“I won’t talk about unemployment benefits:” California agents choose between ego, handouts
Real estate agents mull whether to take advantage of landmark stimulus program
Alicia Dry Cohen made a calculated bet three years ago, leaping from digital advertising to selling homes.
“It is a great career if you want to have flexibility, plus L.A. real estate is a lot sexier than digital advertising,” said Cohen, a real estate agent at Nourmand & Associates.
Cohen started the year strong, netting sales in Brentwood and Pacific Palisades. But when Covid-19 and ensuing shutdown orders hit California, the deals dried up.
On Tuesday, Cohen applied for the federally funded, state-run Pandemic Unemployment Assistance program at “8:01 A.M,” she said.
That makes Cohen among the first to apply for a landmark assistance program designed to assist independent contractors. The program enables individual real estate agents to collect unemployment benefits while continuing to affiliate with their brokerage and even show properties.
Nourmand broker Carolyn Rae Cole, who has helped publicize the Pandemic Unemployment Assistance program to real estate agents, believes that up to 50 percent of all California residential and commercial agents will eventually apply.
Agents had already applied at the state’s Economic Development Department website by Tuesday afternoon, according to Cole.
But most agents don’t want to talk about Pandemic Unemployment Assistance.
Many interviewed claimed they weren’t familiar with the program, or said they are too successful to qualify. Others preferred to not discuss their own vulnerability in a vulnerable industry.
“I’ll talk about anything in real estate you want to talk about,” said one agent. “But I won’t talk about unemployment benefits.”
Pumping the pandemic prime
Included in the $2 trillion CARES Act, Pandemic Unemployment Assistance for independent contractors is a break from past stimulus measures during economic crisis times.
“Generally, independent contractors are not eligible for unemployment,” said Matthew Clarke, an attorney at the Legal Aid Foundation in Los Angeles. “The reason is that they are not working for an employer.”
Real estate agents occupy a confusing space in the workforce. Most do work for a single employer, their brokerage, but they have retained their status as independent contractors, in part because agents get paid on sales commissions, not salaries or hourly.
“Real estate agents are essentially considered operating their own business,” Clarke said.
Under Pandemic Unemployment Assistance, agents (or any other independent contractor) must state what business they have lost due to the coronavirus. Cohen, for example, estimated commissions that never materialized in the application she filed.
If the applicant qualifies, the state administers $600-a-week payments that stretch through the fourth week of July. Also, the applicant receives an additional $167-$450 a week, a figure dependent on their previous income.
Applicants can keep pitching properties while they get assistance, attorneys told The Real Deal.
“At this time, a return to work is defined as when you collect income,” stated Brian Manson, managing counsel of the California Association of Realtors. “Showing a house is not a return to work.”
Agents who do receive a commission are disqualified from benefits in the week that commission is received, but they can keep getting government checks in forthcoming weeks.
The assistance totals sound modest given the money in California real estate.
But the realtors’ association has actively encouraged their members to apply, many of whom have not drawn any income in over a month.
Lotus Lou, a realtors’ association spokesperson, noted the state has waited to unveil the program so as to avoid problems experienced by Florida and other states in administering benefits.
Still, Lou stated, “We have no way of knowing” what the program’s impact might be.
We don’t need a handout
Pandemic Unemployment Assistance is an entitlement, like traditional unemployment assistance, meaning the federal government will (in theory, at least) keep providing California what money is necessary to mete out benefits.
But many brokers said their agents don’t need the help. “We haven’t seen any of our agents ask about government assistance programs,” said Jamie Duran, president of Coldwell Banker in Southern California. “We’ve taught our agents to pivot.”
Other brokers simply stated they hadn’t heard of Pandemic Unemployment Assistance or confused it with the Paycheck Protection Program, the small business loan program that’s drawn controversy for serving rich corporations and leaving mom-and-pop shops out in the cold.
(One residential real estate agent said they received a $20,883 government loan through the Paycheck Protection Program as a small business of one person.)
Beyond navigating a government bureaucracy, agents who apply for benefits must notify their brokers that they’re applying for public assistance.
Some brokers, including Michael Nourmand of Nourmand & Associates, encouraged their agents to apply. Other brokers suggested that an agent who applies is someone not properly adjusting to the new real estate market.
Agents also must grapple with their own ego, especially as the virus hit amid a strong moment for L.A. real estate.
Jeremy Shore, an agent at Maher Commercial Realty, said he was set to close on a multifamily apartment deal in Silver Lake last month when his client’s lender backed out at the 11th hour.
“The lender went back on their term sheet,” Shore said, adding there has been a “definite slowdown” in the multifamily market.
Shore soberly noted that he may apply for Pandemic Unemployment Assistance, particularly if the market continues to be populated by bargain-bin buyers and reluctant sellers.
Cohen of Nourmand said that she has accepted going on public assistance. But she acknowledges it doesn’t beat selling houses overlooking the Pacific Ocean.
“I feel no shame or embarrassment,” the agent said. “But it’s a real bummer, because 2020 started out so well.”