Real estate values may have tanked last year, but business boomed for PMZ Real Estate.
The Modesto-based company increased its sales a staggering 167 percent in 2008 compared with 2007, by far the biggest gain among America's top 100 real estate companies.
PMZ agents sold 7,599 homes last year, acting on behalf of both buyers and sellers. That was the most in the company's 62-year history.
The value of the homes PMZ sold exceeded $1.52 billion in 2008, about 51 percent more than 2007. Only during the 2005 peak of the real estate boom did PMZ sell homes worth more.
"I'm proud of our team and its accomplishments," said Mike Zagaris, PMZ's president and the son of its founder, the late Paul M. Zagaris.
PMZ's 550 agents last year sold an average of 14 homes each. The national average was nine sales per agent, as calculated by Realtor Magazine.
That publication gathered sales data from real estate companies across the country to determine the top 100 firms based on transactions and home sales value.
PMZ was the only Northern San Joaquin Valley company to make that list for 2008, at No. 38 for transaction sides and No. 54 for sales volume, as revealed in the magazine's July issue. PMZ also made the top 100 in 2004, 2005 and 2006.
But 2007 was a disaster for real estate sales and values throughout the region.
"The buyers and sellers were staring at each other in 2007," Zagaris recalled. He said sellers refused to lower their prices enough to attract buyers, and banks wouldn't agree to accept sales for less than their outstanding mortgages. "It was a period of standoff."
PMZ sold just 2,846 homes that year.
Real estate sales started soaring the spring of 2008, and they haven't stopped. Zagaris said PMZ's sales so far this year are higher than last. "As soon as houses come on the market, they're gone," Zagaris said.
Low home prices, low mortgage rates and the availabil- ity of loans have motivated buyers. "We have thousands of buyers who are qualified and ready to buy today, but they can't find a home."
Zagaris said the average PMZ agent is working with about 10 buyers, searching for the right deal.
"Our agents often have to write 15 to 20 legitimate purchase offers to get a home for a buyer, and sometimes even then they don't get one," Zagaris said. It's complicated to close a deal these days because about 90 percent involve bank-owned foreclosures or "short sales," where the seller owes more than the home is worth. "The business is far, far more difficult today than it was in 2005. The environment is so frustrating."
Frustrating it may be, but at least sales are robust. That's not the case in many parts of the United States.
Statistics gathered by Realtor Magazine showed that only 18 of the top 100 real estate companies sold more homes in 2008 than in 2007. On average, the number of sales for those companies fell 14.7 percent.
The value of homes sold also declined for most real estate companies, with only 11 of the top 100 showing gains last year. On average, the total value of homes sold fell 20 percent.
Bucking county trend
One reason PMZ increased in the number of sales and the value of homes sold is because it expanded its sales ranks.
Five years ago, it had 292 agents. Now PMZ has 575 agents in Modesto, Ceres, Gustine, Hilmar, Lodi, Los Banos, Manteca, Oakdale, Ripon, Riverbank, Salida, Sonora, Stockton and Turlock.
"Our business plan is to grow," Zagaris explained. He said that during the past few years, about half the growth has come from agents new to real estate and half from experienced agents moving to PMZ from other companies.
The overall number of real estate agents in Stanislaus County has been dropping.
U.S. Census Bureau statistics showed there were 1,455 agents in the county in 2005, but by 2007 their ranks had declined 16 percent to 1,225. Gross earnings also plummeted for Stanislaus' real estate agents, falling from an average $60,754 in 2005 to $37,525 in 2007. Data for 2008 hasn't been released yet.
Real estate agents make money through commissions they receive after closing sales. Typically, home sellers pay 5 percent to 6 percent of the sales price in commissions. Those commissions are split between the seller's agent and the buyer's agent.
Those agents, in turn, share their commissions with their real estate companies, which also are called brokers. Zagaris said commission-sharing agreements between agents and brokers vary widely, but typically agents give 25 percent to 30 percent of their commissions to their brokers.
Zagaris said most brokers spend about 92 percent of their share of commissions to pay for company expenses.
"It's a very low-margin business as a broker/ owner," Zagaris said. "It's not what people think."
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or 578-2196.