Sudi Hernandez of Cloud 9 Real Estate Group loses leads when a client hears her Cuban accent.
James Dunn of eXp Realty surprised a client with his answer to their question, “You’re white, right?”
Amy Kong of Trust Real Estate hosts open houses where people ask, “Where is the agent?”
These are instances of racism experienced by Hispanic, Black and Asian real estate agents. But they point to something more specific – homebuyers and sellers surprised to interact with a non-white real estate agent.
Just 6% of all of the National Association of Realtors’ 1.4 million members in 2020 identified as Black, despite respondents having the option of identifying with more than one race. Ten percent stated they are Hispanic, and 5% identified as Asian, according to figures provided by the trade group.
That compares to a U.S. population that is 13% Black, 18% Hispanic and 6% Asian, according to the Census Bureau’s 2020 numbers.
So why is the percentage of non-white real estate agents so low when compared to the country’s overall racial make-up?
The answer is multifaceted, but hardly complicated. In fact, the lack of minority real estate agents can be roughly boiled down into five explanations.
Factor One: There are fewer non-white agents because there are fewer non-white homeowners.
In the second quarter of 2019, the Black homeownership rate hit a new low. Not a new low for 2019, but a new low in the Census Bureau’s 27-year-history of recording quarterly housing data.
The rate of 40.6%, was also lower than the 1970 Black homeownership rate, which was just a few years after NAR accepted minorities into its organization and Lyndon Johnson signed the Fair Housing Act, an extension of the Civil Rights Act that prohibited discrimination against homebuyers.
Black homebuyers are still dogged by problems emanating from the Jim Crow era of being redlined out of certain neighborhoods and denied home loans, said Antoine Thompson, executive director of the National Association of Real Estate Brokers.
Since then, the Black homeownership rate rebounded to 44.1% in the fourth quarter of 2020, according to Census figures, which is not too far off from the Hispanic rate of 49.1% and Asian homeownership rate of 59.5%.
But the white home ownership rate is much higher and growing. It was 74.5% at the end of 2020.
A lack of minority homeownership has not caused a lack of minority agents, or vice versa. But observers claimed a strong correlation between the two.
“I think there aren’t many Black real estate agents, because the people who are able to purchase properties are overwhelmingly white,” said Krystle Comer, a Black real estate agent in the Los Angeles area.
Homebuyers, Comer added, want people they are comfortable with, which can mean closing a deal with someone that looks like them.
Thompson of NAREB agreed that the lack of minority homeownership is a deterrent for minority real estate agents. Founded in 1947, NAREB is the self-described “oldest minority trade association in America,” a group that accepted non-white agents barred by the NAR at the time.
Thompson said that brokerages’ incentive system is part of the problem. “Certain real estate firms don’t buy advertising dollars for homes below a certain price,” he said.
Industry-wide flat commission rates also make working with first-time homebuyers of modest means an inefficient use of agents’ time, according to Elizabeth Korver Glenn, a sociology professor at the University of New Mexico, who spent a year studying Houston area real estate agents.
“On its own, percentage-based commissions appear to be race neutral,” Glenn wrote in “Brokering Ties and Inequality,” an academic paper. “Yet it encourages real estate agents to pursue affluent homebuyers and home sellers with high-value homes.”
A specific issue exists within some Hispanic communities. Access to Spanish-speaking agents would make Hispanics more comfortable with home ownership, said Gary Acosta, executive director of the National Association of Hispanic Real Estate Professionals.
But many Hispanics, Acosta said, don’t know there’s a job called “real estate agent.”
Factor Two: Agents are drawn from informal, mostly white social networks.
Real estate agents often join the profession as a second career that was spurred from a happenstance conversation.
“I hear people say, ‘When I stopped acting or dancing or following this or that dream’ I became a real estate agent, because I talked to someone else who was getting their license,” said Max Besbris, a sociology professor at the University of Wisconsin-Madison, who studies race relations in real estate.
And, Besbris noted, becoming a real estate agent requires no formal education besides studying to take the licensing exam.
In theory, these factors make becoming a real estate agent an achievable goal for workers struggling to find their place in the modern economy. There’s no U.S. News & World Report rankings of real estate schools with sky-high tuition. No expectation that your life is a straight-line path of resume-friendly accomplishments.
In reality, it can make residential real estate an invitation-only club.
“Real estate is a relationship-driven business,” Acosta said. “Having a friend or family member in the business is still the most common way people get started.”
One way to learn about a career outside friends and family is at school. The fact that becoming a real estate agent is inconsistently taught at community or four-year colleges not only makes the profession hard to learn about, but also suspect.
“To be successful when I was growing up, there was a lot of emphasis about going to college,” said Shawneequa Badger, a Black woman who leads an agent team at Corcoran Global Living in Oakland. “A career in real estate looked like a step back.”
Asian real estate agents can have similar misgivings, said Amy Kong, who is president of the Asian Real Estate Association.
“Culturally, Asians expect kids to become a doctor, lawyer or accountant,” Kong said.
The lack of a clear educational path plus word-of-mouth recruitment adds a patina of elusiveness and exclusivity to becoming a real estate agent.
“This is an industry where early success comes from hard work,” said Kofi Nartey, a Black agent who partnered with Side to launch Society Real Estate and Development in Beverly Hills, “but also from your social circles.”
Factor Three: Start-up costs are high and open-ended.
Beth Fernandez, an agent at Premiere Properties in Portland, Oregon, recently spent an afternoon cataloguing her expenses.
There’s the bill from the NAR’s Multiple Listings Service that runs at $174 a quarter, plus annual fees of a few hundred dollars to be part of NAR and NAR’s Oregon chapter. There’s the $180 yearly she pays DocuSign, the $60 a month she pays Premiere Properties for marketing, and various online courses and real estate coaches recommended via word of mouth (Fernandez paid several hundred dollars for classes offered by Buffini & Company).
Fernandez is currently not using Zillow’s Premier Agent or another site that charges for leads, which can run another $200 a month.
Fernandez called herself an “upper middle-class white lady” (despite the Hispanic surname) whose husband holds a steady job that provides her the health care and other benefits that agents, who are independent contractors, typically do not get. Fernandez also knows the right kind of pricey candies, champagne and tiaras to give as gifts to clients.
“It is a very expensive business,” Fernandez said. “So much of your money goes out the door.”
In a recent interview, Nick Bailey, chief customer officer at RE/MAX, casually offered a startling fact – 87% of real estate agents wash out, as their licenses lapses and they move to a second career after their second career.
Even the most successful of real estate agents have described “starving” in their first year, as they rely strictly on their cut of a home sale commission, and don’t get paid until the deal closes. That means going months without income as agents scramble to both make deals and build a book of business.
Per NAR statistics, agents with two years of experience or less earned a median gross income of $8,900 from their real-estate work in 2019.
More white agents than minority agents have the familial support to absorb such hard times.
According to a 2019 Federal Reserve Board study, white households have a median wealth of $189,000 compared to $24,100 for Black households and $36,100 for Hispanic households.
“Getting started in a commission-only business can be especially difficult for young adults who can’t afford to go very long without a paycheck,” noted Acosta of the Hispanic Real Estate Professionals.
Thompson of NAREB also lamented the marketing and training costs that squeeze out agents. Retaining minority agents who can be both full-time agents and earn a living wage, the trade group leader said, “is an everlasting battle.”
And it’s a battle minority agents are largely struggling to win, according to an NAR report published this month that surveyed the experiences of member agents, specifically looking at gender, race, and sexual orientation.
Among agents who work exclusively in real estate, the study found, white agents’ median gross personal income last year was $49,400. That’s not enough to live on in many parts of the country, but it’s still more than the U.S. median personal income of $36,000, according to 2019 U.S. Census Data.
However, the median figure reported for member agents who identify as Asian/Pacific Islander was $27,400, and the figure for Hispanic agents penciled out to $26,600. For Black agents, the median annual income was $16,700.
Factor Four: Many white real estate agents want to preserve the status quo.
“People I encounter think racism in real estate ended after the Fair Housing Act,” said Badger of Corcoran Global Living.
What about Newsday’s 2019 groundbreaking series on discriminatory real estate practices – namely steering – on Long Island? What about the stagnant numbers on minority homeownership? Surely, white agents must at least pay lip service to needing a more diverse profession?
Well, no. Multiple white agents really did say the Fair Housing Act put the matter to rest.
“Laws have been put in place for decades now that all people need to be treated equally,” said Ed Garano, a RE/MAX agent in Bel Air, Maryland. “Any barriers to entry are either imaginary or self-imposed.”
Other agents interviewed were annoyed to be asked about race.
“Stop looking for others to blame, and more importantly stop reaching so quickly for the racism button,” said an agent in New Hampshire, who requested anonymity, fearing she would be quoted out of context.
“It’s not racist,” she continued. “It’s just difficult to understand what to do, and no one helps you. But you’ve got to push through.”
And a few agents didn’t think the NAR membership numbers warranted a closer look.
“I just don’t see the big discrepancy,” said a Florida agent, who sought to have her name withheld because she feared running afoul of NAR anti-hate speech statutes. “Six percent of the realtor population is not far off compared to the rest of the population.”
“I will be happy when we can all consider ourselves God’s children, human beings, and not see color,” the agent added.
This is an unscientific sampling of agents’ views. But they indicate that if NAR woke up tomorrow and demanded an aggressive recruitment of minority agents, they might face resistance.
Factor Five: What’s being done to boost diversity is scattershot.
The NAR, which spent more money lobbying the federal government in 2020 than the U.S. Chamber of Commerce and every single other organization in the country, is not demanding an aggressive recruitment of minority agents.
“The recruitment of agents is ultimately conducted by individual real estate firms,” stated an NAR spokesperson, adding, “It’s important to note that none of NAR’s activities are specifically designed to attract new professionals to the business.”
As to indirectly spotlighting the issue, the NAR is working on a couple of fronts. One is pictures.
“NAR has worked to showcase the profession through our media advertising, an action that is also followed by many brokerages,” the spokesperson explained. “Diversity in who is pictured as a realtor was one of the areas suggested by various focus groups of minority agents.”
Another is working with NAREB and the National Association of Hispanic Real Estate Professionals. Thompson, executive director of NAREB, described NAR as an occasional ally. “We work with NAR from time-to-time,” he said.
NAREB’s own recruitment efforts include partnering with real estate referral company HomeLight to provide select Black agents an up to $5,000 onboarding grant, as well as mentorship.
As for brokerages, Realogy and Berkshire Hathaway HomeServices each have executives dedicated to diversity, inclusion, and equity, though no brokerage has set specific goals for minority agent recruitment. Also, the largest brokerages, with the notable exception of Compass whose CEO Robert Reffkin, have no racial minorities (or for that matter, women) at the top of the company.
The modest assortment of scholarship programs does extend to independent brokerages. For example, Living Room Realty in Portland runs a $15,000 scholarship program that requires a three-year commitment from prospective agents, and gives preference to “underrepresented racial/ethnic minorities and/or candidates that identify as LGBTQIA.”
And that’s the landscape of dedicated solutions, on top of individuals like Badger who draw attention to the lack of minority agents via social media posts.
In adding non-white agents to residential real estate what’s at stake is not just whether a specific profession will mirror the country’s diversity, but who tomorrow’s ambassadors of home ownership are.
Real estate agents, observed Elizabeth Korver-Glenn of the University of New Mexico, are “High-status information gatekeepers within the housing market institution.”
And, in 2021, those gatekeepers remain predominantly white.
