With the collapse of the real estate market agents and mortgage brokers have
had to find new means of employment. (Creative Commons licensed)

In a store below the TENTEN Wilshire high-rise luxury condos in downtown Los Angeles, a former mortgage loan and real estate broker builds a new career.

On a Friday morning at his new store, Urban Life Cleaners, 51-year-old Mike Woods stood before an electronic rack rotating a long line of pants, suits and dress shirts by gently pressing a floor pedal with his foot. Next he reviewed his list of morning orders to deliver and pick up.

Nearly six months have passed since the former entrepreneur first opened the upscale dry-cleaning store geared toward white-collar professionals working and living in the downtown area. He opened the store after closing the five offices of his mortgage loan and real estate company, AVS Financial Services, which experienced plummeting sales during the meltdown in the housing market.

Woods is one of many real estate professionals affected by stricter lending requirements and plummeting home values during the sub-prime mortgage crisis that started in 2007.

He is also one of the many real estate professionals who left the industry, either temporarily or permanently, to enter alternative career paths because of the market's downturn.

Real estate brokers say they have seen their offices empty out since 2007 as agents have gone broke, unable to afford to stay in the business. They have seen them leave to do all types of work, from retail to financial consulting.

Real estate associations, consisting of agents and brokers, have also seen membership drops over the past couple of years and expect even further decline.

Woods, who has been in the mortgage industry for 20 years, is maintaining his broker's license and still has AVS Financial Services listed as an active business with the hope of returning when the market improves. But he is looking to his new business as a pathway to stability.

"No matter what the economy is, people have to get their clothes cleaned," Woods said as he sat at a high counter-top in his kitchen. The loft-style store also serves as his home with a bed upstairs. The clothing rack near the store's entrance hides a kitchen and living room area with a television and sofa.

The Crash and the Career that Followed

Woods first felt the hit when he returned to his Covina-based loan and real estate business in July 2007 from a month-long trip to Europe with his daughter, who had just graduated from high school. He arrived just as the market was crashing.

"When I came back, business as I knew it had completely changed," Woods said. "We couldn't do the loans... The rules were changing every week."

FICO credit scores in the low 500s range and stated incomes were no longer enough for borrowers to qualify for the company's 30-year-loans with three to five years of interest-only payments. The minimum requirement started rising, and soon borrowers had to have scores in the 700s range and proof of income and assets to qualify, Woods said.

He also said bank lenders started going out of business or began to deal more with borrowers directly, cutting out the mortgage middleman.

Cecilia Carlson, who worked as a real estate agent and loan officer for AVS Financial Services, witnessed the problems.

"Banks were closing down," said Carlson, of Hacienda Heights. "Then, of course, the next step was foreclosures... and the property values going down, the underwriting guidelines tightening up. There was no more money available to lend."

Carlson said those factors, along with fewer qualified borrowers, led to the January 2008 closure of the West Covina office she headed for seven years.

"Everybody was scared of doing business," Carlson said. "The refinances went completely down. The sales [came] to a stop."

Woods said his loan and real estate sales went down so much that his commission payments to employees dropped by nearly 50 percent that first year, from about $3.4 million in 2006 to $1.8 million in 2007. The amount dropped to about $80,000 in 2008, the year he closed all of his company's offices.

As his staff started leaving to other jobs, Woods stopped renting office space for his West Covina, City of Industry, Huntington Park and Downey branches, which he closed one by one between January and November 2008. Woods said that by the time he closed the doors of his Covina headquarters office in late December, he had lost about 10 real estate agents and loan officers and 12 office staff.

That was when Woods decided to take a chance. He partnered with his brother, Steven Woods, who wanted to expand his Alhambra dry-cleaning plant called Valley Cleaners. The brothers set up Urban Life Cleaners, which sends orders to the Alhambra plant for cleaning.

"What Michael brings to our partnership is basically... the networking and the marketing and then going out, making connections, and coming up with ideas as how we can go and make inroads to different areas," Steven Woods said.

While Mike Woods would like to eventually reopen AVS Financial Services, he said he first wants to expand Urban Life Cleaners to 10 other locations in the downtown area. He already has four locations he is trying to secure.

"I see the vision that with this dry-cleaning business I can get back to the same type of income I was making," Woods said, referring to his former income as a broker of about $200,000 to $300,000 a year. The business started in the negative and right now, he said, Urban Life Cleaners is barely breaking even.

A Struggling Industry and Decisions to Leave

Woods is not the only real estate professional who took a different career path because of a slowdown in sales.

The California Association of Realtors has seen a 13 percent decline in membership of real estate agents and brokers from 2006 to 2008. And the real estate trade association expects an even further decline, said the organization's deputy chief economist, Robert Kleinhenz.

"We may be down in the high 20- to low 30-percent range," Kleinhenz said, projecting where the association's membership would be in 2010.

Riverside real estate broker Doug Shepherd, who owns Coldwell Banker Shepherd Group, said he lost about 40 percent of his agents in 2007 and 2008. But, he was able to fill the positions by hiring agents from other companies in the area that went out of business.

Financial stress was the main reason Shepherd's employees left, he said.

"A slowdown in real estate has forced people out, and they've gone into other jobs," Shepherd said, adding that he saw the exodus affect agents of all experience levels. "They've gone into everything from retail to back into jobs they used to do. I've had some people go into the financial services sector, some (into) insurance... into the family business, (they have) gone into the grocery business -- things that were a little more stable and traditional."

One of his former agents, April Landry of Moreno Valley, is now working as a foreclosure and consumer credit counselor at Springboard, a Riverside-based nonprofit organization.

Landry, 49, who worked as an agent for six years, said she left Coldwell Banker and real estate in December 2007 after she could not get a sale for four months. After leaving, she was out of work for four more months before starting at Springboard in May 2008.

"Because we were lacking one income, we ended up getting really, really behind on our credit cards," Landry said, adding that she and her husband stopped eating out and started cutting back on unnecessary expenses. "We just kind of hung in there and our main focus was not losing our home, and so we just learned to [pack] lunches."

Landry, who has a daughter in college, said that during her real estate career, she had gone from making about $70,000 in 2006 to about $24,000 the next year. Despite her struggles, she is waiting for the market to improve and plans to go back in as a broker.

Qais Ayoub, 34, also left real estate after struggling to get sales. He worked as an agent for five years at two companies, REMAX Olson in Porter Ranch and Bencor Properties in San Fernando, before leaving sales in December 2008. Ayoub, who has a background in graphic design, recently opened a design retail store in Granada Hills called Experience Graphics.

"I definitely never wanted to be the first just to run out, so I stuck it out for two years, trying to do my best," said Ayoub, who said his income decreased from about $165,000 in 2006 to about $23,000 before he left the industry in December.

"I went through all of 2008 not collecting a check until the end of the year--two sales," Ayoub said, comparing that number to the estimated 16 transactions he made in 2006.

Ayoub described the main obstacle real estate agents have faced in selling homes as declining property values because of the competition from foreclosure properties. And for agents trying to enter the thriving market for selling foreclosed bank-owned properties, he added that it not as simple it seems.

Kleinhenz of the California Association of Realtors agreed that the number of opportunities from the market's recent growth could be misleading because banks often choose a limited number of agents to handle hundreds of short sales and foreclosure sales. And those are the types of transactions that make up a large portion of the sales happening now in California, he added.

Ayoub said his wife was working as a Los Angeles Unified School District teacher and was constantly being threatened with pink slips because of budget cuts at the time he decided to leave. He also had two young sons to help support and a two-bedroom home in San Fernando he was not able to make payments on.

"I realized that something was going to have to change," he said.

Now the former real estate agent is running his new business, especially now that his wife has actually received her pink slip. He is also trying to work out a deal with on his mortgage with his lender, he said.

Woods and a New Life

Like Landry and Ayoub, Woods's decision to follow a new path has led to a range of adjustments.

One of the largest is his change in income.

"[Before] I was making probably over $20,000 a month. And now I'm down to a negative every month," Woods said, adding that he has been living off of his savings since August 2008. "The lifestyle I have now is completely different than the lifestyle I had before."

With less income, Woods said he now works 12- to 13-hour days, cuts back on golf and dining out and this year skipped his annual two-week trip to Hawaii he used to take every May. Even his living situation has changed drastically as he now lives at his business site.

"It's definitely an adjustment," Woods said. While sharing a residence with his business might not be his top choice, he added that he doesn't complain. As someone who grew up in the housing projects of Watts before moving his way up financially, Woods said he knows how to live modestly.

"You just have to look at life realistically, accept the hand that you've been given, and just work hard to move up," Woods said. "I've led a good life, but I also have good faith that I can do it again."