Real estate bar camps are an held in an “unconference” format where some of the best and brightest come to share, laugh and learn.

On November 12, prior to the National Association of Realtors annual Conference and Expo in San Diego, approximately 400 real estate professionals from across the country gathered for just such an event…

Many more photos available on Flickr.

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Spend much time on real estate blogs, internet message boards and the like and it won’t take long to hear Realtor Bashers making wild claims about over-paid real estate agents.

And while it’s true that one can make very good money in real estate sales, the simple fact is the vast majority of real estate agents actually earn very little.

Here is some data that was shared by the Arizona Regional Multiple Listing Service (ARMLS) in a “Broker’s Breakfast” this morning. Apply a little simple math, and it highlights what real estate agents typically earn, at least here in central Arizona (though I suspect the numbers are similar across the country).

Some facts:

• At the end of 2008, there were 33,500 agent subscribers to ARMLS.
• 20,466 of those agents (61%) had at least one sales transaction.
• Conversely, that means 39% of agents in the Phoenix area sold nothing in 2008.
• 7,156 agents (21%) had $1 million or more in sales volume.
• Those 7,156 agents had $23.6B of the areas $29.4B in sales transactions (80.1%)

In short, it’s the age-old “80/20 rule” – 20% of the agents do 80% of the business.

What does this mean?

Let’s start with defining “$1 million in sales volume”. This does not mean an agent earned $1 million dollars. Not even close. You may often hear an agent puffing out their chest with pride, proclaiming, “I’M A MILLION DOLLAR PRODUCER!”

Big deal.

“Sales volume” means the value of the homes sold. So if an agent sells one home priced at $1 million, they are one of the coveted MILLION DOLLAR PRODUCERS! Ditto if they sell ten $100,000 homes or four $250,000 homes. You get the idea.

What does this equate to in dollars of actual income for the agent?

Let’s say, for example purposes only, the commission on the sale of a home is 3% of the purchase price. (Before someone jumps all over me, yes, commissions are negotiable. And they vary wildly. But 3% is pretty typical around here. You’ll find some less, and some more.) Simple mathematics will tell you that on $1 million in sales volume at 3% commission, the agent has just earned $30,000.

Let’s not even go down the commission split road. For the uninitiated, real estate agents typically split their commissions with their real estate broker. I’ve seen splits of 50/50 to 90/10 (90% of the commission to the agent, 10% to the broker). There are offices that claim to be “100%” offices. That’s really a fallacy as trust me, brokers don’t work for free. They get money in one form or another from agents.

Then there are of course taxes. And expenses. But for the sake of argument, let’s just say the agent clears $30,000 on every $1 million in sales volume.

Then by ARMLS’s numbers, 79% of the real estate agents in the Phoenix area made less than $30,000 in 2008.

That’s hardly a boatload of money.

I’m sure someone has already whipped out their calculator and determined that the 7,156 agents that did $23.6B in volume averaged over $98K in gross earnings. That’s a pretty nice annual income. But averaged of course, means exactly that. There’s going to be a distribution of incomes in that 20% of top producing agents, and this data doesn’t tell us what that distribution might be. The entry wage to get into that “top producer” group is just $30,001 in annual income. No question though that some of that 20% are doing very well financially.

But still, four out of every ten agents in the Phoenix area made NOTHING in 2008. and eight out of ten made less than $30,000 in annual income (significantly less if one factors in commission splits).

What does this mean for home buyers and sellers?

Finally, Jay gets to the point!

What this all means is that you, oh home buyer or seller, is that you need to be very careful in who you chose to represent you in the sale or purchase of your home. Obviously the majority of agents out there aren’t making a living selling homes. Don’t you want an experienced agent representing you?

This is not to say that a part-time agent, or an agent that has a “real job” supplementing their income is incompetent. I know *many* wonderful agents that are in this situation. (I also know some lousy agents that are in the 20% group). An agent can also receive (or not) a lot of help from their broker, and/or other agents on their team.

Whether the agent you chose to represent you actually makes a living doing this is one of several factors you should consider. But it’s definitely a consideration. No, don’t go asking your prospective agent for their last five tax returns. That’s just wrong, and honestly, it’s no one’s business knowing what someone else earns.

But questions like, “Is this your full time occupation?”, “How long have you been in real estate?” “Will there be times you can’t help me due to other commitments” and similar questions are perfectly acceptable to ask.

Should you rule out an agent that isn’t full time? Personally I don’t think so. I’d rather hear an agent say, “Real estate is my passion, and I’m darn good at it. Yes, I supplement my income but you’re getting me, a great broker and I have tons of support to help you” than something like, “Hire me, I’m in the Million Dollar Club!”. One agent is being honest and upfront, the other one is full of crap.

Whether an agent has a secondary income or not may or may not be a critical factor for you. That depends on you and the agent. If it is important, you should know the numbers and I suspect that much of the general public is quite unaware just how many agents aren’t making their primary living selling real estate.

Now you are more aware.

And that’s the point!

Gary V - enthusiastic is one word to describe him...

Those that have been reading here for awhile know I love Gary Vaynerchuk. I had the pleasure of hearing Gary speak live not once but twice tonight. The guy gets it. “It” being business, and life. He took a good business (his families $3 million a year wine business) and grew it into an great business – to $60 million in five years.

Thanks to Doug Sutton with Keller Williams Realty East Valley for bringing Gary in for a special session just before his book tour signing event at Changing Hands Bookstore.

I got to the KW event early and grabbed the front row center seat. Below is a video of Gary’s entire talk, and most of the Q&A at the end. Sorry for the abrupt cutoff at the end, but the Flip cam only records for 57 minutes.

Disclosure: Gary isn’t one to mince words. If “colorful” language offends you, you may not want to watch. Yes, it’s almost an hour long, but it’s well worth it if you are even remotely interested in growing your business, social media and / or how to get more out of life…

And keep reading below the video to find out how you can win a FREE autographed copy of Gary’s New York Times bestselling book, Crush It!

A BIG thanks to Joe Manna and Infusionsoft for processing and hosting this video! You rock.

Download the video (165MB)

Win an autographed copy of Crush It!, Gary Vaynerchuk’s best seller

I have two autographed copies of Gary’s book to give away. And it’s easy to enter.

Just leave a comment.

That’s it. I’d love to hear your thoughts on what Gary says, but any comment will do.

I’ll pick two winners randomly by drawing on Sunday Nov 1 at noon Arizona time.

Be sure to leave a real email address in the email field so I can contact you for a shipping address!

 
These two fine young adults, with their impeccable fashion sense, are members of one of the Highland High School Jazz bands. (Matt plays the trombone and Lauren the saxophone. Both also play other instruments in the Marching Band and the Symphonic Band.)

The Highland High School Band department is sponsoring the First Annual Highland Jazz Festival on March 26 – 27, 2010. This is going to be an amazing event for local and regional high school and college bands as well as fans of jazz music.

Two premier jazz artists, 13 time Grammy nominee Bob Mintzer and 6 time Jazz Journalists Association Trombonist of the Year Wycliffe Gordon, will be playing concerts available to the public.

The kids will get to attend workshops lead by several world class musicians and college music professors. It promises to be a great program for young adults at all levels.

Such a wonderful event requires lots of planning, and unfortunately, lots of money. Bringing award winning artists and some of the best clinicians in the country isn’t cheap. Phoenix Real Estate Guy and Thompson’s Realty are sponsoring Matt and Lauren’s chairs, but that’s not even remotely enough.

So yeah, I’m asking folks to consider donating to the cause. The music program in the local (and I suspect elsewhere) schools took significant budget cuts. If we want to get kids the music and arts education they need, we’re going to have to pony up the bucks. I honestly can’t think of any better cause than our children’s education.

The Highland Jazz Festival has different sponsorship levels for individual, business, corporate and institutional donations. And they need donations. As the Arizona Republic recently reported, community support for the Jazz Festival is lacking.

This is a great opportunity for local, state and national businesses and organizations to support a terrific program that will benefit high school music programs across the Valley.

We need people to step up. For more info, go to the Jazz Festival page or Republic article.

Here’s some of the kids at Jazz Band practice. The one on the left is mine!

Photo credit: Michael Schennum/The Arizona Republic

More photos from the Arizona Republic

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Yesterday I sent out a message on Twitter that said:

Something big is gonna happen with Thompson’s Realty in the next couple of weeks. You’ll never guess, so don’t even try.

Of course people guessed. While some were creative, no one got close. And things happened a little quicker than I expected…

We are very, VERY excited to announce that Thompson’s Realty is opening a branch office in Tucson, Arizona. And we’ve got the PERFECT person to manage the branch and build a team in Tucson.

Kelley Koehler, aka HouseChick, to put it simply – rocks. Many people in the real estate business know Kelley. She’s wicked smart, one of the funniest people I know and is just an all-around terrific human being. Honestly, I can’t think of a better person to help lead the expansion of Thompson’s Realty to Arizona’s second largest metro area.

For those that don’t know Kelley, she is a University of Arizona graduate (we try not to hold that against her) with a degree in Systems Engineering with a Software specialty (I told you she’s a smarty) and got her real estate sales license in 2003 and her real estate broker’s license in 2008. In addition, she’s a classically trained ballet dancer, home remodeler, SCUBA diver and dog lover. I don’t think there’s anything she can’t do…

You can find out more about Kelley at her brilliant website HouseChick.com and her blog – one of the best real estate blogs in the country.

The branch office was opened today with the Arizona Department of Real Estate. There’s still some paperwork being processed with the Tucson Association of Realtors and Tucson MLS, but we expect that to be wrapped up by next week. Shortly after that, Kelley will officially be the Branch Manager of Thompson’s Realty Tucson!

Welcome aboard Kelley!!!

What if you held a contest, and no one entered?

That’s exactly what happened right here, two weeks ago. I announced a video entry contest where three lucky people could pick up a kick ass Ubertor real estate web site for a year. For a dollar.

And there was not one single entry.

Good grief. I’ve had plenty of failed blog experiments, but this one takes the cake!

So thanks to the graciousness of Ubertor, we’re going to try again.

This time, it’ll be even easier to enter and win.

Leave a comment here.

That’s all you have to do.

Just tell us why you need / want / desire a real estate web site from Ubertor.

The three judges; me, Ian Watt of the fabulous Vancouver Real Estate Video Blog and David Gibbons, Director of Community Relations at Zillow will each pick a winner. Judges choice. They can pick the winner however they see fit – creativity, random draw, need, throw a dart, whatever. (Ian and David agreed to judge the video contest, they haven’t committed to judge Part 2 yet.)

The rules are simple:

You can not be a current or past Ubertor client.

One comment per person.

Edited to add: Whoops, should have put a deadline in here! Comment by Saturday October 10 at noon Pacific time.

Let’s see if we can’t at least get some entries this time! Trust me folks, if you need a real estate website, you can’t go wrong with Ubertor…

Dear Huntington National Bank -

The addendum you are requiring potential home buyers to sign before you will even look at their offer is, in my opinion, ludicrous and borders on criminal.

I’ve seen a lot of banks put a lot of asinine things in their addendums that makes me question whether you people have a lick of sense, but you guys win the grand prize.

You all should be ashamed of yourselves and you should fire whoever wrote this load of bullshit you’re requiring people to sign.

Good luck with your attempts to fleece home buyers,

Jay Thompson

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That’s the letter I’m about to send to Huntington National Bank, the Arizona Association of Realtors, the National Association of Realtors, my elected officials, the AZ Department of Real Estate, the Attorney General’s office and anyone else I can think of.

Go read Heather Barr’s article on ThePhoenixAgents.com, Wrong on So Many Levels.

Seriously, read it. Heather outlines some absolutely ridiculous terms and conditions this bank is requiring a prospective home buyer to agree to – before they will even LOOK at the offer.

Things like:

• Making the earnest money deposit non-refundable for any reason.
• Requiring inspections to be complete, or waiving the right to inspect the property – again before the bank will even look at the offer.
• Forbidding access to the property unless the banks agent is present. (Really? The REO listing agents usually won’t even answer the phone, email, text or smoke signal. And now they have to be physically present?)
• Removing the financing contingency (in other words, if your loan falls apart you still have to buy the home. So come up with lots of cash, or kiss your earnest money goodbye).

There is more. It makes me want to puke.

What really makes me ill is the knowledge that there are a LOT of people out there trying to buy bank owned homes. And every lender has their own flavor of these insane addendums.

I’ll bet you a lot of those addendums are never read. Some agents say “sign here” and people do just that.

Potential buyers of REO / bank owned / foreclosure properties need to read every word of every document the lender requires you to sign. Every single word. If there is anything in there that you don’t fully understand the ramifications of, discuss it with your agent, or a real estate attorney. These lenders don’t care one thing about you. It’s all about them. They write 10 page addendums in arcane legalese that can cost you thousands of dollars.

And they’ll be the first ones whining to Congress and asking for a handout (and more of your money) when their financials crumble.

Be very very careful out there…

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Ever meet someone and just think, “I like this person”? Sometimes you can’t even really place exactly why, you just know it when you meet them?

Well, that’s Nancy Hawkes, the latest addition to the growing family at Thompson’s Realty.

She didn’t want to do it, but here’s Nancy in her own words:

Nancy Hawkes has worked previously with RE/MAX and Realty Executives. She is pleased to be part of the smaller, friendlier family at Thompson’s Realty.

As a Tempe native and long term resident, Nancy knows and likes a lot of people, which enables her to work primarily by referral. She believes that providing excellent customer service and promoting her clients’ best interest is the only way to do business.

Nancy’s husband, Rob, is a self-proclaimed computer nerd who writes the software tools that manages wide area networks for large corporations [Jay says, “Nerds are cool”]. They have been married a long time and have three grown sons and five grandchildren whom they adore and spend as much time as possible with. They also have several critters, including an African Grey Parrot with a huge (and loud) vocabulary.

On the rare occasions that she’s not busy with work or family, Nancy likes to cook, bake, sew, travel and entertain.

Nancy has a BA in Art Education and a MA in Teaching English as a Second Language. She teaches an American Business Communication class at ASU’s MBA school and spends the rest of her daylight hours happily working in real estate.

We want to take a moment to welcome Karen Fanty to the growing family at Thompson’s Realty!

From the moment we first met Karen, we knew she was the perfect fit. She’s personable, smart, funny and places her clients needs above everything. Just what we’re looking for in an agent.

Karen spent 18 years as real estate paralegal before getting her real estate sales license in January 2005. Her husband owns a general contractor business – Wild Hare Builders – and built custom homes in Rio Verde for Alexander Homes for a number of years. Karen knows real estate law, sales, and construction!

Karen lives in East Mesa and is mother to three teenagers (and her sanity is still intact). She grew up in an Italian neighborhood in Philadelphia and with an Italian husband, she enjoys red wine and loves to cook – we must sample those killer Philly Cheesesteaks soon…

As someone who loves real estate and lists helping people find the perfect home as her favorite thing to do, Karen is a great addition to the Thompson’s Realty team.

Welcome aboard Karen!!

Here’s a post that your average home buyer or seller could probably care less about (though really, you should. Things like this could ultimately affect the way you search for homes on-line or your agent markets your home for sale on-line).

The Back Story

To make a long story short, back in May the real estate interwebs were all a buzz about a… let’s just say “highly questionable”… decision by MIBOR (Metropolitan Indianapolis Board of Realtors) that decreed Google and other search engines were “scraper sites” and that an Indianapolis agent was violating rules by having an indexable home search solution on her web site. This resulted in the search being shut down. Sounds silly, and it is, but it happened.

That agent (Paula Henry) and I were asked to attend the National Association of Realtors (NAR) midyear meetings and address our concerns with the Multiple Listing Issues and Policy Committee. The Committee modified the policy, agreed to it, got it passed by the Executive Committee and unfortunately, a single member of the 900 member NAR Board of Directors (not coincidentally, a member of MIBOR) via a parliamentary procedure sent the proposed changes to the IDX policy back to a “work group” for further discussion and clarification.

NAR’s IDX Rule Changes Need More Study, is a good article on the initial days of the controversy and what happened at the midyear meeting. The comments are definitely worth reading.

After the midyear meeting in Washington, D.C., the NAR was gracious enough to invite me to sit on the MLS Committee and join the work group, so off I jetted to Chicago for Monday’s meeting of the “IDX Enhancements Work Group”.

So what happened in Chicago?

I’m not at liberty to write about exactly what was discussed in the meeting. Let me be crystal clear here. This is not because the NAR is trying to hide anything. Trust me, if they were, I’d say so. It’s because the final language of what the work group is recommending to the committee isn’t set yet, nor has it been delivered to the full MLS Committee. To post the interim language here would be a disservice to everyone. There were some very senior members of the NAR leadership team in attendance, and they had no issue with letting me write about the general outcome of work group’s discussion.

First and foremost, it’s important to understand that the work group does not establish NAR policy. They draft (in sometimes excruciating detail) recommendations that are then sent to the full committee.  That committee will then discuss and vote on these recommendations in the NAR annual meeting in November, then it goes to the “Executive Committee” and assuming passage there, it’s off to the full Board of Directors for their approval.

I must say that I was impressed with the people that composed the work group. There were brokers, association and MLS executives, and a cross section of NAR leadership from legal to technical departments (technically, the NAR leadership weren’t workgroup members. I’d call them “advisors”). This was a very sharp, very dedicated group of people that were obviously serious about their duties and kept both the NAR membership, and the real estate consumer public in mind throughout the meeting.

For the love of Pete man, get to what was discussed!

Two items were on the agenda for the meeting: 1) Proposed enhancements to the Internet Data Exchange (IDX) policy; and 2) Indexing IDX information by search engines.

The morning was spent discussing enhancements to the existing IDX policy. Much of this was to better align the IDX policy with the VOW (Virtual Office Website) policy. Significant discussion took place surrounding two major items of concern, the display of user-generated comments about a seller’s property and Automated Valuation Methods (AVM’s) – automated / electronic home value estimates – of home listings. Providing the sellers with a way to opt out of these two areas was the chief topic of discussion in this regard. The general consensus was that home sellers should be able to “opt out” of having this sort of information shown side-by-side with their listing data. (I am grossly over-simplifying here as I try to convert 2 hours of discussion into a single paragraph.)

The second subject of morning debate was advertising and co-branding on IDX search page results.  There have been issues in the past with some folks having deceptive or misleading advertising / co-branding on their web sites. This is obviously (I would hope) not good. I was surprised to learn that there are some MLS’s out there that prevent any co-branding on IDX display pages (for co-branding, think of the all-in-one brokerage/lending/title shop, or where you join with a third party – like a listing aggregator – and display their logo and yours). While I’m not a fan, at all, of single agents doing two jobs like agent/lender, there are many brokerages that combine real estate services under one roof. Seems odd to me that some MLS’s would prohibit this sort of advertising, but to each their own I suppose. What this does demonstrate is the difficulty in crafting one national policy to cover hundreds of local MLS’s and their nuances. It’s not easy folks, believe me.

What about the indexing? Tell us about the indexing!

The afternoon was spent discussing the subject of search engine indexing of IDX listing data. Those that have followed this topic know my position on this matter is crystal clear – we’ve got to allow search engines to index home listing information. Got to. To prevent it would be… well, I don’t have the vocabulary to explain what preventing search engine indexing would be. Crazy? Asinine? Just plain stupid?  Let’s just say there is no valid reason I can comprehend to require agents and brokers to prevent search engine indexing of listing data. In fact, the only way to truly do that would be to pull every agent/broker home search off the Internet and revert to keeping listing printouts in a three-ring binder. In other words, we’d have to fire up the flux capacitor and head back to 1983.

Again, I can’t reproduce the exact language that the work group will be sending on to the MLS Committee, but suffice it to say that I was very pleased with the end result. I think, assuming it gets past the Board of Directors this time, that the new policy language will be advantageous to both the NAR membership, and more importantly, to real estate buyers and sellers. It will, in short, do the right thing. But it’s not policy, yet.

So what is next?

The recommendations of the work group will be collected, collated and codified and shipped off for the full MLS Committee to review and act on at November’s meeting in San Diego. Assuming the MLS Committee approves (and I suspect they will – they did at Midyear), the suggested policy changes go through Executive Board review and then to the NAR Board of Directors for a vote on final passage. This time, the subject matter has been dissected and discussed at length, so hopefully the BOD will approve and we can put this whole sordid mess of whether or not IDX listings can be indexed to bed.

This was my first real experience at the national level of how things get done inside the NAR. While the wordsmithing down to the comma level was tedious at times, it was very interesting to observe and participate. To be honest, I was all prepared to go to battle and knock some heads to convince people that indexing listings is the right thing to do, but it wasn’t really necessary. The workgroup “got it”. Now we just need to help the Board of Directors “get it”.

Any BOD members reading this (and I know some are), I’d appreciate your support in helping push these changes in November. If you need any help understanding the nuances, please don’t hesitate to contact me.