“For almost 20 years, I have had close friends who are realtors. In the past month, I have seen serious changes in behaviour indicative of desperation. Commissions are down 50%, and for those on the fringes, this is pretty much poverty.”

“I’ve been following this market for a long time. Also, for almost 20 years, I have had some close friends who are realtors (and did it in the years when real estate was just something that people needed to live in – – without all the BS hype).
In the past month, I have seen serious changes in behaviour indicative of desperation. There was also a quote that “Everyone in my office has had to take a second job to ensure steady cash flow.”
I don’t think we are here to gloat in the misery of others but with sales numbers like we have now, commissions are down 50% in the past 2 years and for those on the fringes, this is pretty much poverty.
. .
Quick tidbit – – Attached is showing listings declines with some areas even failing to have rising inventory. SFH however is very slow with the high end of the market completely stopped . . . .”
yvr2zrh at VCI 25 Feb 2013 10:36pm

40 responses to ““For almost 20 years, I have had close friends who are realtors. In the past month, I have seen serious changes in behaviour indicative of desperation. Commissions are down 50%, and for those on the fringes, this is pretty much poverty.”

  1. there’s no easy or polite way to say this so i’ll just say it. [redacted -ed.] realtors

    [Sorry about the censorship, matt, your contributions to discussion are appreciated; but when we spot it, we don’t let off-colour offensive statements stand. If there really is “no easy or polite way” to say something, say it elsewhere or figure something else out. – vreaa]

  2. A decent detached house in South Arm area of Richmond listed for $999k is now asking $838k, more than a 16 per cent drop. Yes, the market is slowing to a crawl and people are heavily discounting to get out while they can. The question is no longer IF prices will drop, but when we will hit the bottom. In this neighbourhood, a few heavily discounted houses have begun to sell, with price drops in 15 % range.

    • Real Estate Tsunami

      Thanks Martin,
      for confirming my observation that prices in Richmond have already dropped by around 20%.
      Given the downward momentum, I think another 20 to 30% is very likely by the end of 2013.

  3. deleting comments is keeping this realtor a lot busier than selling real estate:)

    • Egads! Hint to Ms. Comeau’s crew… try to position the TelePrompter closer to the camera… lock in your exposure/focus on the ‘facial’… start slightly wide and ‘push’ slowly into your subject until the requisite ‘intimacy’ has been achieved… as for Ms. Comeau – as unnatural as it might seem – just try to keep looking into that shiny glass thing with the blinking red light that’s in front of you…]

      • Wow, I agree, and plus, how could she hold a steady face saying what she is saying? The market is toast, everyone knows it but her….or the poor people she sucks in to buy now.

      • moloko, I did a quick review of her other videos on Youtube and this link has at least twice the hits of her other posts. Although I attribute the increased views to you posting the link on this site, I am sure that Teresa will see it as a sign that the market is turning around!

    • Doesn’t exactly inspire confidence, does it?

  4. I think the term “Party like a Rock star” and the need to fit in with the “in”has made people spend beyond their means. I am sure that there are a few real estate agents in Vancouver that partied like rock stars when they should have been saving like gig musicians.

    • Funny you should say that, DiggsTown… there was a time when I used to cover/string the PNW music scene for TimeLife [PreWarner]…. Accordingly, one gets to see more than a few examples of DissoluteLifeStyles… Surprisingly though, many an authentic RockStar lived a rather a bland WorkADay existence betwixt the Studio and LightsCrowds&Pyro…

      Hmmm… thematically apropos the thread if, perchance, inspired by a ReallyGood DiscountBordeaux… here’s one for you, Epte, et al… [and do tell, please, re: your new local ZeitGeist as/when the mood strikes you – without, of course, revealing where precisely down there you’ve landed. Anecdotes are important, you know]…

      [NoteToEd: LosLobos wouldn’t have so much as a beer prior to performing… BoDiddley, on the other hand… Additionally, it was TedKoppel on ABC’s NightLine who first broke the FifthWall {yes, that’s right DearReaders – not the Fourth} by deciding to
      use, “For What It’s Worth” to ‘ambient’ an historical piece… Of course, MickeyMouse owns ABC now…. and NBC belongs to a conglomerate that can’t make up its mind about whether it’s a theme park operator, a studio… or a CableNet/ISP. Thank you for indulging me, DearReaders.]

      • @Nemesis – your key statement was the rock star spending time in the studio. That would make me think that these rock stars were musicians. The 10,000 hour rule was probably quite evident. However, today, the instant gratification bunch may wish to be rock stars and forget to be musicians. All filler, no thriller.
        I liked Charlie Watts summary of being in the Rolling Stones (for 25 years at that point). 5 years of music, 20 years of waiting around.

  5. Some people have more money than brains, unfortunately when the money disappears the brain issue becomes a significant problem. I know people that have averaged income 3 times what I make over the last 10 years but now find themselves poor and destitute now that the film industry has packed up and left. The same seems to apply to realtors, construction workers etc. It truly boggles the mind how these people could have nothing left to show for the years of good fortune they have enjoyed… Meanwhile I have a decent sum of cash stashed away for retirement, rainy days etc. being a single parent it’s not easy but good lord…. Do some thinking instead of consuming once in a while!

    I won’t shed a tear for a single one of these idiots….

    • I believe that there must be a epidemic of the Keep Up with the Jones in the Film Industry and the Real Estate Industry. Both of these industries are affected by outside influences such as where investors are wanting to put their money. Unfortunately, I believe there is an incredible need to sell oneself in both industries and maybe, just maybe, appear to be who you really are not.

      • UBCghettodweller

        From my observations most people’s wants and desires are reflective. They see what others want and then consciously or unconsciously choose to want the same thing. It seems to be an intrinsic element of being human. Few people are actually OK with not keeping up with the Jones. Those that are have either really found what brings them happiness and satisfaction or at least have learned how to put the blinders on to what the Jones are doing next door.

    • I have a friend just like that too, Xyz. She makes an excellent income, speculates on houses and appears to do nothing all day long but sit in Starbucks and yack on the phone. She is literally spending 30 bucks a day on coffee alone and was crying broke last time I saw her. Big surprise.

    • Some may have more money than brains. Most, you’ll find, will just borrow more money than they have brains.

  6. I don’t begrudge anyone an honest buck, whether gained through skill or luck. But I’ve read and heard so many tales of such bad behaviour by agents that I’m not really willing to extend the benefit of the doubt to any of them even though I know there’s some good, honest hard working ones. I hope they lose their cars, properties and credit ratings in far greater proportion than the population they’ve been screwing over all these years.

    • I agree. But I shutter at the negative multiplier effect this will have, and it will be felt everywhere. No more “top performing realtors” throwing money around, buying rounds at the local taverns. No more expensive dinners. Designer clothes. Leased BMWs. And that’s just the realtors. Throw in the recovering home equity junkie no longer buying those things, and the R word looks like a sure bet. This is inevitable and in fact very healthy and necessary, but it will hurt like hell.

  7. Somewhere in the past couple of years I read the stats for the number of realtors in BC, or Metro Vancouver — can’t remember which. I do remember thinking, hmm, looks like there’s a bubble in the number of realtors to accompany the bubble in prices, and sales. I’m assuming the ‘realtor bubble’ will pretty much mirror the fortunes of the other bubble. Ditto the ‘hammer-swinging-dopesmokers bubble’.

    • I heard some Pareto statistics on Realtors, something like 80% do 20% of the business or something like that. It all comes out in the wash, one of those rare times where averages matter.

      • Ralph Cramdown

        http://realtylaboratory.com/2012/03/07/agent-statistics-the-top-1-of-toronto-real-estate-board/
        Shows some stats for Toronto. It’s a funny/sad industry. The failure rate is very high, I believe 1 in 2 don’t last two years. But there’s several thousand in fees just to get licensed and about two thousand a year to stay licensed, so the provincial association and local boards do quite well by it. The senior agents are always moaning about the part-timers (making them look bad, cutting rates and stealing the occasional deal, I guess), but they always get outvoted at the annual elections, of course. And otherwise, who would staff the open houses?

      • Real Estate Tsunami

        The 80/20 rule strikes again.

    • I saw that too, Froogle. It was a number that I also cannot recall exactly anymore but the stat suggested 20% of Realtors were making 80% of all the sales which suggested most Realtors were just hanging on even during the bubble. (I am making up the numbers here in a crazy way of course but maybe someone else can recall the sales to worker proportions).

      • 20% doing 80% of the business is totally normal. I wouldn’t be surprised if it were 90/10 as it is in a lot of phenomena. For example, Something like 90% of the people in Canada live in the 10% most populous municipalities.

    • Looks like the membership of REBGV may have almost doubled since the beginning of the bubble in 2002-03. VancouverCondoShop.com has a graph of REBGV membership going back to 1980. In 2002, membership was a little over 6000. According to the “About Us” page on the REBGV web site, the current number is 11,000. (Farmer, I think that 14K number on the home page probably includes FVREB.) Given that the population of Metro Vancouver has not doubled in the same time span, I’d say the market is currently oversupplied with realtors, and a ‘realtor correction’ could very well lie ahead.

      The realtor behind VancouverCondoShop.com also had this to say:

      “Given the recent record setting activity we saw in the last half of 2009 and earlier this year, it’s no surprise that membership numbers are on the rise. When the market is hot newcomers are often lured by the prospect of making ‘easy money’ (a hope which never actually materializes for most). As the market cools and the reality of what it takes to make a living in real estate sets in, many agents leave the market.”

      http://tinyurl.com/bjp3c3z

      If you look at the chart, there was also a dramatic increase in the number of realtors, and an equally rapid decline, coinciding with the bubble in the first half of the 90s. Which makes me wonder if rapid growth in the number of realtors, after factoring out population growth, is a pretty good real estate bubble indicator. A lagging indicator, perhaps, but a strong indicator nevertheless. The fact that there are just so damn many of you denying there’s a bubble, proves there’s a bubble!

      • Hi Froogle.
        Yes, you can be absolutely certain that numbers of people draw to being RE salespeople will correlate very well with speculative cycles.
        Much like the tech stock boom drew people into the investment industry.. there were stories in 1999 that brokerages couldn’t train personnel fast enough.

        This quote from a local realtor June 2010:
        “The Real Estate Board of Greater Vancouver is about to break its own membership record; it surpassed 10,000. There is nothing more predictable or more assuring that the Vancouver real estate market is about to tumble as the number of Realtors® in the business.”

      • Froogle Scott

        So Larry Y. basically makes the same point on his blog, and includes the same chart of realtor numbers dating back to 1980, and correlates it with the Vancouver RE average price chart.

        Which makes me think that over the past decade, seasoned realtors, watching the flood of newbie realtors into the market, must have been thinking, “We’ve seen this story before. And we know how it ends.” The smart ones will definitely have been socking away money for a rainy day, and avoiding blowing it on lifestyle accessories.

  8. REBGV incidentally claims there are 14,000 Realtors in the Association. That number incidentally comes right off the groups header page where they mention Realty Watch working in conjunction with police to be the “eyes and ears” of the community. Now how does that stack up against the 1351 MLS sales during the month of January? I would suggest most of them are starving right now.

  9. More TalesFromTheRealtorCrypt… or, “Ooops… It really ain’t different this time.”…

    “Buyers are very skeptical, very hesitant because they think prices may go down.” – Hoda Seraji, VancouverRealtor

    “Will they work at the condos? No. Will they live in them? No.” – Lou Rivera, NewlyUnemployed BakeryProduction Mechanic [upon learning that his employer’s premises were liquidated to enable a 27 Tower CondoDevelopment]

    “We’re due for a big correction.” – Steve Hennessey, Sales Representative for Right at Home Realty Inc., Canada’s largest independent real estate brokerage

    “As an economist working for a Canadian bank, I can’t go into a client meeting and have someone not ask me about housing in Canada.” – Tom Porcelli, Chief U.S. economist, RBC Capital Markets LLC, Royal Bank of Canada’s investment-banking unit

    “We basically borrowed our way out of this recession. Now, it’s payback time.” – Benjamin Tal, Deputy Chief Economist, Investment-Banking, Canadian Imperial Bank of Commerce

    [BloomBerg] – Canada Losing Debt Halo as Bull Market Housing Peaks With Carney

    …”For Crockett, fellow investors and Canadians alike, the glow is fading as home sales tumble, Bloomberg Markets magazine will report in its April issue. They say they’re worried that Canada’s debt-fueled expansion will stall before a global recovery can revive exports — a slowdown that would blemish Bank of Canada Governor Mark Carney’s record just as he begins his new job as head of the Bank of England on July 1.

    “If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector,” Crockett says, pointing out a window of a downtown coffee shop to dozens of cranes swinging across the skyline. “I’m afraid of a condo crash, and then what will happen to all the investments?” ….

    http://tinyurl.com/aurz76p

  10. Grrrr… RoboRedaktor. RightHere…

    “Help! Help! M’Aider!”, cried the HostageComment… alas, to no avail as the EvilRoboRedaktor chortled, “SillyComment, on the InterWeb, no one can hear your screams.”

  11. I predict there will be a glut of used Mercedes E ans C classes and BMW 3 and 5 series coming onto the market as well. Realtors just love investing in depreciating assets. Shows how smart they are.

  12. It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004. When I met my wife she had just purchased a condo in Surrey for $135k. We moved into it and met a tough-as-nails older woman who had been a realtor for 30 years and lived in the building. She shared the history of the building with us. Units had originally sold for $170k but a leaky condo adventure had dropped the value down to $70k, many lost their homes but those that were left were holding out for the prices to return to $170k. I asked her how long that would take. She pondered it, referred back to her 30 years of experience and said. “Probably 10 years.”

    Almost exactly one year later in mid 2005 she came to us to tell us she could get $160k for our unit if we wanted to sell and move to a larger unit. We took her up on it and bought a larger unit in the same building. We got an over ask offer of $164k and bought a bigger unit for $170k. A year later and I was now working in Burnaby, a crappy commute. The condo needed a new roof and we had an assessment of $5000 that we had to take HELOC to pay for. We got a call to check out a place in a co-op in Burnaby near my work. It was perfect for the family we wanted to start. When we returned from checking out the co-op there was a flyer under our door. Our friendly realtor had just sold a comparable unit to ours for $240k.

    Our families told us we were nuts to sell and rent. I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k. My sister explained that I didn’t understand because I didn’t have kids yet how important it was for us to have real estate holdings to leave them. I decided that when I did have kids, they would be better served having me home for the two hours I would have been commuting then having a condo in Surrey 50 years from now. We pulled the trigger, the realtor actually sold the place to the same people who had bought our previous unit and we are now renters in Burnaby.

    I knew nothing about real estate when I met my wife, she had bought into the market with an inheritence and had a bit of trouble walking away from ownership. But strata drama had shown her that she didn’t really own much of anything, she couldn’t rent her place out, she couldn’t decorate the way she wanted, she could have the pets she wanted, it was really a lot like living in a co-op. Except your crazy neighbours are toying with a massive chunk of your equity when they make silly rules. (They tried to make the building a 55+ while we lived there).

    But ultimately it was that chance conversation with the realtor when she genuinely predicted a slow, steady increase in value that paced with inflation that tipped me off to the anomaly that was this price increase. I watched it shoot up and I was not prepared to sit back and watch it drop back down, taking my windfall with it. My wife is glad we made the move too, now she tries in vain to explain to her friends and family that they are headed for financial ruin if they continue their real estate delusions. But we all know how that goes.

    • Yes, nice work. It’s possible that the people who know next to nothing about real estate will end up better off than the cognoscenti. After all, you have to know all about it to pay way more on a mortgage than you would on rent, or to turn down an offer of stupid money for your home because you just know that even stupider money will offer next year. And kudos for deciding that time with the kids is more precious than a two hour commute — so many people seem to get that one wrong.
      I loved the bit about needing children to understand that a legacy that isn’t real estate is no legacy at all.

  13. Realtor behavior

    Very interesting story, and hats off to your smart move!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s