Guess how much one can easily have in just a year.
You may be young and ambitious and the real estate may be just the thing for you. You have good social skills and enjoy meeting people. The prospect of receiving high commission fees of more ore less $1 million a year without having to study three, five or seven years, is an optimal choice. But not all things seem favorable. Based on the latest annual report from the Council for Estate Agencies (CEA), around 140 real estate agencies have closed down over the 12 months to March 31, 2015, and over 3,000 property agents have quit their jobs amidst sluggish property market.
Singapore Business Review spoke with several experts to find out if being a realtor remain an appealing career.
Here’s what they had to say before you seriously consider getting into the industry during trying times:
Jeff Foo, president of Institute of Estate Agents, Singapore (IEA).
I believe estate agencies would continue to encourage property agents to join their respective agencies. It is always more active during the months of September and October when renewal of registration takes place. The mood is pretty much the same.
My personal concern is with technology, it will affect the profession some what but as it still require some form of personalised services, it may still be an appealing career for some.
With Consumers being more knowledgeable and more savvy with Internet accessibility, information that are readily available on the internet or property portals, much less will they be requiring the services of estate agents except in areas when specialty advice in subject matters are required.
With property measures implemented, transaction and property prices are going through a lull period and price drop. Property agents’ income is somewhat affected.
The costs for property agents are relatively high. Annual renewal fees, professional indemnity insurance, portal subscription, advertisements, continuous professional development courses, etc., [are just some things to consider.]
Eric Tng, Division Director, ERA
Real Estate Salesperson (RES, this is how they call us in Singapore) is a middleman you cant do without in a real estate transaction, now or in the future. With the IT age, many predict that we will be redundant in the near future. I just don’t see it happening. You don’t buy a property just by looking at pictures/videos online. There are a lot more emotions and considerations in such a major decision.
With CEA, the industry is getting cleaned up. But it will take at least another 5 years for the public to respect RES as professionals. I always feel real estate is a full time job not a sideline to make additional income. Currently, we are seeing many part-timers in the business. We are handling a product which is worth few hundred thousands dollar or even millions and it wouldn’t be fair to a house owner if the RES is a part-timer.
Moving forward, RES, as a true professional, should be able to advise on real estate investments, calculate and help maximise investment returns and finally, manage clients’ real estate portfolio. Also, they should be familiar with overseas property markets in this age of globalization.
The top 10% in this business can easily receive $1 million or more commission annually. I estimate their costs (transportation, marketing, advertisements, staff salary, entertainment etc) to be about 20% – 30%. The bulk of commission will come from doing real estate sales. Income will also come from doing rental deals, getting referral fees from bank loans and management (running a team of RES) fees.
However, these top producers usually slow down after 3 – 5 years. It is a tough business. They work up to 12 hours a day, seven days a week, they get burnt out very quickly. Usually, the top producers will own enough properties for passive income or they move into a management role. Of course, there is a minority that regain their top positions after a few years break.
For an average full-time RES, they should be making a 5-digit income monthly else they are better off working as an employee. This career is only suitable for people with an entrepreneur mindset, motivated and able to work independently.
Ong Kah Seng, director, R’ST Research
Hiring is fairly cautious mood among agencies for now, due to the cooled property market sentiments. Buyers are generally cautious and selective in home buying too. Tenants are also more cost-sensitive, and more selective amid ample choices due to substantial new private homes completed in 2014 and 2015, and will be completing in 2016. Nevertheless, agencies remain very keen in attracting agents who are still much passionate, interested and experienced in offering specialized services to help owners, tenants and property buyers.
Many agents and agencies however take it very positively – they felt the lull period is indeed a time for further training to up the service quality and standards of agents. They are also welcoming agents to join them to undergo good trainings and prepare for any future market recovery, whether it is a gradual or fast recovery. In a bull property market, everyone will be busy cooking deals, and the lull period is definitely a very good time for agents to actively train and enrich themselves further to service and attract buyers, tenants or landlords requiring their service. It is a good time for agencies to also rework on operating and marketing strategies, so many agencies are indeed using this lull-period opportunity to enrich themselves.
Being a realtor is still an appealing one, although for now, it seems to be trying times.
But ultimately the weak property times will be over, and everyone who stay and bite the bullet will pull through. This is a period where tough times actually are in roads for further sustainability, as agents and marketing personnel will have to put in more efforts to attract and encourage buyers or tenants to firm up their decision. But this period, the agents will gain and devise plentiful useful marketing strategies and even go extra reach-out and may land himself with some interesting, new, less conventional set of buyers. These new opportunities and new profile of buyers or tenants whom the agents discover in his extra efforts will well be a back-up set of homebuyers or tenants for him to fall back on, when times improve.
The lull time now is actually very good time for agents to build up their own contacts, demonstrate their personalized, sincere services to the buyers, tenants and landlords, property owners. When times are better, they have no lack of such customers and they can go quickly full swing in closing deals and catch the upswing opportunity wave.
Yes, the property agency career will remain appealing, but more so only after the rough times are cleared, and likely after 2016 where new property completions moderate. The agents who painstakingly pursue their clients and conclude fairly mega deals during this period also will gain intangible returns, like extreme satisfaction, where they are seen to be survivors of the fittest. They also will feel very satisfied, encouraged and have some recognition about their capability and that home buyers and tenants, landlords, chose them over others during such tough times.