dealing with fear. People have been scared to death to buy anything,” Gillette said, putting some of the blame on media reports that make California sound like one big market that’s all in the same big mess.
And for the agents who survive this market? “When it gets normal, whatever that is, they’re going to think they’ve died and gone to heaven,” she said.