San Francisco is named best market for real estate agents in spite of intense competition
Still considered “red-hot,” San Francisco’s real estate market continues to close on homes quickly and a median home price is easily over $1 million.
But despite expert predictions, the market does not seem to be slowing down much, as reported in the San Francisco Business Times.
Noting median wage and real estate employment growth, WalletHub has named San Francisco the Best Place to be a Real Estate Agent for 2018.
The personal finance site compared over 170 U.S. cities across 18 key indicators of a healthy real-estate environment ranging from sales per agent to building permit activity to home turnover rate.
Patrick Carlisle, a vice president and chief market analyst for Paragon Real Estate Group, indicated some key distinctions that make San Francisco’s market stand out from the rest of the country.
“One of the challenges in San Francisco is how complicated the market is,” Carlisle said. “We have single-family home, condos, TICs, co-ops, then we get into rent control and anything to do with tenants is not just complicated, but dangerous if you’re not doing the right thing.”
He also said that clients in San Francisco have higher expectations than in other markets, demanding more tech-savvy agents in communication, marketing and data analytics.
“The level of sophistication here is unlike anything else, when you are a very, very bright entrepreneur that has succeeded you have a certain level of expectation of the people you hire to meet your needs,” said Pacific Union real estate agent Steven Mavromihalis. “What that level of expectation has done is it’s brought a higher and higher level of service within the industry.”
With some of the highest housing prices nationwide, it’s not unusual for top real estate agents to gross over $1 million a year and several agents earn well into the six-figures.
According to Carlisle, those financial incentives have created an extremely competitive environment where top executives in fields like finance, law and business have entered the business.
“At the same time you’re putting together multimillion dollar contracts, you’re preparing a home to show,” Carlisle said. “Being a real estate agent in San Francisco is sometimes like stapling five or six careers together that don’t really have much coherence.”
Another big difference is that real estate agents just need to do a few deals to be successful in San Francisco.
“While in some markets you’ll see top agents do literally hundreds of deals, because of San Francisco's high housing prices, agents only need 10 to 12 deals to be in the top 10 percent and make a very good living,” Carlisle said. “However, there’s ferocious competition to get those deals, especially in the higher price ranges.”
Carlisle entered the real estate industry in 1989 and has seen many changes through the years including new online tools offering services to potential homebuyers.
“The only way real estate agents could compete is to reduce the cost of hiring an agent,” said Mehdi Barati, professor of economics at the University of Southern Mississippi in the WalletHub report. “Price is and always has been the No. 1 factor in the decision-making process regarding purchasing a good or a service.”
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