In a market with shrinking inventory, high prices, and high interest rates, a new problem has emerged: a surplus of licensed real estate agents competing for available listings. According to a new report from the Consumer Federation of America, more than 1.5 million residential real estate agents — including brokers — compete for 5 to 6 million home sales annually. Not all of those agents are well-versed, and many of them are just part-time.
Influx of Agents Has Negative Impact
The effects of what the CFA is calling “A Surfeit of Real Estate Agents” range from more time spent finding clients to the frustration of agents and clients dealing with inexperienced agents, the reinforcement of relatively high uniform commission rates, and the damage to the reputation of the industry.
“A large majority of practicing real estate agents have recently received their license or work part-time,” said Stephen Brobeck, a senior fellow at CFA, of the organization’s report using data from a National Association of Realtors survey. “These agents usually charge the same commission rates as experienced, full-time agents yet in general offer worse service and deprive experienced agents of needed clients.”
The report documents complaints by many experienced, full-time agents of the incompetence and/or inattention of other agents that also harm consumers. And it emphasizes that because of the “surfeit of agents,” real estate agents and brokers feel financial and/or peer pressure to keep commission rates relatively high.
“Without 5 to 6 percent [commission] rates, even fewer agents would survive financially in today’s marketplace,” Brobeck said. “Ironically, relatively high rates attract new entrants into the industry, increasing competition for clients, and reducing individual income for all.”
Not so Much in North Texas
DeCarla Anderson of Dave Perry-Miller Real Estate is an experienced Realtor in the North Oak Cliff area. While she has seen longtime Realtors leave the industry in the past few years, she can’t attribute that trend to an influx of agents — full-time or not.
“There are a lot of agents who have chosen to retire in the last few years. A lot of big names,” Anderson said. Some have moved on — either to a new career, a new pastime, or a new location altogether — she said.
For Anderson, who has been a Realtor for 10 years, selling homes in the post-pandemic era hasn’t been all that different from before.
“It’s been a kind of interesting market, and my business has been doing great — sustaining and growing,” she said. “We have our core business base built. I do have a lot of clients and I do a lot of multiple transactions with investors. I don’t see agents that have worked in this market for a while being affected with a loss of business.”
The Dallas-Fort Worth market is often an outlier when it comes to national trends. During the Great Recession, the North Texas area real estate market wasn’t nearly as battered as other major metro areas. Likewise, the effects of a saturated agent market may not be felt as acutely in our region. Likewise, according to HomeLight, there are 7,200 licensed real estate agents in the Dallas-Fort Worth-Arlington MSA that make an average of $60,650 annually.
“I think that as far as North Texas is concerned, we’re kind of our own little area,” Anderson added. “It seems that we’re not impacted in the same way as the rest of the nation.”
