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Real estate agents decide whether to stay in

BY VANESSA GREGORY, Californian staff writer
e-mail: vgregory@bakersfield.com | Wednesday, Feb 6 2008 10:05 PM

Last Updated: Wednesday, Feb 6 2008 10:10 PM

A year and a half ago, as real estate veterans started to talk about troubling signs of change in Bakersfield's market, sales agent Charles Olsen tried to stay positive.

The ex-Navy man was new to the industry, fresh off a job as a boiler operator. He had already racked up six transactions within three months of getting his license, and he loved working with people.

He beat the bushes. He knocked on doors. But the sales barely trickled in.

"It was a good fit for me, but the market is what it is," said Olsen, who left Watson Realty ERA after about a year of trying to survive selling real estate. He now handles quality control for StructureCast, a Bakersfield concrete company.

A clearer picture is emerging this month of how many of Olsen's fellow real estate agents and brokers might be leaving the industry amid falling home prices and dwindling sales. Realtors face a Feb. 29 deadline to renew their association memberships, and while agents and brokers are not required to join, many choose to do so to gain educational opportunities and political clout, and to align themselves with the associations' ethical standards.

Last year, sales agent memberships had already dipped 15 percent compared with 2006, according to the Bakersfield Association of Realtors. This year, the association decided to waive an early January late fee to give its members a break. As of last week, 1,054 of the 1,686 billed agents had renewed their memberships, though more are expected to do so in coming weeks.

"Obviously, we're going to have some fallout," executive officer Linda Vernon said. "What happens in the next 25 days or so will really tell the story."

Real estate sales agents, brokers and affiliated industry professionals pay $529 a year to join the local, state and national associations. Agents and brokers also typically pay monthly fees to gain access to the Multiple Listing Service, an index of properties for sale.

So far, association membership has not fallen as much as might be expected considering the market conditions, Vernon said.

Bakersfield's median home price dropped 25 percent from its June 2006 pinnacle to a January price of $225,000, according to a preliminary report prepared by local appraiser Gary Crabtree. The first month of 2008 also saw sales volume declines of 24 percent compared with January 2007, the report states.

But the number of renewing members may not entirely reflect the number of people earning a living in Bakersfield's real estate industry.

Olsen, for example, plans to maintain his membership in the hopes of earning extra money by working on weekends.

During the city's real estate boom, the legions of sales agent members soared 66 percent, from 1,161 at the end of 2004 to a peak of 1,931 by December 2006, according to the association. Many were newcomers to the business, eager to cash in on an exuberant business climate where, for a brief time, sales came easy, industry insiders said.

Since then, some real estate agents who once made good money have cleaned out their desks and left the business, said Watson-Touchstone Real Estate agent Lynnette Madden.

Activity in the residential real estate market has picked up over the past week or so, Madden said, with qualified buyers starting to look for homes in response to the Federal Reserve's decision to cut a critical interest rate by three-fourths of a percent.

But she doubts it will persuade those struggling to renew their association memberships and stick it out.

"I think they've already made their decision," Madden said.

J.R. Lewis, an agent at Scott Tobias Real Estate, said he personally knows of more than 50 people who have dropped out of the real estate industry in the last year.

Many rushed to become agents when home prices were soaring, but failed to concentrate on developing the relationships that foster long-term success, he said.

"It's really analogous to the dot-com boom," Lewis said. "People saw money and they just jumped in."

Lewis was one of them. He left a high school teaching job five years ago for real estate. He survived by focusing on hard work and business fundamentals, he said, and by resisting an industry culture where many felt driven to cultivate an image of instant success.

"I worked the whole first year in a 12-year-old Toyota Corolla," Lewis said. "It was apparent to me real early that it didn't matter that I had a flashy car."

The purging of the real estate ranks will ultimately benefit consumers, he said.

"A lot of these folks who are opting out, they are hobbyists, and they were not professional Realtors," Lewis said.