Billions in PPP loans went to real estate agents during pandemic
Some agents who thrived financially during the pandemic also had tens of thousands of dollars in COVID-19 relief loans forgiven, a new report finds.
Real estate entities that said they had a single employee received $3.9 billion in loans through the Paycheck Protection Program, with nearly 80 percent of that amount having already been forgiven, according to a new report this week by NBC News.
While the typical loan was small — only $13,000 on average — 146 real estate companies received at least $90,000 each, the government’s Pandemic Response Accountability Committee reports.
And some of these forgiven funds went to agents who likely made six or seven figures of commissions on real estate sales, NBC News found.
By all appearances, these loans were granted and forgiven in a manner consistent with the law.
These forgivable PPP loans were intended to help businesses that would have otherwise struggled to maintain their payrolls in a dire pandemic business climate.
But within weeks of the shutdowns, the real estate recovery was already in full swing. Historically low mortgage rates drove a prolonged spike in home demand, driving transactions and sale prices to new heights.
Using data from Zillow, NBC News took a look at Santa Barbara luxury agent Gary Goldberg. The year before the pandemic reached U.S. shores, Goldberg sold $31 million worth of homes. That number dipped to $27 million in 2020, then ballooned to $82 million in 2021.
Goldberg’s one-employee operation also received $95,832 during this time, NBC News reports. Under the program, he met eligible criteria, and did not have to pay back the loans.
Goldberg declined to comment for their story.
For many agents who received PPP loans, the early weeks of the pandemic represented true uncertainty about the future, the National Association of Realtors’ Erin Stackley told NBC News.
Stackley defended these agents, most of whom received relatively small loans from the program.
The program was intended to be lenient for businesses requesting loan forgiveness. Agents who received the money in good faith and stuck to the guidelines in the law were doing “what the SBA and Congress intended to happen,” said Stackley, NAR’s senior policy representative for commercial issues.
But it wasn’t long before the real estate market began to turn around.
While open houses came to a standstill in March and April of 2020, they had begun a swift rebound in many parts of the country as early as May of that year, NBC News reports.
The boom in the housing market in the months since also drove up the pool of commissions available for real estate agents, the report found.
Real Trends partner Steve Murray told the news organization that even in the first year of the pandemic, commissions were way up year over year. Commissions jumped from $76 billion in 2019 to $86 billion the next year. In 2021, they reached nearly $99 billion, he said.
At least one agent who received a PPP loan said she was uncomfortable with requesting loan forgiveness after she had a successful year.
Austin agent Phyllis Patek received an $83,300 loan in 2020, a year where she sold $10 million worth of homes. Nearly half that loan was forgiven, government records show.
She told NBC News she intends to pay the rest back as well.
“I’m almost finished paying it off,” she told the news organization. “It ended up being a crazy year because I’m in Austin and I didn’t feel right asking for it to be forgiven.”