The Realtor and You - Your Costs; Their Costs

Realtors sell houses for a living. For starters, no one pays to put gas in their cars, the cost of the vehicle and its insurance. Real estate agents are not taxi-drivers (well, there are some part-time agents who drive cab for a living but that is another subject), or City tour guides, although most agents are pleased to offer such service when required by someone new to the area. Much of a real estate agent's job description is administrative work, no matter how many assistants an agent has. A certain amount of communication can "only" be done by a licensed agent. A license is very expensive to acquire along with the continuing education courses that an agent must take in order to keep a license active.

Agents must have all the accoutrements that run an office, just like where you work, privately: a computer, a fax machine, a photocopier, a printer often more than one); some carry pagers, PDA's and laptops, instant messaging machines; digital cameras, virtual tours, air miles, marketing materials, advertising, web sites, and email ISP contracts; supplies of Board forms that each agent pays for, cartons of paper, printer ink and toner cartridges, often by the case. Secretaries, personal assistants, answering services, and other in-house salaried staff must be paid for, along with a sharing of commissions between each co-operating agent and their appropriate brokerage houses. Uncle Sam and the State take a share of every commission earned, and social security must be paid as well. Although tax must be paid and is collected on every commission earned, accountants must be paid to fill out all the required forms. Hours, every day, must be spent searching the MLS systems for related information on your area. No one person pays an hourly rate to the agent for this type of work. It’s just part of the whole package that the commission pays for.

Each agent must pay for mandatory insurance programs. Real Estate Boards and State and National Associations charge massive fees for Realtors to belong to each one (mandatory participation), because they in turn have a business to run that requires that bills be paid along with the salaries of their related staff. Agents pay to run those associated businesses. Office rent (sometimes called “desk cost”) has to be paid, and all the operating costs like power, heating, taxes and other related expenses just like you pay where you live and/or work. All these costs are supported and paid for out of the commission that an agent earns. It seems like a lot of money that the public pays, and it is. Usually you pay no money to a Realtor up front, so the agent fields all the expenses from his/her own pocket, often over a period of months, until such time as a pay check arrives, often many months after the consummation of a purchase or sale. Example: you buy or sell a house in February and you are scheduled to move in June. The agent can look forward to getting paid sometime in July, and must budget accordingly…. Although all sales commissions are deemed to be negotiable, we are not permitted to discuss commissions among ourselves due to the fear of being accused of price-fixing; as with any sort of buying power, you always get what you pay for.

Many agents are available 24/7, unlike in other professional practices, and they work very hard, often behind the scenes. The public has no way of knowing what is really going on as the agent tries hard to locate the perfect house for you, or the perfect buyer for your listing. In the up markets agents can earn a higher than average living, but in a down market there often is no income at all. A high percentage of listings never ever do sell, even though the agent has had the expense of carrying the listing and any related marketing costs. Even the cost for installing and removing signs is most often paid by an agent. Many do it themselves to cut costs. Some Realtors are fortunate enough to work in family teams, but when the production is divided among four or five family members, no one individual really has done a massive amount of business or has a lot to show for the hour invested, after all is said and done. The great Realtor works with plenty of kindness, patience and understanding, often needing to wear several hats at once, such as counselor, advisor, confidant, putting his/her own personal feelings aside in order to remain professional at all times, in all circumstances.

©Carolyne Realty Corp., Reprinted with permission (excerpted)