ANNE D. BLATZ
‘Reduction’ in licensees

The slumping housing market and news reports of a real estate bubble could be having a chilling effect on the number of people wanting to jump in the business.

The state has licensed fewer new real estate agents so far this year, and the number of people taking the salesperson licensing exam for the first time has dropped sharply, making recruitment and hiring of new agents a challenge for some Bay State companies.

A total of 4,916 people took the licensing test through the end of August this year, down 32 percent from the 7,220 first-time test takers during the same period last year, according to Promissor, a Pearson Vue business based in Pennsylvania that administers the licensing exam for Massachusetts.

The state Board of Registration of Real Estate Brokers and Salespeople issued licenses to 6,167 new real estate agents through Sept. 1, an 11 percent drop from the 6,931 licenses that were issued during the same months last year.

Some industry observers are blaming the drop-off on the market downturn, which they say is making it harder not only to recruit but retain agents.

“There is definitely a reduction in the number of people who are getting their real estate licenses,” said Anne D. Blatz, who manages the Yarmouth and Brewster offices of Kinlin Grover GMAC.

Blatz said Kinlin Grover, which has 11 offices on Cape Cod, subscribes to a service that automatically notifies the offices when new agents in the region are licensed. “Before we would see sometimes as many as 10 or 12 [new licensees] a week. Now it’s more like one, two or zero agents,” said Blatz, who serves as president-elect of the Cape Cod & Islands Association of Realtors.

Since most real estate agents’ income is commission-based, many firms don’t cut back on agent recruitment when the real estate market slows down. In fact, some larger real estate companies make it a practice to recruit and train large numbers of agents, knowing that only a few will remain and commit themselves to a real estate career. And most firms are eager to welcome experienced, top-producing agents who will bring more income to their offices.

“Since most agents are independent contractors Â… there isn’t a huge financial commitment in terms of salary. It’s mostly a commission-driven arrangement,” explained Joseph H. Hare, executive vice president of Hammond Residential GMAC.

Kinlin Grover has actually stepped up its recruiting, according to Blatz, because not only are fewer agents coming into the business but some already in the business are leaving, deciding that market conditions are too tough to stick around.

“There is some of that – people exiting the business – but it’s not huge,” she said. “I was concerned that it would be bigger.”

Kinlin Grover currently has 229 agents, compared to about 200 a year earlier. The company wants to end the year with 13 percent more agents. So far, 56 percent of the agents recruited to work for the company have been new licensees, while the rest have had some experience, said Blatz.

The smaller number of new agents is also being felt at local Realtor associations, as fewer people are going through the new-agent orientation process that many Realtor groups offer.

Only about 167 agents participated in the new-member orientation that the Cape Cod & Islands Association of Realtors offers during the first eight-plus months of the year compared to more than 280 during the same months last year, according to Henry J. DiGiacomo, the association’s chief executive officer.

The Northeast Association of Realtors, which serves the Merrimack and Nashoba valleys, has seen an average of 28 new licensees a month join the association this year, compared to 36 a month a year ago, said Anne Rendle, the group’s chief executive officer.

‘Transitional Attrition’
Christopher Bernier, an executive vice president with Coldwell Banker Residential Brokerage Central New England – which has recruited and trained hundreds of new agents – said there is definitely a “sense” that there are fewer new licensees.

That is a significant change from the last four years, when droves of people were seeking to enter the real estate industry hoping to reap the benefits of a booming market. From about 2001 to 2004, for example, many professionals from the high-tech industry were jumping into the real estate business as many dot-com businesses were fizzling out.

But now that the market has shifted, real estate may have lost its luster for some people, real estate experts suggest.

Bernier said that the current real estate market requires agents to spend more time on each transaction because homes are taking longer to sell and the number of homes that are available for sale has grown. “That has an impact and Â… influence on whether people come into the business or not.”

Still, Bernier said the market changes haven’t affected Coldwell Banker’s recruitment.

“We’re always interested in partnering with good, capable people,” said Bernier, who declined to provide specifics on the number of new agents the company recruits each year. “There’s always good, capable people coming into real estate.”

And Bernier says the company isn’t having trouble holding onto agents once they join Coldwell Banker. According to Bernier, there’s been only a “slight increase” in the attrition rate so far this year, although he declined to be more specific.

Ron Morrison, owner of ERA Morrison Real Estate – a Chelmsford-based company with 14 offices, said agent turnover at his company also is low. Less than 10 percent of the agents working at ERA Morrison leave the company, he said. It’s not unusual for companies to have an attrition rate as high as 20 percent, according to Morrison.

ERA Morrison has grown from just three agents to 180 sales associates in the last six years.

“We’ve been able to grow because we’re not losing agents at the normal attrition rate,” said Morrison. “We know our marketplace and we’re well respected in our marketplace. That’s why people stay, and [they] also [stay] because of the programs we have.”

Morrison’s firm has 42 more agents this year than it did in 2005, and it aims to hire 60 new agents each year – some new hires and some replacements for agents who have left.

Morrison, who has about two decades’ worth of real estate experience, said he hasn’t had trouble getting new agents to join his firm.

“I always seem to notice that when the economy turns down and the market turns down, that’s when we see more agents coming into the [real estate] industry,” he said.

But Morrison acknowledges that agents with less experience might find it harder to make a living given the downturn in the market. Agents with a year or less of experience, who aren’t yet established in the business, often find that they have to secure a second job to support themselves, he said.

“There’s certainly attrition, but it’s more transitional attrition,” he said. “It’s not that [agents] quit. They’re out there getting a transitional position to Â… supplement their income while they wait the market out.”

The ups and downs of the real estate market don’t really affect hiring at Hammond Residential GMAC. The company primarily targets agents with years of experience. Hare estimates that about 85 percent of the agents who have joined Hammond are “experienced with a track record.”

“By and large, the market being up and down doesn’t have all that much bearing on how we proceed or how we do things here,” said Hare.

Hare said Hammond’s office managers generally make decisions on hiring and recruitment. The South End office in Boston, for example, is currently recruiting new agents. The office is relocating to new space at Atelier 505, a luxury condominium development on Tremont Street, and will double its staff over the next six to 18 months.

James Nemetz, who manages Hammond’s Chestnut Hill and Newton offices, said he’s not actively hiring any agents because his offices are at full capacity.

Both offices are home to veteran agents, who on average have been in the business for at least a decade. The slowing real estate market hasn’t affected Nemetz’s recruitment efforts, because he says the types of agents he seeks and hires are doing well regardless of whether the market is booming or struggling. He generally hires agents only as current associates retire or scale back on their business.

“I get inquiries from new people starting out all the time and I usually guide them to another firm to get started,” he said.