West Side Spirit
February 19, 2004

BUYERS CROWD THE MARKET – AND BROKERS DO, TOO

In one school for brokers, enrollment’s tripled

By Patricia Greco

The cost of housing has skyrocketed. Bidding wars are the name of the game. The real-estate market is a battlefield. Yet there’s no shortage of recruits: as the industry grows more competitive, many real-estate schools are reporting enrollment rates have soared.

The National Association of Realtors reports a 27 percent increase in its membership over the past three years, to 977,000. According to Laura Rubinfeld, executive officer of the Manhattan Association of Realtors, established in 2001, 450 of those members work in Manhattan.

Esther Muller, master teacher and president of the Real Estate Academy, said the average number of students in a single class at her school has grown from 20 to 60 people. Interest rates are the lowest they have been in more than 40 years, Muller explained, and as buyers are crowding the industry, many people see a future in the profession.

But Muller said that it is not just the hot market that attracts so many
people to her academy.

“A lot of bright people have lost their jobs,” she said, adding that real estate offers them a chance to establish a profession where their “entrepreneurial spirit” may prosper.

Arthur Shinensky, a former student at the Real Estate Academy who now works for Goodstein Realty, left a 33-year career on Wall Street to enter
the profession.

“It’s an exciting field,” he said, and one that requires a lot of initiative.
Most brokers, like Shinensky, work as independent contractors affiliated
with a brokerage firm.

“If you have the ability to get out of bed in the morning, go to work and
pound the phones,” Shinensky said, you can be a broker.

Of course, you have to get your salesperson license first. In New York
State, to qualify as a salesperson, an applicant must complete 45 hours
of coursework approved by the Secretary of State and pass a 2.5-hour qualifying exam, administered by the New York Department of State.
But a salesperson is not a broker. The main difference between the two
is that the salesperson is supervised by the broker, who will ultimately
accept or reject all negotiations made by the salesperson.

According to a survey conducted by the National Association of Realtors in 2002, there is another difference between the two: a broker typically earns more. While the median income of a salesperson is $39,300, the median income of the broker is $65,300.

To become a broker, an applicant must have at lease one year of experience as a licensed real-estate salesperson, or a minimum of two years’ experience in the general real-estate field. In addition, the applicant must complete a 45-hour real-estate broker course and pass another 2.5-hour qualifying exam.

An expired license can be renewed within two years of expiration if
the licensed broker or salesperson takes a 22.5-hour continuing
education course.

But Muller estimated that only 60 percent of her students remain in the business once they pass their licensing exam.

Because there are so many misconceptions about real estate, people drop out of the field at the same rate as they enter it, Jacky Teplitzky, an executive vice president at Douglas Elliman said.

People who enter the field thinking that as independent contractors they will work less are in for a rude awakening, Teplitzky said. In reality, she said, agents have to work more hours, and even weekends, to make the big bucks.

It’s not just about showing kitchens and bathrooms, she explained. It’s about knowing the ins and outs of the market.

But not everybody attends the course to become a salesperson or a broker. According to Muller, 15 percent of her students attend classes to learn more about real estate and make educated investments. The real-estate industry, she believes, is much more competitive because clients are much smarter.

“Buyers are very, very savvy,” said Marjorie Magid, a vice president
at Halstead Property, LLC, who added that the Internet has provided increased access to apartment listings, prices and sizes.

According to Victoria Medina, a Halstead agent, buyers should have a “checklist” of what they want, including neighborhood, space and cost,
among other things. But, she added, they have to be open to what is actually available, and what they can realistically afford. And the co-op boards are “tough,” she said. Steering clients towards a co-op board they can pass is one of the agent’s most important jobs, Medina said.

According to Teplitzky, the boards are very concerned with whether or not prospective buyers invest their money in “volatile” places. And of course, she added, boards expect buyers to have a solid income and substantial savings. For a $1 million home in Manhattan, in a building that requires no more than 75 percent of the cost be financed, Teplitzky estimated a client would need a $300,000 salary and $200,000 in savings, after down payment, to pass the co-op board.

Overall, Teplitzky said, the market is strong and it is a good time for people
to enter the field. But, she said, they must “review their reasoning.” To people who enter the field to work less or to work part-time, she gives one piece of advice: “Look for another job.”