NAR Member Survey Shows Income Disparity with Rising Ranks

Business Wire, August 17, 2005

WASHINGTON -- Realtors(R) earn significantly more the longer they have been in the business, according to a new member survey by the National Association of Realtors(R).

Members who have been in business for 6 to 10 years earned a median $58,700 in 2004, up 18.6 percent from 2002, while those who have been in the business for two years or less earned only $12,850. Realtors(R) with at least 26 years of experience earned $92,600, up 37.2 percent from two years earlier.

NAR Chief Economist David Lereah said, "People who have been selling real estate for a while are seeing healthy income growth, while newcomers need time to establish themselves," he said. "Real estate agents build their business over time through referrals and repeat business, which is how most people learn about the agent they choose. Consumer surveys have consistently shown that both home buyers and sellers rate reputation and knowledge of the market as the most important criteria in choosing a real estate agent or broker, and these results underscore those findings."

The median income of a real estate broker in 2004 was $52,800, while sales agents earned a median of $37,600. Another gauge shows that successful professionals are growing their incomes - for members earning more than $25,000 per year, median income increased 7.2 percent from 2002 to 2004. Few Realtors(R) receive fringe benefits, largely because the vast majority work as independent contractors.

Rapid member growth has distorted median income figures. The median gross income of all Realtors(R) declined 5.6 percent between 2002 and 2004 to $49,300, while at the same time NAR membership totals increased 26.6 percent to 1.1 million.

NAR President Al Mansell of Salt Lake City said rapid member growth has paralleled increases in home sales. "When we look at the relationship between members and sales in comparison with the last survey in 2003, we see the business activity for a typical member is fairly stable," he said. "This means the industry has been able to accommodate rapid growth and create new jobs."

In 2004, the typical sales member sold two of their own listings and six of someone else's, while other Realtors(R) sold five of their listings. The median sales or leasing volume was $2.2 million in 2004, up from $1.8 million in 2002.

Among sales members, the median number of transaction sides handled last year was 12, equivalent to six full transactions. In 2002, the median number of transaction sides was slightly higher, at 13. "In other words, the large number of newcomers - about 165,000 people in the last year - hasn't had a significant impact on overall business activity for the typical Realtor(R) member," Mansell said.

The 2005 National Association of Realtors(R) Member Profile was based on a survey mailed to 120,000 members and generated 8,450 usable responses, representing a response rate of 7 percent. It covers diverse characteristics of NAR members including demographic data, current business attributes and technology use.

The typical member is 52 years old, works 46 hours per week, and has been in the business for nine years; however, 15 percent of members have been in the business for one year or less. Overall, 54 percent of members are women. Realtors(R) have been with their current firm for a median of four years, and only 15 percent work fewer than 20 hours per week.

Members are optimistic about the future, with 84 percent saying they are confident they will remain active in the business during the next two years; only 4 percent were uncertain.

The member profile shows 15 percent are fluent in languages other than English, while 9 percent of respondents were born outside of the United States.

More than one-third of Realtors(R) hold only a sales license, 43 percent have a broker associate license, and one in five hold a broker's license. Although members may hold more than one license, their functions sometimes differ. For example, one-quarter of broker licensees work primarily as sales agents. Three-fourths of NAR members specialize in residential real estate; 20 percent have a secondary specialty in relocation; commercial brokerage and land development registered 16 percent each.

Buyer agency is a large component of member business, with 38 percent offering both buyer and seller agency, and another 11 percent providing exclusive buyer agency.

Home offices are popular, with 71 percent of Realtors(R) reporting they have one for business purposes. Technology plays a critical role, with cell phones and e-mail being used almost universally, the vast majority of members use digital cameras, and 32 percent use PDAs on a regular basis. The most popular software is multiple listing, with 76 percent using it daily or nearly every day, and another 11 percent using it a few times per week. Comparative market analysis software is used somewhat less frequently, but is used by nearly 90 percent of Realtors(R), and roughly four out of five use electronic contracts and forms.