Veteran real estate broker Deanne Esses, who plies her trade as a senior vice president at one of the city's biggest firms, Bellmarc Realty, said eight people in her Upper East Side office on Madison Avenue are leaving their jobs for alternative careers. Those eight represent 20% of the office's sales staff of 40.Now read about the newbie real estate agent who quickly went from almost 200K a year to flipping sandwiches in Queens. Wow!
That's only the beginning. Ms. Esses said she thinks more New York City brokers will be leaving the scene. "Business here is just not quiet; it has dropped dead over the past few weeks," she said. "At the same time, there's a flood of inventory on the market. We run open houses, we run advertisements, but nothing works. There are no buyers, and without buyers, there are no sales."
Now as the market continues to decline there will be many more people leaving the housing industry for other prospects. The bubble was unsustainable and the wreckage will leave the US economy in a state of recession in 2007.Early in 2004, Mark Clemente left his uncle's dry-cleaning plant in Detroit to go east and, hopefully, make his fortune in real estate. Shortly thereafter, he became a broker at E&G Realty, a small firm in Newark, N.J., where he earned a respectable $195,000 in his first year.
But it has been downhill ever since. The housing slump and fierce brokerage competition led to the demise of E&G. Mr. Clemente's income collapsed, and over the past six months he has held a number of part-time jobs, including one making sandwiches at a Queens delicatessen that paid him $100 a week. "I'm going home; my real estate career is over," he said the other day.
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It's sad to hear stories such as Mark Clemente's, however that is the nature of the real estate business. Like the flippers who make enormous amounts of money because of the high-risk, "short-window-of-opportnity" business, the "extra" real estate agents who came in got paid well for their efforts. It's like the football player who makes lots of money over a short career. The real career real estate agents will do fine. While I don't necessarily feel sorry for the Mark Clementes of the world (afterall, he made out well), I do feel they deserve respect for their efforts and not redicule as this blog is doing. Even with the good compensation that came with the short time effort, how many of us would commit to learning an entire new skill, taking licensing exams, and even moving halfway across the country for an effort whose duration was never guaranteed to be longterm? Looking for a property in the heady 2004 - 2005 time was hard. Let's imagine how much harder it would have been had there been less real estate agents around? Would established real estate agents have been demanding premiums in order to prioritize who they served? Let's be thankful that people like this guy came forward and pitched in. Rediculing his efforts shows a completely lack of maturity on the part of some bubbleheads and can only be explained as "envy". Again, my hypothesis that most bubbleheads are nothing more than individuals looking to make a quick buck (rather than looking for a "home") gets borne out again.
ReplyDelete"Would established real estate agents have been demanding premiums in order to prioritize who they served?"
ReplyDeleteI recall an agent working in DC that demanded 7% or 8% (from WaPo RE chat, I believe), but that was a while ago.
You have appreciate the irony. Real estate agents in a hot market (i.e., "order-takers") vis-a-vis real estate agents in a slow market (taking orders in a deli).
Now we hear that debt created by leveraged buyouts of Harrah's etc, could be dangerous. We have a private equity bubble, a housing bubble, Republican sexual preditors, dogs and cats, and Condi denying the warning about Al Qaida, and Cheney still believing that WMD are in Iraq.
ReplyDeleteClowns to the left of us, and jokers to the right. We even find out that the Repubs didn't even tell the Americans about how bad things were in Iraq. So much for family values and the high moral ground. Republicans run the risk more than anyone of being hypocrits. And they are now fulfilling that role with gusto. They disgust me.
This guy use to work in a dry cleaning factory and is NOT from New York yet he was "qualified" enough to make $195,000 his first year? Sounds sketchy as hell to me. Also football players train and condition their whole lives and even then only the best of the best get those lucrative contracts. I'll give this guy respect in that he saw a golden opportunity and cashed in on it. But if he was able to traverse his way through complicated financial deals and contracts in that little of a time period, why do we need REALTORS at all? I will come a centimeter short of calling this guy and the firm grossly negligent for allowing someone like this to give financial advice because if he was intelligent and talented enough, he would still be in the industry and not jumping ship/making sandwhiches (which is the only job he can get now in NYC?)
ReplyDeleteNAR presents a unified front of their members helping others achieve the american dream but are composed primarily of members who do not have the understanding of the financial meaning of the "service" they are providing or of top firms protecting their cash cow. Of course they know which forms need to be filled out etc etc but do not deserve the kind of money they get from this? Basically they are money grubbing opportunists who are "looking to make a quick buck."
Of course there are exceptions and there are some great, intelligent and morally responsible REALTORS out there but the majority would be making sandwhiches for $100 a week if not for this industry and the way it is run.
And who could blame them as everyone is looking for financial success (not saying it's right but it is the ways of the world, especially in the US - which is getting rich is the American dream). Also, it is the general, igmnorant public that allows this to happen by not thinking for themselves.
I read this blog everyday and love it. It gives me varying viewpoints from a small subsect of people who actually do think for themselves. Keep it up.
Would you like to supersize that Big Mac meal?
ReplyDeleteanon said:
ReplyDelete"I will come a centimeter short of calling this guy and the firm grossly negligent for allowing someone like this to give financial advice because ..."
Again, words from someone who believes everyone else is responsible for his well being. Real estate agents don't give financial advise. They are sales people and as such facilitate you through the sales process if you are buying or market your property (and facilitiate you through the sale process) if you are selling. If a buyer allowed himself/herself to be given financial advice from a real estate agent, they deserve everything they got.
Lance wrote" Again, words from someone who believes everyone else is responsible for his well being"
ReplyDeleteNo sir. I take FULL resposnibility for my actions at all times and wish more people did the same. And what percentage of REALTORS did not suggest creative financing when a someone wants to purchase one of their listings? I wish I could say little to none but I sincerely doubt it and I consider myself an optimist about the human race. Like I said, not every REALTOR is like this but my bet is more than not recommended exotic mortgages (and even use this information in their advertising!)to get the sale. Maybe not out of maliciousness but of incompetence or ignorance to think about what that loan will mean for the buyer in a couple of years. I know I know..it's not their job but according to NAR surveys, referrals are one of the leading ways to get business for REALTORS making it smart business to look after ones clients. Maybe one of the reasons Mr. Clemente is leaving the industry.
And by gross negligence I meant:
How a REALTOR that has been in the area for less than a year supposed to tell me about neighborhood crime?
Schools for my kids?
Or any other anecdotal knowledge of an area that house resides in which is the beneift of hiring a REALTOR?
Did you use a REALTOR when buying your properties? Those forms are complicated and when buying something as significant as real estate would hire someone who could get a job besides making sandwhiches; simply if there is a screw up in the paperowork, the implications are enormous for the buyer AND Real estate firm.
Etc Etc.
THAT is the REALTORS job let alone a REALTOR making almost $200 in his first year. Good agents don't see a profit until at least a year if not more developing clientelle and making him/herslf proficient in his/her job.
You also stated "Looking for a property in the heady 2004 - 2005 time was hard"
Agreed. BUT it was easy selling property which means that people less qualified like our friend Mr. Clemente were flooding the industry. Also notice in the article that the RE firm (E&G) went under. What I see is a fly by night company taking advantage of a situation.
Like I said in my original post, people allow these things to happen because they don't think so the onus is mainly on them. But I will not “thank” somelike like Mr. Clemente for anything.
Lance said...
ReplyDelete“I do feel they deserve respect for their efforts and not redicule as this blog is doing.”
Absolutely Lance, these guys exude “respect”. Just check out some of the comments:
http://www.inman.com/blogger/2006/09/just-listed-again-there-are-reports.aspx#links
195K in a year is close to four times national median household income. If he stashed a lot away, the foray into real estate may have been worth it.
ReplyDeleteAs for ridiculing the guy (and others like him), a couple points:
1) I wouldn't necessarily ridicule him, and can feel sorry for him individually, BUT his initial success (no experience, just makes 195K right away) is a sign of a bubble. And for the bubble to burst, people like him need to go out of business.
2) People like him spent 2001-2005 ridiculing those of us who said that home prices (and realtor licenses) were out of control. It is natural (though not necessarily admirable) for some in the bubblehead community to give a little back now that reality is proving us correct.
A Redskins fan
... but the bottom line is that they ain't makin land no more and we're still making people.
ReplyDeleteYIKES! Another one those uneducated supply/demand freaks has showed up on the board to teach us all a lesson.
Can't wait for this argument to get started again.
Lance said: most bubbleheads are nothing more than individuals looking to make a quick buck (rather than looking for a "home") gets borne out again.
ReplyDeletePerhaps you might imagine that many bubble heads are just people that are not as foolish with their wealth. The data does clearly support the fact that housing is in a substantial correction. Let me say that once more so it might sink in a little. Better yet, I’ll give you a quote from Ben Bernanke. There is currently a substantial correction going on in the housing market,'' Bernanke said. So, what was that about making a quick buck… Will you ever “get it”. I think so. Eventually
This situation kinda reminds me of when my pa trusted me to buy foodstuffs while he was away. I bought all the good stuff, and it was gone in a few days of food orgying. And I've got to say that eating PB&J for the next two weeks was not pleasant. But I did learn something.
ReplyDeleteI Hope these housing dullards like hot dogs and macaroni, b/c they've definitely earned it.
Tom,
ReplyDeleteYou sound like you're too young to realize that real estate follows a cycle ... Up a lot, down some, up a lot again. If you're buying a "home" vs. an "investment", the short term down won't matter one iota. Yes, you can try to "time" the market and get your home cheaper by pure luck than you could be simple good negotiating, but you are more likely to win the lottery than time the market "just right". (I.e., you're much better off just negotiating yourself a good deal and not waiting for good timing and luck to hand you that discount.) But, as you sound so young, and ignorance is bliss, I bet you won't have heard one word I said. You will instead end up acting like a flipper and betting on the luck of the market to save you the big bucks that you could just go out there and save yourself by simple firm negotiations. And, of course, you'll let the prospect of shortterm price declines blind you to the long term gains if you just stay put for at least 6 years.
Hey Lance,
ReplyDeleteIf we can agree that the market will bottom in the next 10 years and start back up, then that's 3,650 days in which the market will bottom.
So one would theoretically have a 1 in 3,650 chance of perfectly timing the market.
I would say this is substantially better than winning the lottery. Even a daily pick four is 1 in 10,000 or the equivalent odds of guessing right on the bottom over the next 30 years or so.
Just thought I'd throw some numbers at your comments...
My $0.02.