Too Many Realtors? Blame The Free Agent Economy
Over the past few years I have written a lot about new real estate agents in our marketplace. Who can blame me? With over 40,000 agents in the GTA, there’s plenty to write about and certainly there is enough chatter on various Facebook Groups about some of the things agents do (some good, but mostly bad). And, it seems like we ask ourselves, how did it get this way and can we do anything about it? We blame all the wrong people. How many times have we heard…. OREA should make getting a licence harder and RECO should limit the number of agents? The truth is we are barking up the wrong tree.
There are two ideas out there; the first one freely admits that there are people out there who see opportunity to make a quick buck in real estate, and why shouldn’t they? The market is strong and driven by cheap money. The other notion is that there are agents who enter the business because they want to take control of their lives. They believe in the work that they are doing and have the conviction to work hard, plan and adapt to changing environments. They enjoy more autonomy and flexibility and see opportunity for challenge. In reality it all plays to the overall theory that we are in the middle of the overall shift in the world economy. In 2001, Daniel Pink wrote a best seller called The Free Agent Nation about the rise of the independent contractor. In his book Pink argues that the catalyst for the adoption of the free agent nation happened when large corporations shed their work force in an effort to stay afloat during the recession. If you were working in Ontario in the early nineties than you probably saw it first hand. What emerged were people setting up their own smaller companies, out of necessity, and acting as independent contractors to larger corporations who were now free of paying health care or contributing to pension plans. They could keep their machines rolling at much lower cost. Pink comments that the times when Boomers and even Gen Xers went into the workplace thinking they would stick with an employer their entire lifetime were officially over. That shift has now been in place for over 25 years. For many young people entering the work force today, it is the new normal. They believe that a person is responsible for their own career so they are very comfortable with a free-agent mentality. But as Richard Florida comments in The Rise of the Creative Class, a book that I’m currently reading, “The free agent assumes more risk and responsibility along with more freedom.” Life is good as long as the economy is happily rolling along but pretty lousy when the economy turns south. Not to be the bearer of bad news but if you think the ride is never going to end, you are in for a shock. Consider that over half the agents working today have never even seen a real estate recession.
So where does that leave us? First it is important to recognize that like any ecosystem, only the strong survive. The real estate market ebbs and flows but those that don’t plan for the future are destined to lose a grip of their current position. I survived the last real estate recession, just barely. I remember when over half the agents hung up their licences. I was working in an office downtown and I remember vividly a cartoon that someone had taped to their desk. It said, “please God let there be another boom…this time I promise I won’t piss it all away!”.
Part of being a successful agent includes planning for the lean years. This doesn’t mean squirreling away all your money, it means being responsible…saving a portion of your earnings, living modestly, building your referral network and being on your game at all times. The cream rises to the top of every industry. The message seems clear, don’t worry about more agents coming into the business. Even complete saturation isn’t going to stop people from getting their licences, so work on running your business smartly.
mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.