More than half of California's real estate agents take their job and shelve it after discovering the Golden State's housing boom doesn't make selling homes a walk on the beach.
In 2000, the California Association of Realtors selected 100 new Realtors and followed them through the first years of their career.
By the fifth year, only 43 percent of the original agents stayed the course. The other 57 percent went searching for greener pastures.
The association found that many left the industry because of a lack of support from their brokers, but others left because of the inability to make a decent living.
The association's membership is at a record level at more than 161,000 members and rising. A quarter of the current total membership, 42,000, came on board just in 2004 on the heels of one of the state's hottest housing markets.
Home prices in California increased nearly 110 percent during the five-year study period -- the biggest jump of any state, according to the Office of Federal Housing Enterprise Oversight.
A job selling homes in the Golden State appears to have the potential for a six figure income -- a necessary income level to afford housing in many of the state's markets. With the median price at more than $548,000 in December, according to CAR, a typical 6 percent commission, split two ways comes in at more than $16,400. Even after paying the broker half of that, selling a home a month, 12 homes a year, would provide a gross income of nearly $100,000.
Unfortunately, with so many real estate agents with the same idea, competition has become fierce. Productivity among CAR members is the lowest its been since the boom of the mid-1990s, CAR says.
Association members average only 8 "transaction sides" per year -- what amounts to only one side or half of eight commissions a year and, with the growth in discount brokerages, that half isn't always what it used to be.
And then, of course, there are operating costs, overhead and now a sales decline.
In December, 2005 sales were off by 17.6 percent, compared to December, 2004.
"I think the study probably underestimates the number of people who leave," said Jim Myrick, broker/owner of Realty World-Realty Solutions in San Jose, CA.
"Those willing to participate in the study probably have a higher dedication to success than your average person. I would think the numbers would be closer to 70 to 80 percent of people who aren't making it," said Myrick, who was the 2005 president of the Santa Clara County Association of Realtors in San Jose, CA, the largest city in the county where there are more than 9,000 association members who are Realtors, but fewer than 3,000 listings each month.
In addition to the difficulties earning a living as a real estate agent, the study also found:
* Nearly all of those in the study (95 percent) said the value of their membership in their local association and CAR exceeded the costs in the first five years.
* Successful new real estate agents attributed their success to effective training, mentoring, and marketing.
* Agents sought training in transaction process, marketing, and professional skills early in their careers and later, Internet marketing, more advanced technology applications, integrating technology to expand businesses, professional development and niche or specialized marketing.
* As the study progressed, panelists diversified their position by focusing on niche or specialized marketing and integrating technology to expand their business.
* Technology and the Internet were key components to new licensees' business models, including integrating their use of Internet marketing in their business.