Friday, August 08, 2008
Realtors are fleeing the business: "sales" isn't for everybody; "Always Be Closing" doesn't close
I can remember about the time I got my layoff-“forced retirement”-buyout package, people my age were thinking about new careers. In particular, technical people who had not quite kept up with the rapid changes (despite the earlier much touted “war for talent”) were think about becoming “people-persons” and moving into sales. There were various ideas, like becoming a financial planner, tax advisor, of life insurance agent. (I had worked for a life company.) And some people took up real estate. All of this blossomed into the "Always Be Closing" model (from the film "100 Mile Rule") of modern sales culture.
I can remember when I moved to Dallas (from New York) in 1979 that real estate was a “hot field” (literally), even in the era of Jimmy Carter’s high interest rates and inflation. It was hard work, much of it happening on weekends. A part-time realtor in my office got me a condo (a conversion, with aluminum wiring, I would find out later) at a guaranteed 10-1/2 percent (although the contract wouldn’t say that). Eventually I closed. I lived in a property with leaky roofs (although you don’t find out about that during a Dallas summer) and old air conditioner compressors that have to be replaced (I did find out about that). “There is no warranty on used housing.” Later, I would have another property, with a VA loan, from Pulte, and there was a 10 year HOW warranty. (I had a housewarming $39990 party”. Yes, in Pleasant Grove prices in were that low those days.) A compressor broke there, and I found out I still had to pay the labor for replacement ($165 then). Some of my best friends in the local GLBT community were in the Dallas real estate business, and had to weather the recession of the late 80s when oil prices dropped under Reagan’s policies.
I’m off track, a bit. USA Today has a story (Aug. 7) by Stephanie Armour, “Realtors live close to the edge: Some who sold homes fearing losing them.” The link is here. There is a statement that the typical income for a realtor is $40000-$50000 a year. Part of the problem is owner and Internet sales, but many realtors are fleeing the business.
You wonder, of course. The epidemic of foreclosures produces new business opportunities for fixer-upper personalities and those who are aggressive enough. Donald Trump’s companies, among others, have been parading in local hotels offering symposia on how to make money and, frankly, get rich in a foreclosure-infected environment. It sounds like a new kind of flipping that keeps some young adults away from wanting to go to college (as in one "Dr. Phil" episode, particularly, where a guy at age 23 owed millions for flips that hadn't flipped when the subprime crisis hit), but it requires a lot of hands-on hard work. The practice sounds distasteful and exploitative to some people, but that sort of thing is perhaps an inevitable part of healthy capitalism. The unfortunate part of it is the recklessness encouraged by the regulatory climate that shelter banks from the risks they took with other people’s money.
Visitors will want to check out the recent three part series in The Washington Post, "Anatomy of a Meltdown: The Credit Crisis,"and "Boom", "Bust", and "Aftermath", here. Furthermore, the front page A1 of the Post today has a followup by Dina ElBoghdady, "Foreclosure Crisis Catching Renters Off Guard," link here, affecting house and condo renters who don't know about the owner's problems and may lose security deposits and advance rents. The District of Columbia offers more protection than Maryland and Virginia, and some banks allow renters simply to keep on paying rent to them, or have "cash for keys" programs. All of that suggests more business opportunities for realtors, it would seem.
Picture: Turnberry Towers under construction in Arlington VA. Yes, I still think the units are overpriced. The real estate recession doesn't seem to affect the very high end buildings in large coastal cities, from what I see. Many of the buyers come from China and the Middle East. Somewhat hostile foreign rivals are buying up the good old USA.