The Number of Licensees vs the Number of Sales and the Future of Florida’s Real Estate
Thoughts from Andy Brown and The Climer School of Real Estate, the Best Real Estate School in OrlandoQuite often I am approached by my students in a class with this one specific question:
“With all of your experience, can you tell is going to make it and who isn’t?”
My response is always the same. “ There are a couple here and there that I have a feeling about. There’s a couple in every class that I feel are going to be very successful and there are always a couple that I feel don’t stand a chance and should not be here. However, I believe very strongly in the Pareto Principle otherwise known as the 80/20 rule.
I look at every class and I know that approximately 20% of them will make approximately 80% of the income and be successful while approximately the remaining 80% of them will be fighting over approximately the remaining 20% of the business”.
|The Pareto Principle|
I just believe that strongly in the Pareto principle. It’s always there, in everything.
By the end of 2016, according to the most up-to-date numbers from the Department of Business and Professional Regulation (the DBPR) there were 173,957 active sales associates, 19,830 active broker associates, and 39,781 active broker licenses in the state of Florida.
This adds up to a total of 233,568 total active real estate licensees.
According to the Florida Realtors®, there were around 165,000 licensed members of which 74% were Sales Associates or Broker Associates. This means that around 122,100 licensed members were not Brokers.
Also, according to the Florida Realtors®, $78.9 billion in sales transactions were closed by Realtors in 2016 on 268,731 closed sales.
Let’s dissect this for a minute.
Using the Board’s numbers, and if you believe 80/20 rule as I do, this now means that 24,420 licensees (or 20% of all active licensees) earned 80% of the available commissions and closed 214,985 transactions, and the other 80%, or 97,680 licensees, fought over the remaining 20% of available commissions and closed on only 53,746 transactions.
Even better, in $78,9000,000,000 in sales and assuming a 6% typical commission in a transaction as an average, this generated $4,734,000,000 in total commissions. If we assume an average split of 80% (many are 100 %’ers, many “cap out”, etc.); this created $4,260,600,000 in payable commissions to associates in 2016.
Let’s break that down to the individual. The 80/20 rule now says that on an average, the top 20% of licensees who are a member of the Florida Realtors®, or 24,420 of you, closed on a total of $3,404,480,000 for an average of $139,600 each. The remaining 80% of you, or 97,680, closed on $8,724 each.
I like to take another 20% out of each because I believe that there are always 20% who aren’t doing anything at all.
This takes the numbers to $174,500 per person for the top 20% and $10,905 per person for the lower 80%.
So, first, anyone can be in the top 20%! You need a plan of action, and you need to commit to working the plan. Find a coach and a mentor.
Second, this is still a fantastic time to get into the Real Estate Business.
In his “Florida & Metro Forecast 2016-2019”, Dr. Sean Snaith, nationally renowned economist and current UCF Director of the Institute for Economic Competitiveness, writes that, among other things,
• Florida’s labor force will grow at 1.8% per year • Professional and Business Services will have the strongest average job growth at 5.8%
• New Housing starts will begin to accelerate and increase year to year but not enough to match demand and,
• Real income growth in Florida will increase year to year and exceed the national growth by 0.8%
He also wrote “The fundamentals of the housing market in Florida continue to strengthen.”
Across the state, the number of people employed by the Real Estate and Housing market will increase from 182,600 in 2016 to 192,900 by the end of 2019.
In the Orlando-Kissimmee Metropolitan Statistical Area (MSA) alone; Dr. Snaith estimates that there will be 13,444 new single-family housing starts, another 13,514 in 2018, and another 13,649 in 2019.
As more and more people move into the state, especially into central Florida, more and more business and industry growth, and the new home builders are happy and keep building, Real Estate as a career will continue to change people’s lives. I haven’t even talked about the commercial nor the time share sector.
If you aren’t making enough money in your real estate career, consider looking in the mirror. A massive change is only one thought, one decision, one action away.
|The Climer School of Real Estate is the Best Real Estate School in Orlando|