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A Glut in the Market for Homes

But it's the supply of real estate agents, not housing, that's swelling in California. Few will succeed in the savage competition for listings.

May 20, 2005|David Streitfeld | Times Staff Writer

CUPERTINO, Calif. — Joseph Petralia is cold-calling Silicon Valley homeowners, politely inquiring whether they're planning to move anytime soon.

No? Well, he asks, how about the neighbors? Do you know them? Any of them thinking of leaving town?

The real estate agent waits a maximum of three rings for people to answer -- any more and he figures they'll be irritated at having to come to the phone. But even when they pick up, most promptly hang up. Sometimes they yell at him.

It's difficult, dispiriting work. But if the former auto parts salesman is serious about making it as an agent, he needs to find people who will let him sell their houses.

That's a formidable task. One of the few things increasing faster than house prices in California is the supply of agents licensed to sell them.

More than 22,000 applicants took the state's real estate exam in April, nearly three times as many as in April 2003, according to the Department of Real Estate. To handle the surge, the department has rented six test centers around the state to supplement the five it already has.

The last time so many people wanted to sell real estate in California was in 1990. In what might be an ominous sign for the current boom, that year marked a peak in the housing market.

There are 437,000 agents in California, enough to form the state's eighth-largest city. With only 680,000 home sales a year, competition for listings can be savage.

New agents call every person they know or might have met once. They "farm" neighborhoods, which means blanketing them with brochures. They knock on strangers' doors. They call people who are selling their homes without an agent and try to sign them up. They swoop in just as another agent is about to sign a client and steal him away.

Petralia works the phone for days at a time.

"Hi, I'm Joseph Petralia from Coldwell Banker. I'm doing a survey in the neighborhood.... "

That's his standard opening line. Petralia is working ZIP Code 95118, a middle-class neighborhood in San Jose with 7,752 single-family properties. His database, a commercial product that has been filtered through the National Do Not Call Registry, supplies numbers for 985 of them.

It's Monday morning, a good time to catch people after the distractions of the weekend. Within minutes, Petralia is chatting with a homeowner. Unfortunately, not a sympathetic one. "Hell, no, I'm not moving," this fellow says. "I was born and raised on this street 85 years ago."

Cold calling is a straightforward numbers game: the more calls, the greater the chance of a breakthrough. In February, for instance, Petralia called 1,823 people and talked to 557 of them. Five of them qualified as leads -- people who said they were thinking of selling.

He dials another number. A man hangs up on him. Another. A woman hangs up.

"I'd rather have them hang up than not answer," Petralia says with a salesman's unquenchable optimism. "At least I know I'm getting closer to success."

He's 28, a native of nearby Campbell. Though he grew up in the shadow of Intel Corp., Apple Computer Inc., EBay Inc. and hundreds of other technology companies, working with computers or the Internet never appealed to him.

"I didn't want someone else to get rich while I did all the work," he says. "I'd rather put in the effort and see the results myself."

Justin DeSantis, his buddy in the next cubicle, concurs that tech is a bad bet: "Only one out of 20 dot-coms makes it."

A former personal trainer, 31-year-old DeSantis likes the unlimited potential of real estate.

"The most I ever made as a trainer was $60,000," he says. "As an agent, I'm just about there now."

Some of the thousands of people getting licenses have only one client in mind: themselves. When they sell their houses, they'll keep the commission. But many others will pay dues to join the National Assn. of Realtors, a requirement at many brokerages.

There are 165,000 Realtors in California, an increase of 49% since 2002. Only a handful of other fields is growing faster, including debt collection and waste collection, according to the state Employment Development Department.

Kyle Berube trains agents how to use the Multiple Listing Service that inventories homes on the market. Petralia and DeSantis are typical of what Berube sees as the new breed: more entrepreneurial, more aggressive, more sophisticated about technology and, above all, younger.

"A lot of new Realtors used to range in age from their late 40s to the early 60s," Berube said. "Now they're as young as 19."

A large part of real estate's increased attraction is the exploding price of houses. A middle-class home can easily fetch $1 million.

At the standard commission rate, the homeowner pays his or her agent 3% -- $30,000 on $1 million. The agent's brokerage will take as little as $6,000 of that (if the agent is experienced) and as much as $14,000 (for new agents).

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