Why am I surrounded by realtors

November 1, 2023 6:30 AM

I live in a nice NJ suburb. Approximately half the parents of my kids classmates are realtors. Why and how?

Half is a slight exaggeration but I would say that at least a third of the households have one parent as a realtor. My neighborhood is nice and affluent, but not ritzy. We have a few doctors, a bunch of lawyers. Lots of professors/phd holders, highly educated people with well paying jobs, and/or tons of family money. We don't have plumbers or electricians or tradespeople working in my immediate area. Houses sell for 500-800 in my neighborhood, but years ago that was a bunch less.

Typical household income for my social circle (meaning 40 year olds with young kids who go to the local school) is probably around 200k, and for some a lot more.

I understand that over the past decade interests rates were quite low and housing prices increased a bunch and anyone who was involved in the buying and selling of houses made out pretty well. But how the hell are so many people realtors? How can they compete with other high paying professional/educated careers now that theres almost no housing stock and everyone is sitting on the 2.7 interest rate mortgages? Did they just ride that gravy train and now their income is going to take a huge hit? I looked up one of these people on zillow and they sold 12 houses in the past year, for about 300k a pop. What am I missing?

posted by MisantropicPainforest to Grab Bag (24 answers total)

We have a few doctors, a bunch of lawyers. Lots of professors/phd holders, highly educated people with well paying jobs, and/or tons of family money... Typical household income for my social circle (meaning 40 year olds with young kids who go to the local school) is probably around 200k, and for some a lot more.

For parents raising young children, my guess is that being a realtor may offer more flexible hours and the income is a "bonus" if the other parent is the primary breadwinner.
posted by AndrewInDC at 6:37 AM on November 1, 2023

I think a lot of people go into real estate when their kids are young, because it's a fairly flexible job and you can do it around school hours (my own mom was a Realtor for a few years when my sister and I were in elementary school). The money is not necessarily consistent, but if you have a spouse with a steady income, the real estate spouse can often make a good amount of money per hour that can be used for "extras" but won't be missed that much when the market is less hot. (On preview: what AndrewInDC says.)

Also, I think real estate agents tend to congregate in certain neighborhoods/towns that have the features real estate agents prioritize.

So if you live in a "good" school district and you know a lot of families with young kids, yeah, I'm not that surprised that there's a disproportionate number of real estate people in your circle.
posted by mskyle at 6:39 AM on November 1, 2023

Realtor can be a pretty decent job for a stay at home parent, especially if your spouse is the primary breadwinner and you are making pocket money.

300,000 x 3% commission x 12 houses = $108,000. Now out of that you have to pay your brokerage + taxes but I don't know, $40,000 in pocket money is still pretty nice.
posted by muddgirl at 6:39 AM on November 1, 2023

(I should add as a former stay at home parent, in some social circles "I'm a realtor" or "I'm a consultant" or "I have an Etsy store" is more respectable than "I'm a homemaker.")
posted by muddgirl at 6:42 AM on November 1, 2023

It's also really easy to get a real estate license, compared to other professions.
posted by Mchelly at 6:43 AM on November 1, 2023

Being a life coach also seems to be a fairly common career path for folks who opt out of the 9-5 path. It provides income and interesting experience.
posted by waving at 6:46 AM on November 1, 2023

FWIW, a lot of these families are a two realtor household, or a one realtor household where the other parent stays home. While there's some who do it part time, there's a lot of households whose income is solely from being a realtor. Thanks.
posted by MisantropicPainforest at 6:48 AM on November 1, 2023

How many are actually successful realtors? Pretty sure that becoming a realtor is like doing medical transcription at home, or going to law school. A huge amount of people take the training and get the label in hopes of getting the money, and end up essentially never actually getting any appreciable income in that field.

Just figure out how many many of those realtor parent's names you have actually seen on houses around town. I will bet that there are two or three or even four really successful ones with abundant listings and the majority of the rest are only listed on the real estate company's website as one of their agents but they have no actual listings.
posted by Jane the Brown at 7:02 AM on November 1, 2023

The real estate industry is totally fucked up. They have colluded to keep commission rates high, so that a sale gives the realtor a huge windfall. As in any market, high returns attract people. This does drive average earnings down. But because of the collusion, instead of driving prices paid by buyers and sellers down, average earnings are driven down by lowering the average number of sales per agent. The average agent is spending a lot of hours of work for that sale, but a huge portion of that work is in marketing, not directly serving their clients. However, because clients want to hire experienced realtors (and no, goddamnit, I'm not capitalizing it nor adding the trademark), a few realtors sell many homes and most sell few or none.

Fortunately, yesterday a jury found that the National Association of realtors (sic; I know it should be capitalized, but I'm making it lower case here because I can) "conspired to keep commissions for home sales artificially high." Hopefully, this is the first step in moving to a saner market, and most of those realtors can move on to more productive work, like organizing or decorating those homes they used to sell, or selling Amway.

To be clear, many people will need or want to continue paying for an experienced professional to help them buy and sell homes. That's fine, as long as the market is free and compensation reflects the benefits of the services they provide.
posted by Mr.Know-it-some at 7:06 AM on November 1, 2023

I guess I don't understand the question then. Realty is a professional sales job. Your realtor neighbors aren't "competing" with other professions.

Yes if there's a housing crunch their income will be affected. In my neighborhood when there is a tech crunch (as we have seen this year) a lot of incomes are affected.

For sales jobs you basically "eat what you kill." It can be feast or famine so you save up for the lean times and work as hard as you can in the boom times. The benefit of a licensed sales job is you can take your license to any broker. They can also work realty-adjacent gigs like property management.
posted by muddgirl at 7:08 AM on November 1, 2023

If your neighborhood's housing values have appreciated considerably, my theory is that the realtors saw that coming, and glommed onto the neighborhood as a good investment. Realtors talk to other realtors, and word spread.
posted by hydra77 at 7:26 AM on November 1, 2023

And $108k isn't a bad living for flexible work.
posted by hydra77 at 7:27 AM on November 1, 2023

If you're trying to live in a nice middle-class suburb with no professional degree, and you want to do something that does not knock you down a social level in your neighbors' eyes, how many jobs are there? A lot of my Mom's friends used to be travel agents but I think that is hardly a thing anymore. (My partner works in the travel industry, he talks to fewer and fewer travel agents, and fewer of his co-workers' family members are travel agents.) A lot of the jobs, or "jobs," people do in the upper middle-class suburbs are things that basically monetize their social connections, like real estate or even MLM. To have a really good administrative type of office job, you will likely have to go into the city or compete with way too many people. So, what do you do? Back to cannibalizing your social and family circles for money, if you have friends or family with big houses, and can talk them into letting you sell theirs, that's a big opportunity. But I think things like this tend to be overdetermined and it is still correct that a lot of people are doing this as a second income or just to say they are working, even though there are people who are doing it effectively.

I was really surprised, when I went to work in a boosktore in a suburb a couple of economic notches above mine, how many locals were coming in and trying to sell me shit. Arbonne; ad space in some silly magazine a friend of theirs was publishing. And a lot of times it was real estate or they wanted to know if I had a house they could list.
posted by BibiRose at 7:37 AM on November 1, 2023

My guess is a combination of hydra777’s and the flexible/more easily licensed work scenarios. If you go back a few years, was there a sales-heavy company or industry that dried up in the area? Is your subdivision a particularly well-built one or was it a good deal a few years back? Is it a really long commute to other higher earning jobs.

Also, are they commercial agents? Maybe your area had a lot of building or commercial growth going on. Real estate agent is a broad term and can mean people that are development or industry adjacent too.

My mum sold real estate as the second income earner for several years when I was growing up and that provided a lot of extras and a really sweet deal on their current house, worth north of 2 million now, plus an investment property, ditto. (Sadly I am disinherited.) while there are lousy agents and I don’t know how it works in the US, up here real estate agents are often well-educated capable people who yes, would love to sell you a house but are great to have on school committees etc. because of the flexible hours. Good agents make good money too.
posted by warriorqueen at 7:41 AM on November 1, 2023

Real estate agents are also often real estate investors -- but people don't love landlords, so they may own a bunch of investment properties but still describe themselves socially as real estate agents.
posted by jacquilynne at 8:13 AM on November 1, 2023

How can they compete with other high paying professional/educated careers now that theres almost no housing stock and everyone is sitting on the 2.7 interest rate mortgages?

The three d's (death, divorce, debt) are still going to drive churn. Not an easy living though.
posted by mullacc at 8:14 AM on November 1, 2023

Couple things: as everyone's said, it's flexible work. And in two-Realtor households, often one of them is the out-doing-showings one and the other is home-doing-research/paperwork one, which almost works out to a 2.5-person office because both of them can just cram the calendar full of tasks without having to switch gears constantly.

But you can also breezily say you're a Realtor as long as you have your license, and not actually work at all, or not work as a Realtor.

But mostly if your neighborhood is full of Realtors it just means the neighborhood is - or was during a certain point in time - an excellent deal that they all got in on for themselves. There will be lots of neighborhoods in your area that have zero Realtors in them.
posted by Lyn Never at 8:15 AM on November 1, 2023

Going back to the early 1980's we bought our first house in Moorestown for 29K, the left half of a twin. The listing realtor put us in contact with a contractor who did the work needed to bring it up to FHA specs (maybe she got a commission on that referral?) We did a lot of work on it ourselves and had some modernization done, but eventually decided we wanted a bigger house with a place for the kids to run around. So about 7 years later after a promotion at work we sold that twin for 65K through the same realtor and it took her like 10 minutes to earn that sales commission (she phoned a buyer who wanted a property suitable for rental in Moorestown). We then bought the realtor's home (I know, unusual) for 97K and according to Zillow it's now worth more than 370K.

We haven't stayed in touch with her, but I imagine things may not be so easy-peasy any more in the current Interest Rate crunch. But clearly it once was pretty easy being a semi-serious realtor in NJ.
posted by forthright at 9:42 AM on November 1, 2023

an excellent deal that they all got in on for themselves

This is somewhat true, but not universal. Some agents do get into the business because of an aptitude for spotting deals or smart investments, and some do basically operate two businesses, where working for other people as an agent is one business, and managing and flipping their own investments is the other.

Real estate is a job where, if you're good at it, earnings correlate pretty directly with hours worked. So if you're a person who could make a decent amount of money in a full time office job, but for one reason or another you can't or don't want to work those particular 40 hours a week (say, you've got kids in school, an aging parent, another personal business you enjoy that doesn't provide you with full time income, or maybe you and your spouse can afford for you to work part time if the money's good), then getting a license and working 20 hours a week as an agent can pay pretty well.

That comes with a lot of caveats, though. From my experience working as a software developer in the industry I can say that the agents who made the most money were the ones who didn't try to pick and choose their clients, but instead worked hard for everybody from the starter-home people to the estate-with-acreage people. This was true across markets all over the country. We had a lead generation system that allowed agents to opt in for leads by ZIP code and/or price bracket, so we could see that the ones who limited themselves to the fanciest areas and biggest budgets made less money overall because they only closed like a dozen sales a year. The agents who accepted and worked every lead closed a lot more sales and made a lot more money. Maybe closing 12 sales a year is right for somebody as a part time job, and they can select that life for themselves, but their income will correlate pretty directly to the amount of work they put in.
posted by fedward at 9:56 AM on November 1, 2023

I feel like I know a bunch of people who have gotten into real estate in recent years. it seems like if you were looking for a new career that is one with a relatively low training commitment to get licensed and start working and the earning potential can be quite good. I live in a place where real estate has been, and still mostly is, completely insane.

there are not so many industries/professions that fit that bill I think, in our current economy.
posted by supermedusa at 9:58 AM on November 1, 2023

Are you sure you are not asking a similar question as why are there 4 nail salons on one block? This might be a common example of agglomeration: The presence of realtors in close proximity, clustering for mutual benefit where businesses or activities of similar nature cluster together within a specific geographic area.

I lived on a block once that had many architects - seriously like 8 architects (only 2 were married to each other). How many architects are there? But they all had very specific desires that our block fulfilled and so they all lived there.
posted by mutt.cyberspace at 10:02 AM on November 1, 2023

You appear to live in an 'industrial cluster', as mutt.cyberspace just wrote. Same businesses, but differerent sub-sectors / slices of the pie, and they benefit from proximity, probably some don't actually trade in your neighbourhood.
posted by unearthed at 12:02 PM on November 1, 2023

I don't know if it's true anymore, but anybody with a California Bar card used to get a real estate license for free (or waiver, or w/e), so maybe they're non-practicing lawyers (also perhaps more socially-acceptible)?
posted by rhizome at 3:56 PM on November 1, 2023

People like the flexibility and variety. I have a family member who traveled the world doing things like teaching yoga for many years and when they needed a "stable" job they became a realtor.

My family member (corporate real estate, so transactions are bigger and take longer) also only needs to make one sale a year to live on the commission.

It's a certification, not a degree, so it also appeals to career changers. A friend who worked as a realtor for many years got into the field because they wanted something new and it was a field you could/can pivot into without a burdensome time investment.
posted by capricorn at 11:28 AM on November 2, 2023