Market a challenge fit for true professionals
There’s an ad campaign currently running for an online dating
service. The premise of it is you should hire them to help you find
a mate since you hire other professionals to provide services for
you. One of the lines is,
”
You hire a Realtor to help you find a house.
”
Market a challenge fit for true professionals
There’s an ad campaign currently running for an online dating service. The premise of it is you should hire them to help you find a mate since you hire other professionals to provide services for you. One of the lines is, “You hire a Realtor to help you find a house.”
Actually, you don’t. You engage services, certainly. But the Realtor is paid by the seller of a home (about 99.9% of the time). Since you don’t pay a thing when you’re buying a home, why not work with the very best agent you can?
Hmmm…some of us are too lazy to do any research, so we call and get the floor agent at a real estate brokerage, who may or may not be the sharpest tack in the box. Or we call the listing agent (who – by the way – already works for the seller) to show us the house and represent us. If you don’t value the service of your Realtor, you’re unlikely to spend any time selecting your agent and you’ll get just what you asked for, whether you recognize it or not.
I have been an agent for so long that I cannot remember what I thought about Realtors before I became one. I do remember, however, that when I was an architect, people always wanted to talk with me about my job at parties. As a Realtor, people didn’t return phone calls and sometimes stood me up for appointments. It was very discouraging until I learned how to build a business model to avoid those situations.
Finding a house is not a huge part of the service provided by Realtors. In fact, I am currently assisting some wonderful clients who found the house themselves! My value comes with negotiating skills, up-to-date information about all issues in the market, a network of excellent service providers for inspections, repairs, title and escrow services, etc. and my attention to detail. (And they’re getting it all for no charge to themselves. Such a deal!) And an added bonus is my enthusiasm and humor.
One of the greatest myths of all time: Realtors make tons of money. Turn your attention to the following information. San Benito County has 230 members of the San Benito County Association of Realtors. Since the beginning of the year, 118 sales have been reported on the multiple listing service. This means there have been 118 paychecks issued for 230 agents. That doesn’t sound very lucrative, does it?
Imagine that the average sales price is $600,000. A 6 percent commission is $36,000. “Whoa, doggies!” you’re thinking. “I’d like to get a paycheck like that.”
A commission of $36,000 is split in half by the listing agent and the agent who brings in the buyer. So it’s down to $18,000. Still a great paycheck.
Factor in the split taken by the brokerage. Most Realtors work under the umbrella of a broker of record. Their splits range from 50 percent on down. So that paycheck is cut in half for a beginner agent because the brokerage is mentoring them, providing an office and support staff, training them, etc. The check is down to $9,000.
Consider things like this: Error and omission insurance, the cost of a lockbox, the cost of a lockbox key, membership in the MLS and the real estate board, membership in the California and National Association of Realtors, advertising, promotion, continuing education costs, business cards and stationery, postage for mailings, and so on. We’re down to about $7,500 for this paycheck.
Realtors also pay their own health and auto insurance. We don’t get sick time, vacation, or paid holidays. This amounts to about 1/3 of the total compensation package for a “real” job. We now stand at roughly $5,000.
After we subtract the cost of doing business, Uncle Sam is there with his hand outstretched. And because Realtors are contractors and not employees, there is self-employment tax as well as income tax. The paycheck shrinks a lot more, to about $3,500.
Note that the time on the market has increased from about one month to somewhere between six months and a year. This paycheck is now slower in coming, requiring additional marketing costs.
Back to where we started…230 Realtors, 118 paychecks TOTAL since the beginning of the year. You can see that the ranks of the agents are beginning to decrease as many realize the industry is not what they had imagined. We have families and mortgages and kids just like you. And we’re amazingly addicted to having food with our meals.
Many people jumped into the industry a few years ago. Prices up, houses selling in a nanosecond. It sure looked like easy money! Now it isn’t easy; it isn’t fun to tell your clients that no one has looked at their house in two weeks and it’s time to reduce the price. Today’s market is one for true professionals who are willing to work hard, provide service and forge ahead under challenging market conditions.
Find yourself a great Realtor…and then be kind.
