Sonia Gilbukh
Appearances
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
It depends on the state, but in most states you have to take a course, which could be a 50-hour course. So you put your foot down and you can be done with it in a week. And then you take a state test and you pay a license fee. It's just so different from any other profession. where you have to get a degree or you have to get an apprenticeship before you can actually practice.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
And it's really easy to get a job because the agents essentially work for themselves. When an office hires an agent, they hire them as a contractor. So they're not on the hook for any salary at all. They're just getting part of their commission. So they don't lose anything by hiring as many people as they want.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
We find that the reason why there's so many inexperienced people is because of the, quote unquote, fixed commission rates.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
We find that if the commissions were more competitive, there would be many fewer agents. They would be a lot more experienced and more houses would be able to sell. So essentially addressing the commissions is one of the most important ways that we can make this industry more efficient.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
In our data set, we find that if you take a random agent, so someone who has some history, there's a 30% chance that they have never had a transaction before.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
It's a really important decision financially, emotionally. You need a little bit more hand-holding.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
I'm Sonia Gilbook, and I'm an assistant professor at Baruch College. Most of my research is about the housing market and how buyers and sellers find each other and how real estate agents help them in that process.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
I mean, they're supposed to help. And because in the U.S. most of the transactions go through a real estate agent, I'm putting help in a way that there's no alternative for the consumers.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
The main takeaway is that not all agents are the same.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
There's some really experienced agents that offer different quality service from really new agents. There's a lot of inexperienced agents out there, and they provide a much lower quality service in terms of probability of sale, which is especially important in a down market.