Jonathan Schonning used to train people to clean houses. Today, he's selling them.
Lured by the prospect of five-figure commissions and more control of his career, Schonning is one of more than 20,000 people who paid $63 to take the Minnesota real estate license exam during the pandemic.
"I have more flexibility in my schedule now, but I'm working seven days a week," he said recently. "Even when my wife and I went to Miami, I was still submitting offers and accepting offers while I was sitting on the beach."
Even though sales agents vastly outnumber house listings, there are now more licensed real estate agents in the state than anytime since 2006, according to the Minnesota Department of Commerce, which licenses agents and brokers in the state.
That total number — around 22,000 — is only partly the product of the upsurge of interest in the profession after the economy was brought to a standstill by COVID-19 two years ago. The other factor is the turnover that's been a constant in residential real estate for many years.
And that churn is becoming more intense as the supply of houses for sale plummets. Last month, there were only 2,700 home sales in the Twin Cities metro area, a 15% drop from February 2020.
"It's especially difficult for new agents to hang on," said Chris Galler, CEO of Minnesota Realtors. "And this is a business where it's really difficult to stay in it if you're not doing some transactions."
In a regular housing market, fewer than half of all newly licensed agents make it past their first year in the business, Galler said. Today, their odds are even worse. He predicts that three out of four new agents will drop out after just a year.
"Now that the economy has picked up, a lot of them are saying 'It's a lot harder than I thought it was, so I'll move on to something that offers a regular paycheck,'" he said.
Schonning has already defied the odds. He leapt into real estate in early 2020 while on furlough from his long-time job at a commercial and residential cleaning company. Last year he closed 22 deals, and so far this year he's nailed four sales and has six pending. If he keeps up that pace, he'll sell more than 40 houses in 2022.
"Luckily I know a lot of people and that helps," Schonning said. "You take it as a challenge and make sure that you're maximizing every interaction you have with people to make sure that when they choose to work with someone, it's going to be you."
Peter Brickwedde, head of government and external affairs for the Department of Commerce, said the barriers to entry for real estate agents are relatively low. In Minnesota, applicants are required to take 30 hours of education before taking the test. But only about 60% of applicants pass the test.
He said that real estate licensing numbers ebb and flow depending on the economy, but that real estate is always a popular option for people during times of personal and economic transition.
But today, even seasoned agents are struggling to close deals.
"Being a new agent, it's hard to compete," said Anthony Adams, who moved to the Twin Cities from Dallas, where he worked for several years in the accounts payable department of a national company that manages laundry facilities in apartment buildings and other commercial buildings.
In thick of the pandemic, Adams watched his team get slowly whittled in half as co-workers got laid off or lost hours. Meanwhile, his brother was managing a thriving real estate career back in the Twin Cities.
Adams decided to give it a try. He moved back to the Twin Cities at the end of June and got his real estate license in November. Since, he's only been able to close one deal. There are plenty of buyers, he said, but not enough listings.
"I'm in it for the long haul," he said. "Because I want to branch out into other parts of the industry, including investing and developing."
The latest influx of agents, Galler said, includes a notable increase in middle-aged people who are giving up established careers. Many, he speculates, are just worn out after dealing with so much uncertainty and the lack of control that comes from working a corporate job.
"After the pandemic a lot of people realized that the money they're making isn't as valuable as their time is, and that's how I felt," said Austin Jones, who left a longtime career in the telecommunications world. Until last summer, he was a T-Mobile sales manager, but he was frustrated by his inability to earn more money and move up the corporate ladder.
Unlike many workers during the pandemic, his problem wasn't a lack of work. He was working way too much. His stores were chronically understaffed, and filling open positions was next to impossible. So even on his days off, he'd have to fill those open shifts, sometimes covering for those who called in sick. Because he was salaried, his income didn't budge.
And the stress of trying to enforce masking and social distancing rules was nearly intolerable.
"Being in retail during the pandemic was horrible," Jones said. "People were ruthless to employees, and as a store manager I dealt with all the escalations."
In August, he decided that he'd rather deal with frustrated home buyers, and by October he transitioned to real estate full time. He's still working constantly and is now spending upwards of $3,000 month on advertising and marketing, but he's confident the investment will pay off.
"It's a lot of spending that you're not used to, and you're not making money right away," he said. "But I've always been a penny pincher and a saver, and I was prepared."
In real estate, agents don't get paid unless they sell a house. And those sales commissions, which are typically 6% to 7% of the sale price, are shared with the other agent, if there is one, and the agent's broker.
After a gangbuster first year in the business, Courtney Wylie quickly realized that, although those commissions can seem mighty big, they don't last long. Especially if you don't have a closing for a couple months.
For years, Wylie paid the bills as a bartender. Conventions were also extremely lucrative, filling her pockets with cash after just a single shift. But when the pandemic shuttered all those venues, Wylie decided it was time to be her own boss and start working toward her goal of selling enough real estate to fund a community center for children.
She got licensed in early 2020 and immediately scored her first sale, giving her instant credibility with buyers. During her first year in the business, she had a dozen sales. But in 2021, as the agent rolls increased and the number of homes on the market decreased, her deals plateaued.
Knowing that there could be months-long gaps in her commissions, Wylie says she's doing a better job of managing her budget. And she's constantly promoting, often via social media but even by wearing a T-shirt that says "I'm a Realtor" on one side and "Call me" on the other.
"I have to be creative," she said. "You can't throw a rock without hitting an agent."