Study: Distressed Sales Hamper Real Estate Pay

Distressed sales and economic conditions are causing
real estate professionals to make less and work more than they did back in the
housing market’s heyday in 2006, according to an annual survey by Inman News
about work and pay trends in the real estate industry.

Overall, the survey of more than 1,000 real estate
professionals found that real estate professionals are making less on
commissions, closing fewer transactions, and facing a spike in distressed
properties that is dampening commissions and compensation for many in the
industry.

Slightly more than 20 percent
of real estate professionals surveyed said they plan to make $100,000-$200,000
in income from their real estate work
before taxes in 2011; about 17 percent plan to
make $70,000-$100,000; and about 12 percent say they intend to make about
$35,000-$50,000 this year from real estate, according to the Inman News report,
“Real Estate Compensation in 2011: Changing Times in Work and Pay.”

The survey also found:

Distressed sales dampen incomes.More real estate professionals
are finding themselves taking part in distressed property transactions, but
distressed
properties don’t usually nab the same real estate commission rates as
typical sales. In general, experts say that’s because these properties tend to
have lower sales prices. For example, REO properties sold for 36.9 percent less
than nondistressed properties during the fourth-quarter of 2010, according to
RealtyTrac. Distressed properties also tend to take longer to
close.

Economic conditions pull down compensation. In a separate 2010 study, most real estate professionals cited local
and national economic conditions as having the biggest impact on their
compensation and income in 2010. In this most recent study, “distressed
properties” was an added option, in which the highest share of real estate
professionals selected as having the most impact on their compensation/income in
2010. This is a change from just a few years ago. In 2008, the largest share of
responses centered on “competition from agents offering discounts” as having the
biggest impact on commission rates (only 3.4 percent of respondents in the
latest survey said that was a problem).

Agents report fewer sales. Nearly
half of those surveyed said they closed fewer than 11 transactions in 2010.

However, more real estate professionals
are optimistic that business is improving and plan to close more transactions
this year than last, according to the survey. More than 25 percent of
respondents say they expect to close more than 25 transaction sides this
year–that’s up from 16.8 percent in 2010 and 15.7 percent in 2009. Also, nearly
70 percent of the real estate professionals surveyed said they expect to close
11 or more transaction sides this year.

To read more from the report, visit Inman News.

Source: “Real Estate Work and Pay in 2011: A
Research Report,”
Inman News (May 11,
2011)

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