NW Realtors’ exit highest in Arkansas due to market drop
Posted on Sunday, May 11, 2008
URL: http://www.nwanews.com/adg/Business_Matters/225507/
Northwest Arkansas leads the state in the number of real estate agents dropping out of the industry group National Association of Realtors, an affiliation considered by many to be key in listing and selling property.
The region’s volatile housing market is responsible, said Ethan Nobles, director of media relations for the Arkansas Realtors Association in Little Rock. When the market was hot, people became real estate agents to make the easy sales; once the market slowed, agents began looking for other ways to make money, he said.
Monthly sales numbers for February, the latest available from the Arkansas Realtors Association, show Benton County’s fell 34. 12 percent from February 2006 — during the housing boom — to February 2008. Washington County sales dropped 18. 37 percent for the same month and statewide, sales decreased 5. 22 percent.
Arkansas houses currently spend an average 157 days on the market, according to year-to-date records at the state association. That’s up 31. 93 percent from the average 119 days on the market in 2006.
In total, the three Northwest Arkansas Realtors boards lost 290 members over the past year, a drop of 11. 97 percent. Membership in Benton and Washington counties fell from 2, 460 as of March 31, 2007, to 2, 170 on the same date this year, according to the Arkansas Realtors Association.
The state had membership of 8, 345 on March 31, 2007, which fell by 136 members to 8, 209 by that date this year, for a 1. 63 percent loss.
That drop is about the same for the rest of the country, said Chris Polychron of Hot Springs. He is first member mobilization chairman for the National Association of Realtors.
The national group has about 1. 24 million members, down about 1. 5 percent from an all-time high in 2007, Polychron said.
Very few of the state’s local associations have lost membership except in Northwest Arkansas, he said.
Membership has dipped as much as 13. 78 percent in the Rogers Board of Realtors and 12. 89 percent for the Metro Area Board in Washington County, according to the state records. The only local group to gain membership is the Bentonville-Bella Vista Board, with 20 new members or a 16. 13 percent increase from 124 on March 31, 2007, to 144 on that date this year.
But membership is important for real estate agents to do their job successfully, Fayetteville agent Mike Henry said. He is also president of the Metro Area Board of Realtors.
Realtor association membership gives agents access to the area’s multiple listing service — a list of all property for sale — and the lockbox system that tracks entry to listed houses for sale, he said.
“I’d hate to have to do this job without the multiple listing service,” Henry said. “You’d have to call every individual broker to find out what houses they have listed every time someone wanted to shop for a house.”
Membership also gives agents opportunities for education beyond required license renewal classes; insurance against losses for bad transactions; and political lobbying on issues important to real estate and property ownership, Henry said.
There are some Arkansas real estate agents who are not Realtor association members, he said. They are concentrated in mostly rural areas where multiple listing services may not be needed, he said.
However, the Arkansas Real Estate Commission, which licenses agents in the state, does not show a corresponding dip in the number of active state real estate licenses, Executive Director Bill Williamson said. Agents must renew their licenses and take part in continuing education every year to remain active, he said.
The state has about 14, 328 licensed agents, Williamson said. Of those, 11, 195 have active licenses and 3, 133 are on inactive status.
The number of licensed agents has grown steadily, from 11, 650 in 2004 to 12, 793 in 2005 and 13, 847 in 2006, he said. In 2007, Arkansas had 11, 199 active licensed agents and 3, 138 with inactive licenses.
Henry said there are sometimes discrepancies between the state’s records and those maintained by local Realtor groups. Some errors include inactive licenses and expired licenses listed as active, he said.
Williamson said there could be a time lapse between reporting a license change and the state’s numbers reflecting that change, but that should not cause a large discrepancy between the two lists.
Also, the state commission does not track licenses by region, Henry said. Newly licensed agents in other parts of the state may offset the loss of licenses in Benton and Washington counties, he said.
“The market is clearly a factor for agents leaving the industry,” Henry said. “It is a business where you don’t get paid until the transaction closes. If there is a long gap between, it becomes very difficult for some people to make ends meet.”
Some startup companies are concerned about losing agents.
Crye-Leike Realtors Inc. opened its first Northwest Arkansas regional office in Rogers in 2005, and has expanded to branch and franchise offices in Bentonville, Fayetteville, Gentry, Springdale and Springdale-Lowell, the company’s Web site states.
“We aren’t keeping as many new agents as we are losing,” said Mike Machak, the Brentwood, Tenn., company’s public relations director.
The Northwest Arkansas region gained four agents and lost three in April this year, compared with eight agents gained and one lost in the same month last year, Machak said.
Other areas are reporting the same kind of losses, he said. In Little Rock, the company gained 12 agents last month but lost 10. The area gained 16 agents in April 2007 and lost six.
Kendall Birdsong, the Northwest Arkansas regional administrative manager for Crye-Leike, said many agents got into the business in the past five years when they didn’t have to work hard to sell houses.
Demand for housing was up but the supply was low, so houses sold almost immediately and usually with several offers at listing price or higher, he said.
“Now the agent has to work,” he said.
Some area real estate schools are seeing a drop in applications, said Paul Bynum, director of the Faucette School of Real Estate in Fayetteville.
The average class size in 2008 has been the same as it was before 2002, at 10 to 11 people, he said.
“In 2004 and 2005, we averaged about 55,” Bynum said.
The easy sales market of 2004 and 2005 wasn’t necessarily a good thing for agents, he said.
“When it is too easy, you don’t develop your craft. Now you have to work at it. Those who do will be the survivors; the others won’t.”