Problems with Real Estate Career during the Recession - Research Paper Example

Problems with Real E Career during the Recession Table of Contents Executive Summary…………………………………………………….2 Introduction……………………………………………………………..3 Research…………...................................................................................4 Methodology ……………………………………………………………4 Measures…………………………………………………………………6 Procedures ………………………………………………………………6 Results……………………………………………………………………7 Conclusions……………………………………………………………….8 Recommendation …………………………………………………………9 APPENDIX ……………………………………………………………...11 Works Cited……………………………………………………………….12 Executive Summery Real estate market is among the most dynamic market in history. Despite the fact that the market is not that large, many processes need to run successfully. Many economic issues as well as legal matters that make operation in it not that easy bind this market. Investing in real estate is only profitable when the economic gaps are high, but quite challenging in low economic seasons. Working n real estate does not offers difficulties to the investors only, but also to their selling agents. Brokers normally earn handsomely in peak seasons despite some few challenges they encounter during their marketing. However, in recession times a lot of risk with little satisfaction is what they encounter in the job. There are several challenges that they meet in their operation, including the fact that this sector is much dominated among few buyers at the recession times. This creates a very stiff competitive environment that discourages their prosperity. Marketing real estate products pose difficulty due to the high expectation from the sellers from the brokers. Despite the economic falls, sellers still expect to fetch great prices for their products that become unachievable by the agents. Emerging trends in the real estate such as such as Mortgage Assistance Relief, MID and QRM creates changes in the brokers work environment. This forces the brokers to adjust to the running occupational changes that normally are not easy. During economic scarcity loaning system are much reduced that only a few clients are available in the market. The agents hence find no market for their services in the market. In such cases generally earns very little to support them. Because of these challenges, working in this career is normally very hard, and mitigation measures are necessary to protect this employment sector. Several recommendations encompassing legal aspect, market protection, financial security, diversification, technological adaptation and teamwork have been proposed for implementation to see these groups succeed and enjoy their career. This proposal was made after a rigorous research and study in the field. Introduction For many years, the lives of real estate agents have been unbearable, especially during recessions. Due to this, the brokers sent their pleas to the ministry of labour in the late 2007, following the start of 2007 and 2009 recession. This was taken as an appropriate moments since studies could reveal situations of the real estate brokers from the start to the end of economic hard times. The Ministry in turn sent a group of experts to study the problem and recommend as appropriate. This report was presented to me, a broker and the secretary of the real estate brokers in the Washington. Besides, the report was tabled before the representatives of real estate agents, real estate investors and representatives from government policy makers and planners. This was carried out in a two days seminar in Washington. The report was aimed at displaying the problems facing the agents, the capacity and degree of the problem and the possible solution. It was deemed necessary since the government focus were majorly towards investor and consumer’s protection without consideration on the influence to the brokers. With each recession, life is growing harder for agents that force them to seek alternative way to survive. The report conclusively assessed all the possible problems facing the agents especially in lean times. Research The goal of this research was to determine the problems agents working in real estates encounter during economic recession. Due to several challenges facing the agents in the real estate, proper mode of addressing their problems becomes a necessity (Dodson 112). However, to address these issues before the stakeholders in the industry, precise and supported evidences of the situation was necessary. Real estate agents got this support from the Ministry of labour who funded the research that was carried out by independent researchers to identify the problems. The research work was carried out under the following objectives: 1. To identify the industrial problems facing real estate agents during recession periods 2. To determine the degree of the problem among the real estate agents 3. To determine the issues in the real estate industry policies that impact to the problems of the agents 4. To determine the of the challenges to the life and career of a real estate agent 5. To find out the possible measures of curbing the problem in both the short and long run duration. Methodology To underscore the problems of the real estate during recession, a team of independent experts that was hired by the Ministry of labour carried out this research. The group comprised of forty members in total. However, they worked in smaller groups in different areas. The custody population was made up of 1000 randomly sampled real estate agents from different real estate industries in Washington. The study population was limited to economic recession years. The sample companies whose agents were used were randomly sampled. The study population was chosen under the following criteria: 1. A real estate agent by career 2. Have served in the real estate industry in one or more recession period 3. Is legally employed above eighteen years old 4. Works in real estate as a career of profession The study was carried research was carried out in the late recession period which started from December 2007 to June 2009. The frame used in sampling was obtained from the twelve chosen industries. However, since most of the group met the criteria a 25 percent sample was taken from 4000 agents to make the research easy and cheaper, 40 percent of the agents were female while the 60 percent were male (Brezina 50). The group was majorly composed of people below 30 years (Brezina 50). This represented 75 percent. Only 5 percent were above 50 years while the rest 20 percent were between 30 and 50 years (Brezina 50). The sample taken was non-race sensitive and all the groups were equally represented. Several data collection methods were applied by the team i.e. interview, application of questionnaires , use of hard and soft copy materials like real estate articles, observations on the working trends and wages records from the agents. Household analysis was also carried out to determine the brokers’ standard of living. The group also moved to the real estate offices to collect different information including the number of employees across the recession years, their wages, the property they own, their family background and the number that have moved from real estate career to other forms of employments. As much as the sample was not a whole representation of the study population, the primary aim was never generalization. The main aim of the study was to determine the problems of the real estate brokers during the recession periods. Measures The measures used in this research include the common economic instruments. The instruments used were applied as part of the data collection criteria by the experts. The income aspect was used that determined the income the agents received against their expenditure. Earning rates were analysis against the spending rates at any given particular moments (AREUEA 34). Real estate demand at any given time of the recession was also measured as it marked work availability for the agents. Legal constraints also marked an instrument of measure since it controlled the operation of the brokers. Living standard and work satisfaction were also given consideration in the research (Brezina 51). Procedure Between December 2007 and June 2009 the selected sample were contacted and venue created for the meetings. The venues were normally as close to any group as possible. The participants were detailed on the study as much as possible. They were given options of participation and assurance of confidentiality. None of the agents did refuse to participate in the program, depending on the location they took, through different intake measures. The participants were first taken through a month training to ensure that each understood his part in the exercise. They were given daily allowance for their participation project. Results Limited Buyers From the research, the experts identified several challenges. Taking consideration that recession periods forces most buyers only to deal with basic needs 85 percent of the agents reported that there were no buyers in the market (Stefaniak 217). This was a great factor affecting them since most of their wages are commission based. At some time across the period around mid of 2008 they could hardly locate any potential buyer for their products. This translates to no earning during that period (Ashok 132). Conflict of Interest The brokers also found it challenging to market real estate product during recession due to conflicting high prices expected by the sellers and the informed consumer choice in the market. This was reported by 80 percent of the participants as they complain that normally they get pushed to wall by unreasonable prices by the sellers (American Institute of Real Estate 24). The consumers on their side make the informed choices as the economic scarcity hits that no one is ready to throw their money in expensive products (American Institute of Real Estate 25). Mortgage Assistance Relief About 65 percent people raised alarm on the Mortgage Assistance Relief Service Rule (MARS). As much as this rule is aimed at a consumer defense, they have contracted the brokers operation. The brokers find problem in acquiring and operating within a license frame as the rule requires (Science 21). This means that their work is limited to a small geographical area and one company. During lean period it is never viable to stay in one place and expect customers as most of the agent complained. The rule generally makes their dealings almost impossible during these times (Duran 133). Issues of MID and QRM Brokers reported 70 percent of their problems to emerging issues such as the Qualified Residential Mortgage (QRM) and the Mortgage Interest Deduction (MID). In any recession customers are wary of their spending that issues that any emerging issue affect their decision on real estate purchase. At the same time brokers the sellers and financiers forces that they lose their bargaining power control operations. In the end, their sales are affected making some to seek alternative source of earning (Schwartz 42). Fall In Subprime Loaning Buyers relies on loans for their purchase that any shift in loaning system affects their purchasing capacity. Fallouts of the subprime loans have contributed to the major problems facing the brokers as 75 percent responded. This comes because government focuses on tackling other areas of importance than loaning the mortgages. In most cases of the recession, the loaning institutions lack the potential to give aid to the customers due to scarcity in the economy (Lois 117). Market Flood Lastly, 68 percent of the respondents raised their problems based on too many operating agents. Real estate has the highest number of brokers above the insurance companies (Leigh 142). The competition becomes so stiff in lean periods that only few can survive in the market. The survivors only get these opportunities through good prices from their sellers or strategic location to the clients. Flooding of the agents also is contributed by limited rules governing the sector (McBurney 268). Conclusion Real estate career tends to be more expensive and less lucrative in recession periods. The agents find it hard to balance their needs, their employers and expectation and market pressure that makes some opt to alternative careers. In addition the government policies tend to sideline the agents as they lack legal protection measures. The research carried out is expected to make the real estate marketing job better for agents if proper implementation is carried out. The research points to specific issues affecting agents and the recommended solution during low economic period. This was after a thorough study of the agents working condition and environment. It is expected that with the recommendation given, the life of the agents will be improved with the reduction of their problems. Recommendation The dynamic nature of real estate brokerage continues to open wider challenges to the agents. Since this is a big employing sectors measures should be taken to protect this market both at the national and industrial level. It is found that, to improve the agents condition all the stakeholders must work hand in hand to ensure the following recommendation are instituted in their policies and programs. According to the experts, the following were the recommended actions that need to apply to solve the crisis. Technological Maximization It is recommended that the agents also develop their unique ways of reaching their customers. This is aimed at minimizing their operating cost when seeking their clients. The agents need to apply such sources like internet and other cheaper modes of reaching their clients. Technological advancement in real estate also is also critical for widening their market. Development of Organizations Agents should form their organizations that lobby for their interest. For them to work efficiently, agents need to have a strong team that identifies them and able allocate greener pastures. In addition, this will reduce chances of having fraudsters among the group. Well-organized team will also be useful in advancement of training programs and required skills in line with the emerging issues in real estate. Development of a Business Plan Agents should draw a good business plan that guides them in their activities. Business plans are also vital for situation like recession as they give alternative actions to the agents. The experts strongly recommend Diversification Agents are required to diversify of different aspects of real estate, as this will enable them to have alternative options during lean season. Diversification can be in different forms of houses and other buildings. A diversified a gents reduces chances of a total failure in his career at a given time. APPENDIX Glossary MID: Mortgage Interest Deduction. This was a policy aimed at protection and cushioning the consumers. QRM: Qualified Residential Mortgage: This is a policy aimed at protecting the consumer from exploiters, where by the sellers clear identification became essential MAR: Mortgage Assistance Relief: This a loaning relief aimed at reducing costs to the consumers. Works Cited Alex, Schwartz. Housing policy in the United States. Singapore: Taylor & Francis, 2010. Print. Corona, Brezina. America's Recession: The Effects of the Economic Downturn. New York, NY: The Rosen Publishing Group. 2011. Print. American Institute of Real Estate Appraisers, Appraisal Institute. New York, NY: American Institute of Real Estate Appraisers. 1960. Print. Ashok, Bardhan. Global Housing Markets: Crises, Policies, and Institutions. Canada: John Wiley & Sons. 2011. Print. American Real Estate and Urban Economic Association. AREUEA Journal: Journal of the American Real Estate and Urban Economics Association. California: The Association. 1996. Print. Donald, McBurney. Research Methods: Examples and Explanations. Australia: Cengage Learning. 2009. Print. Esperanza, Duran. Latin America and the World Recession. Cambridge: Cambridge University Press. 2009 Geller, Lois. Sold Direct Marketing for Real Estate. Washington, DC: Pro Capital Books. 2006. Print. Jago, Dodson. Government Discourse and Housing: Urban and Regional Planning and Development. UK: Ashgate Publishing, Ltd. 2007. Print. Robert, Stefaniak. Real Estate Marketing: Developing a Professional Career. Milwaukee: Walker-Pearse, Ltd. 1998.Print. Science Direct. Journal of Housing Economics. USA: Academic Press. 1993. Print. Skene, Leigh. The Impoverishment of Nations: The Issues Facing the Global Economy. London: Profile Books. 2010. Print. Read More