Lured by the estimated $180 million in commissions generated by property sales here last year, hundreds of eager new agents are now entering the real estate business in the Washington area.
Many agree with assessment of Bethesda realtor Frederick V. Thomas that the real estate industry is the "biggest game in town, next to government."
But few of these newcomers will find the easy money they seek, experts advise. In fact, income is meager for most agents during their beginning years, industry figures show. Many beginners, disillusioned, will give up after a short spell.
On the other hand, the real estate brokers for whom new agents work, especially those who give their sales people little training or support, make money off the constant stream of new licensees who pass through their doors, according to a Labor Department occupational expert, Pat Wash.
"It costs them very little to bring somebody on staff, even if the person can't make enough to survive," he said. "Any money he brings in is gravy for the broker. And brokers have plenty of people to choose from."
If last year's lively market continues through 1978, at least $3 billion in property will change hands in the metropolitan area - and that figure is probably low. It reflects only the records kept by local realtor boards, and not the total of all property sales that have occured.
Boards of realtors in the suburbs report that their members handled $2.3 billion in sales in 1977. The District of Columbia board has not compiled a total of its members' sales. But the board points out that mortgage loans in the city amounted to more than $1 billion last year.
Among those competing for sales in this area are 15,000 realtor board members, many professionals who are not board members, and the new licensees. The later should be prepared, not for riches, but for some belt-tightening, according to a study by the National Association of Realtors, an organization of real estate professionals.
The study shows that, nationally, the median net income for full-time sales agents after one year on the job was $3,400 in 1974. Adjusted by a yearly inflation factor of 8 percent, the figure is $4,300 for 1977. Median figures for the Washington area were not available.
The adjusted 1977 figure nationally is $10,000 for an agent with two years experience, and $13,860 for an agent with three years on the job. The median income for agents who have worked between six and 10 years is $21,415. The figures are for sales people, not the brokers from whom they work. The adjusted median income last year for brokers in business from six to 10 years was $26,454.
Many new licensees have unrealistic ideas about the returns from real estate, experts say. As a result, "lots of people get discouraged and quit fast," according to Kenneth J. Kerin, director of the survey.
"They don't realize the work involved, and they have very high income expectations," Kerin said. "Except for some very high producers, income is not really spectacular in the real estate businss. Usually, as a new agent, you must carry yourself for six months with no income while you are developing your own following. It's a sink-or-swim proposition."
Almost all sales people work for brokers as independent contractors on commission. They bring the broker listings of properties for sale, and they participate in the sale of real estate, often in cooperation with other brokers.
They are agents of the broker, and are not authorized to act independently. They receive no salary, and usually split commission with their own broker as well as with other brokers.
Sales agents come from a wide cross-section of background, the survey shows. Eight-five percent have pursued at least one other career, in fields such as banking, building, law, government, communications, secretarial services and accounting.
Previously salaried individuals assume new financial burdens in their new real estate careers. Besides supporting themselves for several months before commissions begin to come in, new agents pay anywhere from $100 to $300 to prepare for and take required courses and the state license examination.
Other expenses may include the cost of membership in the board of realtors (from $60 to $135 annually), social security taxes, health insurance, higher auto insurance rates, increased gasoline and telephone bills, and home office expenses.
Also, agents must constantly hone their skills with additional specialized cources in order to make a living in the highly competitive field.
Locally, experts agree that competition is tough and that the drop-out rate among new agents is high. One firm, which gives its new employes extensive training and support, says 40 percent decide within the first six months that they are not suited to the business. Still, the number entering real estate continues to grow.
Currently, 26,114 sales people are licensed in Maryland. The state real estate commission expects to issue 10,000 more licenses this year.
Virginia has approximately 19,500 people licensed to sell. Nearly 10,000 more will take the examination this year, and 60 percent to 80 percent of those persons will pass, the Virginia real estate commission predicts.
In the District of Columbia, 9,873 individuals hold sales licenses.
Not all those who hold licenses are active in real estate, and fewer still are members of the local boards of realtors. In the District of Columbia the board has 1,110 agent members, who are called realtor-assocates. There are 2,555 in Prince George's County and 7,200 and 7,500 are members of the Northern Virginia board.
The National Association of Realtors study shows that one out of four realtor-associates has completed four years of college, another third has some university training, and 13 percent have attended graduate school.
The median age of the members surveyed was 45. Agents' work weeks averaged 47 hours, and 30 percent worked 55 hours or more per week. Twenty-five percent spent 60 hours or more on their jobs.
Long hours and low pay are not the only problems new sales agents face. Many of them are not well prepared for their new careers, according to Dr. John Kokus Jr., who teaches real estate courses at American University.
He said home buyers and sellers find that "there are a lot of people out there functioning who whouldn't be functioning. Lots of performers who have licenses need much more information on tax matters, investment, exchanges, and sources of finance," Kikus said.
Patti Miller, a member of the Virginia real estate commission's educational advisory council, points to lack of proper training as a cause of early failure in sales people.
"You've got to know more than the next fellow," she advises. "A lot of people think you sit and wait for the phone to ring. You have to work very hard for the first couple of years. You must go to the buyers and sellers, not wait for them to come to you."
Miller thinks the outlook for sales people is improving. "Some brokers go out of their way to develop them, and most are becoming much more aware they have to work hard to hold onto their agents," she said.