Secrets of the City

Quick, Alex, cross-reference that Strib graph with something showing me real estate sales since 2001. I’m curious to know if the increase in agents is because people are trying the self-employed, “easy money” career of real estate sales due to corporate layoffs, slow economy, etc., or if it actually correlates to a boom in the market. My personal experience tells me the former.

Did anyone else thought that it was strange that the Strib story on the 494 strip was mostly a walk down memory lane by Mark Stenglein, the Hennepin County commisioner best known for his desire to bring back indoor smoking?

Speaking of smoking, the article contains this unpleasent little story:

“…There was the night a pimp put out a cigarette in his prostitute’s eye at Webster’s. “It was tragic,” Stenglein recalls. “The cops came, the music stopped and finally the police declared, ‘She’s a hooker,’ and everybody went, ‘Oh,’ as if that was OK, and went back to the music,” Stenglein said.”

Another good reason to keep the ordinance as is!

Wait … Barbette was looking to buy out the Turf Club? Is that what they’re saying? (scroll down in the Chatterbox article)

* shudder *

Later in the Chatterbox/Turf Club article they relay the realy old news about the Olive Garden closing. In new pertaining to that…Nick and Tony’s is being ripped apart. Anyone heard of what’s going into this space?

Thanks for the mention of the PiPress story. MNSpeak is one of my favorites.

Working on this…

Nick & Tony’s will be M&S Grill – part of the McCormick & Schmicks chain.

Okay – looking back at sales figures, the increase in the number of agents does correlate with our local housing boom. However, I think the answer to your question is a little bit more complicated than that.

I didn’t re-read the article – did it really say people were turning to real estate because of a slow economy and corporate layoffs? If so that is nonsense and a perfect example of the type of bullshit information you get from the Strib.

The boom in housing can be better attributed to record low interest rates and a tremendous loosening in mortgage underwriting guidelines, which combined to dramatically increase the amount of home an individual could qualify for. This has been the fuel for the boom – NOT legions of freshly minted realtors.

I mean, sure, part of what realtors do is stimulate demand, and many of them got in to take advantage of what they perceived as easy money, but they sure aren’t causing the boom. [quick aside: Also not mentioned in the article are the very large number of agents that are not self-sustaining, do basically no business, but maintain a license anyway. These are the people that say they are realtors so they can pretend that they actually have a job] What’s also in operation, and I’d say accounts for much of the spike in realtors, is the insane business model the “Big Two” local brokers have, which is to agressively recruit and hire as many new agents as possible, in a dogfight for market share. Realtors aren’t paid salaries, pay for their own education, and most of the newer agents give a VERY healthy chunk of their commission back to the broker, so it’s both cheap and profitable to hire new agents – much more so than to equip established agents, who keep most of their commission, to do more business, more professionally. Their motto may as well be: “A Realtor in Every Home”

Then the big brokers (I am not beating up on the smaller, independent brokers here) complain, lobby, and engage is all sorts of other shady, rent-seeking practices (legislating against discount brokers, for example) to try to protect themselves from this little competitive disaster of their own creation. It’s actually pretty entertaining to watch.

Were I an agent with Burnet or Edina, I’d be quite peeved over the fact that my own employer has basically flooded the market with competition, eroded my commissions, and diluted my already lackluster professional reputation with all these new, inexperienced agents running around. (for what it’s worth, these complaints are similarly true in the mortgage industry, though less acute) Of course, any time I bring this up with agents at said brokers, I get mostly blank stares.

Wow, we got a little off topic there, but whatever.

M&S Grill> looks brutal.

Thanks Alex, you typed out everything I didn’t want to. I had made the supposition above that people were getting into real estate presumably because of the allure of “easy money”, but your post sums up exactly what I meant by that. When I got my sales license (which I also kept active for no reason), all my fellow students were there because they gobbled up all the hype from the Big Two. I remember learning that something like 50% of sales agents cut their losses after one year because they can’t afford it anymore and aren’t making enough money to pay their brokers. The whole industry is a racket. I’ll probably catch some heat for this, since I have friends who are salespeople, but most of the time you’re paying someone for doing virtually nothing. Buy and sell your own house! Anyone looking for a 1-hour tutorial on how to do so can email me anytime.