Larger players, investors shift market for real estate agents
Real estate agents live in a market that is constantly shifting, pushing them in new directions.
So what is causing the rapid change? For starters, the sales landscape for real estate agents changed dramatically after the 2008 housing bust, forcing many retail agents to fill their buckets of business with the disposition of REO assets.
Then came the short-sale craze. Now it’s only a matter of time before the market shifts gain, leaving agents once again searching for new buckets of business, in an industry where larger firms are now using their own in-house brokerages to serve the asset disposition needs of institutional investors.
"I think this is a difficult time for an agent who decides they want to start to get into the REO business," said Rick Sharga, executive vice president of Carrington Mortgage Holdings. "We are at the tail end of the curve. While there still may be larger than normal REO sales, we are going to see those numbers continue to decline."
The reason: The market anticipates another increase in short sales in the next 12 to 18 months, Sharga told HousingWire.
This is both good and bad news for real estate agents. Many agents are now learning new skills and grabbing more business, but holistically they’re competing in a market where larger institutional investors are looking to get into the REO and traditional real estate market and using tighter networks of agents to get the work done.
Wendy Forsythe, executive vice president and head of global operations for Atlantic & Pacific Real Estate, a subsidiary of Carrington Holding Co., is already leading a type of one-stop shop that seasoned agents look to in hopes of connectiong with institutional investors.
Atlantic & Pacific Real Estate formed several years ago to specialize in helping institutional clients dispose of bank-owned properties.
Since then, it has constructed a national sales network of over 1,100 agents to deal with real estate assets and continues to expand. Some agents work REOs, others work short sales. Forsythe says there's no specific goal, but the firm does plan to grow again this year, adding more agents to the network and expanding into new markets.
Getting into this type of network requires experience and a proven ability to take an existing book of business and expand upon it within an individual agent’s region.
"As agents in the business, we have to have an even broader spectrum of expertise," Forsythe says. "There probably isn’t one dominant sector of the market that we can service."
Instead, agents have to work short sales, deal with REO dispositions, service conventional sales and deal with the emerging influence of institutional investors who are grabbing multiple assets in numerous markets, keeping more inventory wrapped up in one band of business.
What does this mean for the individual agent or the entrepreneur or one-man band? Forsythe says this is a time when agents may be looking toward brokerages – either "they have to be their own broker or look to a brokerage."
At Atlantic & Pacific Real Estate, agents linked into the network receive training and access, but specific agents are chosen to handle business that pushes through the Carrington-Atlantic channel.
Sharga says, Atlantic & Pacific is essentially looking for agents that can take the business provided to them and then use their own drive to expand upon it, turning it "into an entrepreneurial business."
As for what happens to the smaller guy, everything is in transition, but opportunities remain.
"Someone didn't sit up one night and say let’s make it hard for the individual real estate listing agents," Sharga said. Instead, he says, in today’s environment, especially when dealing with institutional investors who are managing properties in multiple states, "it is easier for someone to work for one company that has coverage for you in 30 states."
"It was inevitable, you would see more of a business-to-business traditional approach take hold," Sharga added.