By James Hagerty and Anjali Athavaley
From The Wall Street Journal Online

Selling homes has turned into a dog-eat-dog business, so Patrick Logue decided to work with some friendlier canines.

Mr. Logue quit his job as a real-estate agent near Fort Myers, Fla., in December. Then he set up shop as a franchisee of the dog-training chain Bark Busters. So far, he says, “I have zero regrets.”

The long-awaited shakeout among real-estate agents is finally happening — much to the relief of those who are sticking with the business and prefer a bit less competition.

When David Lereah, chief economist of the National Association of Realtors, addressed the group’s convention in New Orleans in November, he got one of the biggest bursts of applause by predicting there would be fewer Realtors around in a year. Mr. Lereah said in an interview that he expects membership in the trade group to decrease by about 6% to 8% from the record of nearly 1.4 million reached in 2006.

The culling of agent ranks is a reaction to the downturn in housing that started around mid-2005. Sales of previously occupied homes last year declined 8% to 5.7 million, even as the number of agents continued to increase for the year as a whole.

Even before sales slowed, people in the industry said far too many agents were chasing too few deals. If hordes of inexperienced agents are scrapping for business, says Christopher Galler, a senior vice president of the Minnesota Association of Realtors, that can only lead to “a race to the bottom in fees.”

More competition on commissions could strike many consumers as a good idea. Mr. Galler argues the result would be poor service. He says more productive agents, who complete 20 or more transactions per year, are better at solving problems than those who do only a few deals annually.

Last fall, Mr. Galler did something all but unthinkable for an official of an association that lives on members’ fees: He wrote an article in a Realtor publication suggesting that some struggling agents should ponder whether it is time for a “career adjustment.”

The industry probably has 20% to 25% more agents than it needs, says Ronald Peltier, chief executive of HomeServices of America Inc., a Minneapolis chain that owns brokerages in 19 states. Mr. Peltier says his company, which has about 21,000 agents, is determined to boost productivity and is nudging out agents who are dabbling in real estate.

Agents tend to compete less on price than on service and reputation. While top agents regularly pull down six-figure incomes, many others just scrape by. An NAR survey found that the median income in 2004 was $37,600 for agents and $52,800 for brokers, who have more training. Most agents are independent contractors rather than employees, so they have to pay for their own insurance, retirement plans, gasoline, advertising and telephone bills.

Although it is difficult to make a good living as an agent, many stay active in the business at least part time, handling transactions for friends and family or hoping to hit the jackpot with one big transaction. The sale of a $1 million house might yield $60,000 in commissions. Those generally would be split between agents for the buyer and seller, and the owners of their brokerage firms also would get a cut. Still, a single agent might reap about $20,000, before expenses, from such a sale.

Mr. Logue, a 34-year-old former golf pro, became an agent for the Assist-2-Sell franchise chain in the Fort Myers area about three years ago. He says his commission income was nearly $100,000 in his first year and $180,000 in his second. Then it plunged to $40,000 last year. “Nothing was selling,” he says.

Cloude Porteus, 35, left his job at an Internet start-up in 2001 to start a career in real estate in Mill Valley, Calif. He says he had income of $170,000 as a real-estate agent in 2004, but last year was a bust. “I didn’t make a penny in 2006, even though I had three listings,” Mr. Porteus says.

Mr. Porteus found a new job last year as a product manager at Instructables.com, another Web start-up, in Alameda, Calif. “Being at a start-up there’s always risk, but not having to worry about how much money you are going to make every month is awesome,” he says.

Source:

http://www.realestatejournal.com/buysell/agentsandbrokers/20070208-akst.html