If you were to convert the sales commission to an hourly rate, what would the average be?

Asked by Bob Quinn, Redwood City, CA Wed Aug 15, 2007

For example, sales price is $500,000, what is the average number of hours I can expect my selling agent to spend selling my property? Assume 2.5% commission to my agent, 250 hours selling is $50/hour. This seems very high hourly rate and is based on a selling hours that I do not think would be realistic either.

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Answers

67
Kaye Thomas, Agent, Manhattan Beach, CA
Tue Aug 21, 2007
This has been an interesting thread.. the fact is there is no real answer to this question. In my case I've been in the business for a very long time and have a lot of knowledge and experience. What is that worth? If I save you from making a $50,000 mistake and I have done that.. what do you think my hourly fee should be? Perhaps it only took me an hour because I knew what to do but it saved you a lot of money. It took me 28 years of experience to know how to resolve your problem in an hour... Can you really put a price on what that hour saved you?
7 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Mon Aug 20, 2007
To those who feel that we agents are so grossly overpaid for the services rendered, why not go get your license and start making a killing? Oh wait, everyone already tries that. And about 90% don't make the first renewal. There's a reason. It's not an easy way to make a living. To belabor my point, would you knowingly enter such a profession, in which 9 out of 10 don't make it, for an uncertain paycheck commensurate with say $20-30/hour? Honestly, would you?
7 votes
Jim Walker, Agent, Carmichael, CA
Sat Sep 22, 2007
Malcom, you and I posted nearly simultaneously,

I liked your Bush and the troops analogy. I was thinking the same thing myself. Private Jones and Corporal Hernandez can't just decide by themselves to "end the war" by leaving Iraq. They would be tried for desertion. If Realtor Walker decides to change the Realtor compensation model from percentages to straight hourly fees , he won't be tried for desertion, he'll just starve his family.

The compensation system is one that is ingrained into our economy and our society. While I appreciate your kind thoughts that journeymen realtors such as myself would earn more if the top producers would spread their wealth a little, I just don't see that happening.

Malcom wrote: "1) Would most realtors make more or less if they charged an hourly fee and billed clients for incidentals? If the answer is most realtors would make more with the attorney model, then why are you arguing with me? To an outsider like me it appears that the status quo is being maintained by the few realtors that are getting paid more at the expense of the majority of realtors that get paid too little. "

Perhaps you can explain how you would coerce consumers (sellers and buyers into paying an hourly fee when a transaction is not produced?

I am sure the consumer who experienced a successful transaction that took less time would love to have their fee discounted. Can you explain how I can persuade the first time home buyer or extra careful investor, whose transactions took 500 hours over two or three years to pony up some extra $ because they took so long, to decide to buy, and then every loan document and signature from them had to be requested a half dozen times?


You claim that you are not saying we should take a reduction in income. - however - The only consumers who will agree to an hourly fee are the ones who know they will clearly save money by doing so. - those who have already entered into a transaction. or those who are certian that they will.

Do publishers spread JK Rowlings wealth around top starving writers? Do movie Studios spread Tom Cruise, George Clooney's and Julia Roberts wealth around to starving actors? Maybe the studios will start paying actors for time spent in acting lessons, and for showing up for and performing audtions? Maybe publishers will start paying writers for rejected novels and scripts. Malcom will you campaign for that too?
Malcom wrote:

"2) Is it reasonable that sellers should pay the same 6% for a $100K home sale vs a $5M home sale? "

"3) Is it reasonable that sellers pay the same 6% to one realtor, cutting their teeth on their first deal, vs another realtor closing their 50th transaction? "

If compensation were reasonable in the world, garbage collectors would earn far more than internet advertising space executives and Realtors. The job of collecting garbage is unpleasant, hard physical work, and requires getting up while it is still dark to go to work. Someone flipping hamburgers in a hot greasy restaurant kitchen would be making more than some guy who plays baseball two hours a day for seven months of the year.

If compensation were reasonable people would be paid more, the more they hated their jobs and less if they liked their jobs. The American economy does not reward people in direct relation to their personal contribution to society. NOT even close. The non-correlation between property agents specific contributions to a transactions and the agents overall income is not a significant factor in the disparity of incomes and wealth mal-distribution in this country. It is not even a tiny factor in that distribution.
6 votes
Jim Walker, Agent, Carmichael, CA
Thu Aug 16, 2007
Well, Bob you are paying for a result not for someone to punch a time card. Will you promise to pay her say $20 per hour if the house doesn't sell during her listing? Yeah, I thought that would be your answer.

Bob, if you knew there was a chance you wouldn't get paid at your job, some weeks the payroll department just hands you a blank sheet of paper instead of money, wouldn't you want a little extra in the weeks that you did get paid for the weeks that you didn't.

So figure she sells two out of three listings that means she is averaging $33 per hour.

But then she pays double social securtiy taxes. YES, she does!

Oh, and she has to buy ads, signs, printing, mailing, fees, insurance, ... A lot of things you don't pay for as an employee.


You've got a $500,000 property. In order to qualify for that much house a family has to make about $120,000 a year. If both H & W work that is about $32 per hour each. So you writing in here begrudging someone who doesn't make any more than you do in a year?
6 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Wed Aug 15, 2007
Hi Bob,

This is from the buying side of a transaction, but I think it provides a little perspective. You always hear about the quick sale. Here is the other side of the coin. I am currently working with buyers in the $1-1.5 million range. I have been since last August. We have seen over 130 houses, and nearly every square inch of Scottsdale. I have sat in their living room for hours on end discussing options. I have helped them select contractors and cosmetics in readying their current home for sale. I have researched values and run CMAs on several near misses. I have spent hours reviewing various loan options with their lender. We have seen turn-key properties, teardown properties, vacant lots. By the time we locate, negotiate and close on a property, my hourly rate in this instance will be less than cost of the cup of coffee a day that Sally Struthers keeps asking me for. In a profession with no guarantee of compensation, the upside must be lucrative. It's that simple.

By the way, you think that $50/hour for the professional who is attempting to fetch top market value for a $500,000 asset is high? As mentioned by a previous poster, I pay my plumber more than that. Heck, that's the service call charge just to get him in the door.
6 votes
Erin Stumpf…, Agent, Sacramento, CA
Wed Aug 15, 2007
Hmm...my electrician charges $65/hour. My plumber charges $85/hour. Most attorneys charge $250/hour.

I charge $0 per hour until the job is done. How many professions do that? Realtors are paid a "success fee" for successfully negotiating the sale of a property. Buyers and sellers do not realize the up front costs we incur. In CA, just to maintain membership with the local MLS, and the local, state, and national assocations of Realtors, it costs about $1k/year. Layer on top of that our liability insurance, which is astronomical, which is over $1k/year. When I market a listing, I pay up front out of my pocket for a virtual tour, professional photography, a custom website for the home (check one out at http://www.1430wellerway.com), flyers, advertising, sign post, sign, etc. When I take a buyer out to tour homes, I pay for gas, miles on my car, coffee, lunch, etc. There is no guarantee a listing of mine will sell. There is no guarantee a buyer client will buy.

Realtors are small business owners. We are not paid a salary by our brokers, and generally split our commissions with our brokers. We pay our own taxes out of those commissions, we pay our own health insurance, pay into our own retirement accounts...

Experience is priceless. Inexperience is can cost you thousands on the sale of your home.
Web Reference:  http://www.sacreblog.com
6 votes
Deborah Madey, Agent, Brick, NJ
Wed Aug 15, 2007
Your agent will pay part of the commission to the broker; she won’t get to keep that entire $12,500. Depending on the business model, the agent and broker can share in any number of different configurations. An agent may keep 100% and only pay desk fees to the broker. Another agent might pay the broker an even split, but the broker will pay expenses. Either way, broker and agent both have expenses. How they divide that pie varies, but whoever takes the lion share of the commission will also have the lion share of expense.

There are expenses in MLS fees, office rents, telephones, computers, clerical staff, bookkeepers, CPA's, attorneys on retainer, errors and omissions insurance, general liability insurance, workers comp insurance, office supplies, virtual tours, cameras, cell phones, and I haven't even scratched the lengthy list. There are ads in print, online, letterhead, biz cards, and I could keep going and going.

So, the first thing that I would ask you to do is understand that the fee you pay is not wages. It is a fee for representation that includes skill, advice, expertise, marketing and broker support. Sometimes, after all fees are paid, the profit is negative. Sometimes, it produces a positive profit. That profit, must also cover the overhead carried on listings that did not sell. That is a fact of business. When you eat in a restaurant, your entree price is based on overhead and profit. You and I as consumers pay overhead and the fees we pay cover loss factors in everything we buy. We pay it at the clothing store, at restaurants, at the bank. Every business has to figure the losses into the pricing matrix. Otherwise, we would be poor business people.

In one property, an agent may average $3/Hr and I am not joking or being smart. I am being very real. In another property, an agent might average $50/Hr and sometimes more. An agent might invest a hundred or more hours in representing a property and never get paid. Overall, the income of the average and median agent is substantially less than the public thinks. The reasons for this include, among other things, that the public sees the fee they pay as "wages" not as a gross fee from which expenses must be subtracted, and much goes on behind the scenes of which the public is unaware.

Your agent might receive a check from her broker for $10K or $6K or another amount. From that, she will pay whatever expenses. She might invest 100 hours or 400 hours. If she does not sell her property, she receives no compensation for those hours under most commission agreements. She enters into this arrangement bearing the risk. You, too, have risk. You are placing your trust and confidence in the agent and broker that you hire to do a good job. Hire well. Interview agents and choose the best one for the job. You have the right to expect your fess to bring you quality marekting and representation.
Don't be hesistant to demand or expect such. Good Luck!
6 votes
Deborah Madey, Agent, Brick, NJ
Sun Sep 23, 2007
HI Jennifer.

I could not agree with you more on your statement that the expertise and education necessary to be an architect is many times more than that of a Realtor. I am not offended at all by your comments.

It seems that you want "fair compensation" to be related to "education and expertise." But, in a capitalistic society, it simply doesn't calculate that way. If we applied that expectation to real estate, Realtors would have a scale and be paid according to the level of education and expertise, but they are not. (If that were true, I might be a beneficiary, since I have both a formal education, and invested substantially in educating myself as a Realtor.) But, Realtors (most work on commission) are only paid if a property sells. The Realtor with education and expertise is not paid more for his/her expertise, only if they accomplish a closing.

The newbie Realtor with no experience, will be paid upon closing, despite the lack of expertise or knowledge. And what about the 20 yr veteran? Tenure alone does not guarantee expertise, work ethic, or education. Compare the Realtor has a finance degree who has also taken lower level architecture classes, and studied land use, zoning, easements, real estate valuation, investment analysis. What if the same Realtor has extensively invested in sales, marketing, advertising, and negotiating classes? The commission based structure only rewards the Realtor for bringing a contract to closing, not all this expertise. I know knowledgeable Realtors who are not successful at marketing themselves, or do not have a network of friends and family who are barely making ends meet. Knowledge and expertise in real estate does not equal income.

There are brilliant scholars in academia who are paid moderately while teens recording an album can become millionaires. While I sincerely empathize with your desire for compensation that is just as related to expertise and education, that is not the determinant in our society

In your post, you explained that 40% of your time was spent on marketing and admin, while only 60% was billable. For a Realtor, many spend more than 40% of their time marketing, and once they land a client, the opportunity to spend money and bear risk begins. For you, the oppty to start being compensated begins, since you will begin ‘billing’. For me, when I list a property, I get to begin spending. After spending to market my company or me and successfully getting a listing contract, I now get to pay for ads, support staff, brochures, post card mailers, sign riders, videos, virtual tours. Let’s not forget that the agent must split compensation with a broker.

So, if I may, please, adjust your figures to reflect a typical (not the top producer) Realtor. 65%-75% or more of a Realtors time is in solicitation of a client, and not all clients produce revenue, but they add do increase expenses. Too many agents chasing too few transactions actually is contributor to higher fees in selling real estate. If the average number of transactions per Realtor doubled, and there was a decrease in marketing expenses to find customers, the average income per Realtor would increase and the cost per transaction would decrease. This decrease could be passed to consumers. More Realtors in the US does not mean less expense for consumers, it means more. It is counterintuitive to assume that more Realtors drives the price down.

In closing, Jennifer, I wish that Realtors with advanced education and expertise had some guarantee of a higher compensation. So, I share the thought of wishing that to be true. I came out of a corporate career with a salary, bonus, expense acct, company car and I thought I worked hard with immense quotas, deadlines and budget guidelines. I thought what Realtors did was easy and that they were overpaid. After 10+ years as a Realtor, I can assure you I changed my mind after wearing several soles off the shoes I have walked in real estate. Some Realtors make a nice living, many do not. I don’t know what system of compensation other than the prospect of earning a nice commission could induce a person to be available 7 days a week, on call, and bear risk and expense.
5 votes
Mr.P, , Arizona
Sat Sep 22, 2007
Wow I am really late to the party,
Where do I begin.
OK I will start with Paul ( the Realtor ) says, If we are making so much money, go out and get a License.
Great answer Paul.

Now Malcolm, I find your comments surprising.

When I go to your website, I find out that Malcolm Lewis is currently Vice President & General Manager, Private Label Local Search, for Local.com Corp.
http://malcolmlewis.org/

So then I go to http://www.local.com/ and search Realtors
Look who`s there...
Well your search engine comes up with 5,000 plus Realtor in California, and 6,000 plus in Chicago
13,000 plus in New york
Featured Sponsors and sponsored links
Are some or all the biggest full service names in the business
ReMax
C21
MGB
Homegain
Etc...
What really gets me is that the California Association of Realtors is a sponsored link
http://www.yourpieceofcalifornia.com/

That is why I am surprised at your answer, you for one knows how much it cost us to do business

Then I was amazed that you have Buyside the very limited service Realtor there also?
Would you have used Buyside a year ago? Why didn`t you?
With a little further research, buyside come up alot. They seem to be a big Real estate account of local?

I just dont understand how you expect us to cut our income, and still pay to be a sponsored link?
5 votes
Patti Pereyra, , Chicago, IL
Tue Aug 21, 2007
Max, what sites like Redfin do is commoditize personal service. If that is what you want, by all means, go for it.

I'm curious, though, why did you *really* get out of the business? And if you did - why are you still a "real estate pro"? I assume you are now working for Redfin or some other commoditized service?

I'll give you that there *are* leach agents out there, just as there are leach attorneys, leach mortgage brokers, and leach people, period. It doesn't mean the whole industry is shady or useless.

You're certainly entitled to your opinion. But it's opinions like yours that make me glad that *I'm* entitled to simply choose not work with people like you.
5 votes
Mr.P, , Arizona
Sat Sep 22, 2007
Malcolm,

Thank you for taking the time to answer my question. however you really didn`t answer my questions.

First I will do my best to answer your reply.

The comment of "go out and get a licences" is clearly, in plain English, not directed to you.


"transparent time and materials model"
Wonderful Idea.
Realtors, to the best of my knowledge have been charging a commission for services rendered since 1891.
I was unable to support this statement through a Internet link. I believe that, because it is a Anti-trust Violation.

If Realtors were to adopt " transparent time and materials model" and charge an hourly fee.
Mr Lewis we live in a Wal Mart World.
Realtors would go from $500. an hour to $100. an hour to.......
Hello Buysidereality, can I help you.
The consumer would have very little service. The individual whom represents them for their largest investment, could actually be outsourced.

Our states are enacting limited service laws, because of all consumers who have been harmed. do to limited service Realtors.

Lets continue with the hourly fee idea, Actually lets use Bob idea of 250 hours, in this market that is not unrealistic Bob, @ $50. an hour that's 12,500.00.
What happens if Bob changes his mind at 249 hours, and he wants to stay in his home. It can and does happen.
OK Bob I understand that you want to stay, here is a bill for $12,450. Sure I`ll take a check.
Malcolm that`s just not going to happen. There would be much more abuse. No one just talks to a lawyer just to talk, they can see the meter running.

Next
"Who says anything about cutting your income"?
Oh Gee, I don`t know....How about that part where you say
"Come on, realtors, let's all agree the 6% model is tragically flawed."

Now on to Questions for Patrick

1) Would most realtors make more or less if they charged an hourly fee and billed clients for incidentals? If the answer is most realtors would make more with the attorney model, then why are you arguing with me? To an outsider like me it appears that the status quo is being maintained by the few realtors that are getting paid more at the expense of the majority of realtors that get paid too little.

Hmmm I am seeing a pattern here.
No they would not, the hourly fee idea has been kick around for years by the big brokerages.
Believe me the consumer is getting more by paying a commission. The commission base salesperson is solely dependent on the deal getting done.
The hourly base doesn`t care if the deal closes they are still getting paid.

Oh your house didn`t close, and you have to spend the weekend homeless, with the Uhaul, and dogs.
Sorry we close at Five.


" then why are you arguing with me? " I am not arguing with you Mr. Lewis,I only asked a question.

2) Is it reasonable that sellers should pay the same 6% for a $100K home sale vs a $5M home sale?
AND
3) Is it reasonable that sellers pay the same 6% to one realtor, cutting their teeth on their first deal, vs another realtor closing their 50th transaction?

Now this is where I am suspicious of you Mr.Lewis. These are very common phrase of a discount, less than full service Realtor. Maybe I have been watching to much CSI

Guest Answer Paul Slaybau... Ladies & Gentlemen

"Malcom, the market determines our fee structure, not us. We did not all sit down and say let's make this a percentage based industry, it just happened. It may not be flawless, but what fee structure is?"

Thanks Paul I couldn't say it better myself, or at least cut & paste it


Mr. Lewis
You really did not answer my question, instead you asked a few diversionary questions.
Good tactic, maybe a first for Trulia.
You know that a Realtor hourly wage would be about $20 an hour, or less. Who care`s if they are good or not. what do we have E&O insurance for?
Charge them for incidentals?
We already have that they are called Buysidereality.
You don`t have to answer my question, however I will ask it again

Would you use Buyside to save that 4K an hour?

Does Local.com give a special discount to Realtors who charge less.

I just dont understand how you expect us to cut our income, and still pay to be a sponsored link?

Thanks Have a good night.
4 votes
Bridgette Ko…, , Florida
Thu Aug 16, 2007
Bob,
You're question so depressed me, that I almost didn't answer... I believe my fellow REALTORs have sufficiently answered this question; but I wanted to reiterate the point made by Jennifer: most of us aren't the highest earners, but the job satisfaction is immeasurable. Helping clients successfully navigate one of the most stressful times of their life is precious. Getting a client into their first home is priceless...

Best of luck!
4 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Sat Sep 22, 2007
Putting aside the merits of an alternate fee structure, I want to know about implementation. Is the suggestion that we agents simply give the wink and club handshake and cease basing our fees on what market forces have created? The only way to turn the ship in such a manner would be with some central figure operating the rudder. Does the NAR simply put out a memo saying "we charge by the hour now?" Do you think the DOJ might take notice of an entire industry colluding to adopt a new fee structure when there is currently no set fee structure? For the reasons eloquently given by the agents on these boards, the hourly wage is not a suitable means for compensation in my opinion. That said, with no set fee structure in place, you can go hunt down an agent that might be willing to be compensated in such a manner. But for standards of practice, the market knows best. Not you, not me, not a room full of you and me's.
3 votes
Malcolm, , Bellevue, WA
Sat Sep 22, 2007
JIM: Great Research on Malcom Lewis, Patrick.

MALCOLM: He clicked on a bio link that I provided. It wasn't that difficult.

JIM: Do you earn a flat salary now.

MALCOLM: Yes.

JIM: Are you willing to ... hire a few highly experienced real estate agents ... for a guaranteed monthly salary of say $5600 per month ($35 per hour)?

MALCOLM: Monthly, of course not. Hourly, yes. Since no one knows how many hours my realtor will spend on my purchase, I think it's fair to both of us that they work for an hourly fee plus expenses. I'm happy to pay for every single hour, every call, every email. If my deal took 20 hours I'd expect to pay for 20 hours. If it took 200 hours, I'd expect to pay for 200 hours. I'd pay a good plumber $100-150/hr in my neighborhood, so I'd expect to pay a lot more than $35/hr for a decent realtor.

Jim, Would you care to answer my 3 questions to Patrick?

Please keep the questions coming. I am fascinated by this question and interested to learn if I am right or wrong. I'm happy to admit I was wrong if someone can answer my three questions in a way that clearly shows the 6% model the best deal for the majority of consumers and realtors.
3 votes
Ute Ferdig -…, Agent, New Castle, DE
Wed Aug 22, 2007
Good question. Since real estate agents are only paid if an escrow closes, they spend a great many hours working without getting paid. Thus, you really can't just look at how much an agent makes per hour when a sale closes. I think a lot of agents would be happy to work on an hourly basis but that would require that the clients pay whether a transaction closes or not. If you hire an attorney on an hourly basis, you pay whether you win the case or lose. When you hire an attorney who works on a contingency basis, you will pay only when you win, but usually you'll pay somewhere between 30 - 40% of the award (real estate agents usually only get 2.5 -3% of the sale price (5--6% if they double end). When you see a doctor, you pay whether the doctor can help you or not.
A listing agent is expected to advance all expenses for advertising and since not all listings sell, there is a lot of money that goes out. In addition to that, unless you deal with the broker/owner of the company directly, all real estate agents have to split their commissions with their brokers. It's not unusual for an agent to be on a 70/30 or 80/20 split. You can see that there is really not that much money left for the agent after the broker split and paying for expenses. As long as real estate clients are not willing to pay agents on an hourly basis, we will not be able to get away from the commission based compensation system. In essence, all the transactions that close have to also compensate for all the work that is done for free.
3 votes
Vicki Masell…, Agent, Duluth, GA
Tue Aug 21, 2007
Thought-provoking & stimulating question, Bob. For those who consider themselves a professional and a business person (rather than an hourly employee), how & how much do you value your time? A Realtor's greatest assets in the real estate business are his/her time and expertise. We all know that we each have the same amount of time in a day. Some people earn minimum wage while others earn what appears to be an outrageous sum of money per hour.

When one hires a true real estate professional, you are hiring a business person (not an employee). As a self-employed business person, there are certain fixed costs, risks and expenses that are incurred whether you do business with that person or not, whether working with a seller or buyer results in a successful transaction or not, and how long it takes for the transaction to close and the agent/broker to be compensated. All the while, the agent assumes ALL of the risks and expenses associated with the possiblity that a particular listing may not sell or a particular home buyer may not end up buying. This part of the business is not calculated or factored into your equation.

In the example you noted, you are using a sales price of $500K. In my market, many of the clients we serve (while not all) are in the $150 to $350K range. In most cases, it costs a real estate professional just as much to market and sell a $150,000 listing as it does to sell a $500,000 home. However, the net profit after all expenses is actually much lower than you might think. Consider that your agent or Realtor will have to pay broker & corporate fees (which by the way, come off the top before anyone or anything else gets paid), office/desk fees, out-of-pocket expenses, federal/state taxes, social security, health insurance, car insurance, business liability insurance, office supplies, printing/copying, paper clips, pens, pencils, print ads, training, continuing education, signs, lockboxes, annual association/membership fees, websites, pay-per-click, Google ads, etc. etc.

I would venture to guess that you did not account for these types of costs/expense in your example but nonetheless these costs/expenses are real and tangible to most agents and Realtors. Would you still wake up each morning excited and motivated to go to work for your employer, boss or client if you knew there was a possibilty that you may not be paid or compensated for your time & expertise while on the job? What if your company announced that they were going to cut salaries by 25, 30 or 50% across the board indefinitely. How would you feel? My belief is that unless there was some reasonable assurance that you would get paid at a fair wage that would at least cover your monthly household and business expenses, you'd be on the phone lining up interviews and sending out resumes the same day.

One closing thought. In a sluggish market like the one that most areas of the country are currently experiencing, it is undisputed that listings are taking longer to sell. As the time on market goes up, so do the costs/expenses of an agent to properly market and service a listing.
3 votes
Chris Tesch, Agent, College Station, TX
Wed Aug 15, 2007
Bob, there would be times when I work for absolutely nothing. I once had a family come into town and I drove them around for two weeks looking for properties the entire time, because they were exploring alternative towns. They bought a for sale by owner that they saw when they took a day off of looking. In this case I was out gas money and lost opportunity as well as wear and tear on the car.

Then two weeks ago a client came in, and insisted on driving. We found the right house 3 hours later and negotiated on it. I've spent, perhaps, 5 hours on the transaction so far. It might be one that works out.

You do find that many are tire kickers and you work hard with them. Hourly rate doesn't work. If you paid agents the hourly rate your felt they were worth and they didn't have another transaction that worked out that month no one would be in the business.
Web Reference:  http://www.ChrisTesch.com
3 votes
J R, , New York, NY
Sun Sep 23, 2007
Thanks for answering, Jennifer, I have a similar rate: 10 listing presentations before I get alisting. Then I begin marketing. I canidentify with not letting clients leave with your plans: I have done desktop publishing and designed ads or such, and then seen people use the same design without paying me. I've also had other desktop publishers cut the rate to get the work. Relating it to real estate: I've done listing presentations with expireds where I educated them about the market to the point where they cut the price drastically--then relisted with their last agent! I also spend lots of time with customers who never buy, so that time is all out the window, gas money spent, research time, and time away from my seller clients. I've had a customer for as much as 6 months who bought elsewhere, or no where. Seems like freelancer/independant contractors have the same things happen to them no matter what the business. :)
2 votes
Ute Ferdig -…, Agent, New Castle, DE
Sat Sep 22, 2007
If the compensation system were to be changed to an hourly rate, it would mean that buyers would have to pay for their own agents as no seller would agree to pay for the buyer's agent on an hourly basis as the final bill would be unpredictable and difficult buyers could easily drive up the seller's cost. I doubt that we'll see any buyers willing to pay for their own agents any time soon. While I would welcome being paid by the hour, it's not going to happen. Paying for real estate services on an hourly basis would also only work if we were to get retainers because I surely would not want to try to collect my hourly fee if the buyer or seller walks away for the purchase or listing. Working on an hourly basis would also require time keeping practices and additional accounting to send out monthly invoices. In CA, most brokers do not have trust accounts as we do not usually receive an moneys from our clients (earnest money is placed in escrow). I do not think that brokers would care for having to maintain trust accounts.

All in all, I don't think being paid by the hour is suitable for real estate services. As long as we are on a commission and success based compensation plan, talking about hourly rates is a mute point.
Web Reference:  http://www.go2kw.com
2 votes
Jim Walker, Agent, Carmichael, CA
Sat Sep 22, 2007
Great Research on Malcom Lewis, Patrick,

I was wondering about Malcom when he wrote that he paid a mergers and acquisitions attorney $500 hour for some work. That statement implied that Malcom is himself an entrepreneur who does not work on an hourly basis. - For Malcom Lewis to rake in the bigs bucks as a capitalist selling his company, and now as General Manager and VP of an internet advertising frim that makes money off of real estate entrepreneurs, then suggest that some of his own real estate brokerage customers are making too money is the new dictionary definition of chutzpah! (Pronounced "hootspah!" )

Malcom Lewis, as wealthy capitalist who cashed in big time on the sale of your company, are you willing to put your considerable wealth on the line and hire a few highly experienced real estate agents (20 years and / or 500 deals under the belt) for a guaranteed monthly salary of say $5600 per month ($35 per hour) ? Do you earn a flat salary now, or is your compensation somehow tied to how much internet advertising you sell. And your sales people at Local.com?

Until Malcom explains his answers on this thread, I ask that no one call him a hypocrite. - Let's wait for his answer.
2 votes
Kristal Kraft, Agent, Greenwood Village, CO
Wed Aug 22, 2007
Selling real estate is more about what we know than what we do. Attaching an hourly rate to it, just doesn't work.

How many professions take as much risk as real estate brokers do? I take a listing and it starts costing me money long before I ever get paid. I get paid on my success and only my success, otherwise I walk away with a minus.

Take away my risk, pay me for every time I help someone and don't get paid, then I can charge less.
2 votes
Bob Quinn, , Redwood City, CA
Wed Aug 22, 2007
From Bob, the original question poster:

Wow, I am glad to see my question generated quite a number of responses.

First, I want to thank all those who took time to reply.

Now for my reactions.

I learned quite a bit from the responses.

While I was focusing on the time and money factor, what opened my eyes was that I had not considered the money spent by a realtor to market a property. Starting with the direct costs, advertising the property to the indirect costs of just being areal estate agent, licensing fees, training etc.

Now to provide a few more items for thought.

There were several response to whether a seller would prefer to pay hourly if the property sold or not.

I would say yes and let the market (customer/relators) decide the rates just like lawyers do with their customers. If it is too expensive, you seek a lower cost source. All attorneys do not work on a contingency basis, why must the real estate industry operate that way? The attorney has outside costs just like the realtor, staffing, office, advertising, etc.

I live in the SF Bay Area where the selling price of a 3br/2ba 1700 sf home goes for around 900k. For this area, I would bet that the hours worked to sell a property, the money spent by an agent to market a property and the money spent by an agent to obtain their license and for continued training, etc are not double or triple for an area where houses sell for 1/2 or 1/3 of my area.

That was the basis for my original question.
2 votes
Patti Fergus…, , 93942
Tue Aug 21, 2007
I've thougth about this a lot. So, let's assume the listing agent gets 3%, or $15,000. In my experience, he/she then pays 6% to corporate or the licensee, leaving $14,400. Then their is Errors & Ommissions policy fees, again, in my experience, $2,500 divided by appx 4 transactions or $625.00 per transaction. Now we are at $13,575.00. This is where the agent's split applies. So, let's assume 70/30 which is generous. That brings the agent to $9,502.50. Okay, let's assume I was conservative in advertising and the best the seller would do is split them: so, $2,500/2. Now we're at $7,252.50.

We've not even calculated the fees the Realtor pays to the local Realtor Association (mine are $1,200 per year), nor non property specific advertising (mine is $5,750.00 per year). And the IRS which should be calculated at 40% at least.

This overpaid agent, working many more hours than you can imagine has now made $4,315.50 for a transaction that may have taken at least 120 hours, and the $$ per hour is appx $43.

Since my last transaction requried residential, commercial, and extensive lending expertise, I made about $12.00 per hour.
Web Reference:  http://www.agdavi.com
2 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Tue Aug 21, 2007
Leeches, Max? Why exactly did you get out when you did if you were just rolling in the dough? If you were spending a total of 10 hours per sale and making money hand over fist, why are you "glad that you got out when you did?" Something doesn't pass the smell test here.
2 votes
Patti Philli…, , Carlsbad, CA
Mon Aug 20, 2007
JR, You make an excellent point. How many times have we listed a home, spent time and money on ads, marketing, signs, open houses, broker caravan- only to have the seller's "change their mind" about selling! Never have I had one even think to say, "Here, you've put out a lot of effort- go to dinner on me!"

And what about the time spent with buyers? Not only the time in the car, gas, hours looking up properties, etc,..... but what about when you get into a deal, negotiate, go to the home inspection, do all the paperwork for escrow- and they get "cold feet" at the last minute and back out. No hourly rate paid there!

I also am very curious what disgusted Kelly so much? Does he/she think we don't work very hard for our money? Many people can go to work, punch in, put in their 8 hours, know the paycheck will be there at the end of the week. In our business there are MANY times we may not see a check for weeks or even months- and when it shows up, we hope to catch up the bills!

Gotta go- I have work to do!

Patti Phillips
800-680-9133
2 votes
J R, , New York, NY
Mon Aug 20, 2007
Answer: Well, Bob....can I include the hours I work for customers and clients where the end result is NOT a sale?? :)

And a question for Kelly: what is it about this thread that makes you so disgusted that you would not use a real estate agent? You don't like that we work so hard? :)
2 votes
Rebecca Cham…, , Palos Verdes Estates, CA
Wed Aug 15, 2007
Hi Bob. It doesn't really work like that. Out of the commission, the agent usually splits the fee with the broker (sometimes up to half) so now we're down to $6250; pays for marketing the property..everything has a cost, including putting up a sign, a webpage, ads, flyers, open house food, lock box etc...usualy marketing costs begin at about 10% of the commission and go up from there..so now were down to $5000. Out of that they pay overhead (desk rent, supplies, assistant, auto fees, etc) and taxes, making the total gain to be about $2000. Time can varry from listing to listing. The issue is, they are there for you no matter if it takes 50 hours or 500..it's until the job is done. That (to rip off a commercial) is priceless. There is no way to predict how many hours a listing will take.
2 votes
Tisza Major-…, Agent, Upland, CA
Wed Aug 15, 2007
Hi Bob,

Good question... And I wish it were possible to actually get paid an hourly rate like a doctor or a lawyer does. Remember, that when you hire a Realtor, much like when you hire any other professional, what they are paid is covering more than just your transaction. Part of what they earn is going toward many things that you never see and hopefully that you never need to, but it still needs to be factored in.

Before anything else happens, remember that the Broker is paid a portion off the top of the commission earned on a transaction. Broker's can receive anywhere from 10 to 50% of the commission depending upon the particular agent's situation. Average for a starting agent, or one that does not do huge volume is about 35%.

They also pay for errors and ommissions insurance for your transaction which protects them and you should there be a problem with the transaction paperwork. They pay for membership in the professional orginizations like the National Association of Realtors, and their local Real Estate board which allows them to place your listing in their Multiple Listing Service and also on Realtor.com. They are paying for the training that they have acquired in order to be able to legally offer their services and all of the continued education that is necessary to keep their license after the earn it. They are paying for the advertising costs for the sale of your home, including the signage, showcase listings, virtual tours, flyer's, postcards and everything else.

On average, a new listing costs me approximately $2000 just for the advertising related expenses alone. And, if you want to look at this as an hourly billing situation instead of a flat commission one, then you also need to factor in every phone call that is taken or made, whether it results in a sale or not. Also, every email that is read or answered, every showing that is done, every broker's open that is hosted, every regular open house that is hosted, every hour that is spent with you and also on your behalf reviewing and re-reviewing any offers submitted; every offer that is countered; every inspector that is contacted; every inspection that is attended... Also, a good agent is always "working". We don't stop just because the clock hits 5. My phone, my knowledge and my business go whereever I go and are attended to whereever and whenever they need to be. Basically if my phone is on, I am working and my phone is ALWAYS on.

So, I am sure that you can see that a good agent will spend a whole lot more than 250 hours on your sale, and after you start adding up all of the other costs that they incur on your behalf $50/hour is indeed high. Sure, a 2.5% commission is a whole lot of money, but not when you really break it down it is not much at all. This is why Real Estate, for the agent needs to be a volume business to be successful.

So, while it may seem like it would be great if you could pay an agent just for the hours they "worked" for you, I am sure you can now see that a flat commission is a much better deal for you.

Hope that helped.

Take care,

Tisza Major-Posner, Realtor, Keller Williams Claremont/La Verne
"Because it's not just a house... it's your home."
Web Reference:  http://Route66Living.com/
2 votes
J R, , New York, NY
Sun Sep 23, 2007
Hi Jennifer, I read your post and have some comments. I'm assuming that after you work with this one client for 2 years, you are guaranteed to be paid. Also, this is not the only client you are working with, correct? When I freelanced I frequently worked on a project for a year or two. I was paid in installments but final payment often wasn't till a year or two in the future. I was also working on many other projects simulataneously, as I guess you are, too?
1 vote
Mr.P, , Arizona
Sat Sep 22, 2007
Sorry I am so late posting I had to make dinner, the kid lost a tooth. I have been writing on and off for two hours.
Hey that was great research.
1 vote
Jim Walker, Agent, Carmichael, CA
Sat Sep 22, 2007
Malcom, I just answered those three questions; I did not exactly rebut them. You are right on all 3 premises.

1. Top producers earn more vastly more money than journeymen and rookie realtors, at the expense of those lower on the totem pole. 2 and 3. I concede that the compensation model is not tied directly to the effort put forth. I expect could find reverse arguments as to why the rookie should be paid as much or even more than the old pro on a transaction, based on effort exerted, and results obtained. Paul made the very plausible argument that the 5 million dollar sale could be the one that is undercompensated as compared to the $100,000 sale, when both are paid at the same rate. (They very rarely are though, millionaires usually understand negotiation even if they are surgeons or plumbers. )

Back to your military / foreign policy analogy: Who are you asking to change the commission system? The generals in charge (Society, Government, Consumers) or the boots on the ground agents?
1 vote
Malcolm, , Bellevue, WA
Sat Sep 22, 2007
PATRICK: If we are making so much money, go out and get a License.

MALCOLM: Why would I get a license? I don't mind paying a realtor to help me for one moment -- I just don't want to pay too much. I'm advocating the transparent time and materials model that has worked well for attorneys (and many other professions) for decades. It's fair to all parties. Consumers would never again pay too much, and no realtor would ever again work for free.

PATRICK: You for one knows how much it cost us to do business. I just don't understand how you expect us to cut our income, and still pay to be a sponsored link?

MALCOLM: Who said anything about cutting your income? Is there some reason why you wouldn't build your overhead (advertising your business in your example) into your hourly rate just like attorneys do?

3 QUESTIONS FOR PATRICK:

1) Would most realtors make more or less if they charged an hourly fee and billed clients for incidentals? If the answer is most realtors would make more with the attorney model, then why are you arguing with me? To an outsider like me it appears that the status quo is being maintained by the few realtors that are getting paid more at the expense of the majority of realtors that get paid too little.

2) Is it reasonable that sellers should pay the same 6% for a $100K home sale vs a $5M home sale?

3) Is it reasonable that sellers pay the same 6% to one realtor, cutting their teeth on their first deal, vs another realtor closing their 50th transaction?

Some realtors like to take the Bush approach of confusing the war with the troops. To be clear, I am FOR the realtors, but I am AGAINST the % of transaction business model.
1 vote
J R, , New York, NY
Sat Sep 22, 2007
Malcolm wrote:
I have been debating this question with a realtor friend and was intrigued to find this thread via Google.

It boils down to these 2 points in my mind:

1) Realtors provide a professional service comparable to attorneys and accountants. They provide a service that is more important than plumbers but less important than heart surgeons (please, realtors, stop using this ridiculous comparison).

JR: well here's one realtor who never uses that analogy.

Malcolm: I'd pay a plumber $100/hr to fix my plumbing. I recently paid an experienced M&A attorney $500/hr to sell my company. I think a realtor's value is somewhere between the two. A year ago a paid an agent $4,000/hr to help me buy my house. Clearly I overpaid.

JR: If you bought the first house you saw, I might agree with you. If it was the 20th or 30th, I wouldn't. On the other hand, you didn't pay the agent, it came out of the seller's net, so the way I see it, if you bought the first house I showed you, it would have made up for all the people I DID show 30 houses to who didn't buy.
~~~~~~~~~~~~~~~
Malcolm:
I understand that there are many examples where a realtor ends up getting paid an effective hourly rate of $10-20/hr, so...

2) It would benefit all parties if realtors were paid on the same time and materials basis as attorneys and accountants:

JR: Benefit whom? If I wanted an hourly job I would have one.

Malcolm: Buyers and sellers would pay for the services they consume, and no more. Realtors would be paid for the services they provide, and no less.

JR: I am paid for the services I provide.

Malcolm: Market forces would previal in every real estate market, with less experienced realtors charging less, and more experienced realtors charging more.

JR: A new agent in my office has other agents who have has as many as 50 years in the business. I would not be against a kind of apprenticeship program, however .


Malcolm: Consumers would make their own choice regarding how much they want to pay relative to the level of experienced they think they need.

JR: They can do that now by checking out the realtor they hire.

Malcolm: Come on, realtors, let's all agree the 6% model is tragically flawed. Paying the same 6% for a $100k home vs a $5m home makes no sense. Similarly, paying 6% to some rookie selling his first home vs the same 6% to an experienced realtor with 500+ deals under their belt also makes no sense.

Please end this silly discussion and transition to the same time and materials model that comparable professions have been using for decades.

JR: You have those options open to you also. You can hire a discount brokerage, go FSBO, or use a clickit agency.
In my previous "life" I was also an independant contractor in another business. I once figured out my hourly rate for one year, and I would have done better working at radio Shack for $12 an hour and getting benefits paid. I also wouldn't have had the option of getting up and walking outside whenever I wanted, going to get my nails done whenever I wanted, and going to the beach whenever I wanted and then working till midnight in order to get my work done. That is why I am an independent contractor. I like to manage my own time. As long as I accomplish what needs to be done, I don't have to be tied to a desk.
1 vote
Paul Slaybau…, Agent, Scottsdale, AZ
Sat Sep 22, 2007
Malcom, the market determines our fee structure, not us. We did not all sit down and say let's make this a percentage based industry, it just happened. It may not be flawless, but what fee structure is? There are plenty of problems with the time and materials model. Wouldn't you say that the guy who gets paid by the hour might not have the same incentive to produce immediate results? Is it not in a lawyer's best interest to file motions and delay to beef up the billable hours? You have obviously given the topic a lot of thought, but at the end of the day, I would rather employ the professional whose compensation is tied directly to my own. Agents are paid for results, not for punching the clock. I think your example of the $100,000 sale versus the $5,000,000 sale is flawed as well. While you might think that a percentage of 5 million is grossly overcompensating the agent, how many buyers are walking around looking for such a property? Many agents will never do business in this price range because they do not have the contacts and budget to market it accordingly. If anything, the percentage on the 100,000 property would be the one that is out of line because there is no shortage of ready, willing and able buyers in that range.

Very good critical thinking in your response, I just disagree with your conclusions.
1 vote
Malcolm, , Bellevue, WA
Sat Sep 22, 2007
I have been debating this question with a realtor friend and was intrigued to find this thread via Google.

It boils down to these 2 points in my mind:

1) Realtors provide a professional service comparable to attorneys and accountants. They provide a service that is more important than plumbers but less important than heart surgeons (please, realtors, stop using this ridiculous comparison). I'd pay a plumber $100/hr to fix my plumbing. I recently paid an experienced M&A attorney $500/hr to sell my company. I think a realtor's value is somewhere between the two. A year ago a paid an agent $4,000/hr to help me buy my house. Clearly I overpaid. I understand that there are many examples where a realtor ends up getting paid an effective hourly rate of $10-20/hr, so...

2) It would benefit all parties if realtors were paid on the same time and materials basis as attorneys and accountants: Buyers and sellers would pay for the services they consume, and no more. Realtors would be paid for the services they provide, and no less. Market forces would previal in every real estate market, with less experienced realtors charging less, and more experienced realtors charging more. Consumers would make their own choice regarding how much they want to pay relative to the level of experienced they think they need.

Come on, realtors, let's all agree the 6% model is tragically flawed. Paying the same 6% for a $100k home vs a $5m home makes no sense. Similarly, paying 6% to some rookie selling his first home vs the same 6% to an experienced realtor with 500+ deals under their belt also makes no sense.

Please end this silly discussion and transition to the same time and materials model that comparable professions have been using for decades.
Web Reference:  http://malcolmlewis.org
1 vote
J R, , New York, NY
Tue Aug 21, 2007
Leeches, Max? Why exactly did you get out when you did if you were just rolling in the dough? If you were spending a total of 10 hours per sale and making money hand over fist, why are you "glad that you got out when you did?" Something doesn't pass the smell test here.
~~~~~~~~~~~~~~~~~
Paul, it seems the 1 post trolls have found this forum. :)
1 vote
J R, , New York, NY
Tue Aug 21, 2007
Big, Max, and Paul? .... Put your eyeglasses on this time and start reading this thread from the beginning, please! :)

Oh, and Big...Can you please tell me what you do for a living so that I can tell you whether or not your salary is justified?
1 vote
Big123, Home Buyer, yeeayya
Mon Aug 20, 2007
the whole real estate biz is smoke and mirrors.

If real estate agents truly did their job, they would charge commission on the following basis:

- if they sell the house for the price that the house would sell for within a couple of weeks were the current owners to put a big sign out the front of the house saying "for sale, $x00,000." they get nothing. because they haven't done anything that the current owners couldn't do themselves, for free.
- from there up to a decent market price, they should take a couple of %.
- from a decent market price upwards they should take 10 or so %.

this means that if you are good and actually manage to get find buyers who will pay a premium for a house, you get paid. if you don't do jack, you don't. This means the average agents get thinned out, and those who are good and can get a good price for a house get paid well.

atm the incentive for agents is to trawl the streets all day for places to sell, then sell them as fast as possible by getting the seller to drop the price as low as possible. that is the best way to make money. it doesn't align with the sellers objectives, which is why agents are so hated.
1 vote
Max Power, , Sacramento, CA
Mon Aug 20, 2007
On second thought....

You'd probably be better off doing it yourself. http://www.californialicense.com/california-real-estate-lice…
$198 for the prerequisite classes and then pass a test a monkey could take.
1 vote
Paul Meeks, Both Buyer And Seller, Santa Monica, CA
Mon Aug 20, 2007
Just use redfin. They will work for YOUR benefit and not try to put you in the most expensive home, not take offers to sellers, tell you to take lowball offers when you are a seller, etc. just to pad or get their commission.

Remember 10K in price to you on a sale is only 300 to the agent. They will tell you to take a 10K price cut to get a quick commission.
1 vote
Patti Fergus…, , 93942
Mon Aug 20, 2007
My last transaction was complication and was worked by both me and my husband. We made $12.66 an hour. I've never had a transaction in which I worked 250 hours -- in this market we are working upwards of 300 hours for every transaction.
Web Reference:  http://www.agdavi.com
1 vote
Kelly, Home Buyer, Minnesota
Mon Aug 20, 2007
This thread is the reason I will never ever ever use an agent EVER again. It's beyond disgusting.
1 vote
John Goad, Agent, Winston Salem, NC
Thu Aug 16, 2007
Bob,

Like most of the other agents said it is a very hard question to answer. Unlike most people we do not go into work from 9 to 5. Most producing agents will agree that we Live, Breath and Eat real estate. I have a team that I work very closely with and we generally start at 9 am and end working sometime around 11 pm, especially in this very trying National Buyer's Market.

I agree with you that some agents are overpaid. As many agents idea of marketing a property is simply putting the property on the MLS then dropping to one knee and praying "Please God let it sell". However a quality agent will extensively market your property and marketing costs not only time but money as well. We spend between $800 to $1,200 marketing each property we have listed for sale (with Fine Homes and Estates going up a great deal from there) with no guarantees that we will sell the property so that we can not only make a living, but recoup those marketing fees.

Here is a couple of facts that many agents know, but very few people in know in the general public. 20% of agents do 80% of the business. 80% of those that have a real estate license make below poverty level earnings in a year. Agents have to pay all sorts of fees, whether they sell 250 properties a year or 0. Such as: Licensing Fees, MLS fees, Local Board Fees, National Board Fees, Desk Rents, etc. We also have to attend classes for license renewal, which unlike most jobs we do not get paid to attend. In fact WE PAY to attend these classes, which sometimes require traveling to other states.

I will leave you with this. When I first started in Real Estate 10 years ago, another agent from my office asked our broker (owner of the company) "Why is selling real estate so hard?” His prompt answer was "If selling real estate were easy, people would not pay us thousands of dollars to do it."
Web Reference:  http://www.GoadTeam.com
1 vote
Jennifer Mon…, Agent, Charlotte, NC
Thu Aug 16, 2007
I know what it ISN'T! It is not $500 per hour like a certain limited-representation agency in Portland likes to contend all over their billboards! That's just crazy!

At one time I tried to assess this number on very different transactions. Not easy to undertake since we are ALWAYS working! If I'm socializing, I'm still answering RE questions and making connections (and SELLING my listings to those who are interested!). Every morning, I update my databank of mortgage information, housing statistics and trends while I have a quick breakfast. I could go on here, but those of you in the industry know exactly what I'm talking about. Heck, I DREAM about real estate and I know I'm not getting paid for that!

After all the expenses that Jim mentioned, we probably don't make a whole heck of a lot when it all balances out. But I am DEEPLY gratified by my work. I love to hand over a set of keys to an excited new homeowner, and help people move on when that's where their lives take them. So you may be looking at just the numbers here, but are you considering the benefits you receive from a dedicated broker who is doing so much more than meets your eye?
Web Reference:  http://JennifersPdxHomes.com
1 vote
Pam Winterba…, Agent, Danville, VA
Wed Aug 15, 2007
Erin....Your answer was extremely well stated and I couldn't add much more.

We are public servants until the escrow closes.
Web Reference:  http://pamwinterbauer.com
1 vote
Amy Wengerd, Agent, Canton, OH
Wed Aug 15, 2007
A real estate agent is a profession that cannot be broken down into an hourly rate for several reasons. There is so much time spent on things behind the scenes such as calls, paperwork, marketing, prospecting, education... When you hire a Realtor you are not getting paying someone for hours spent but rather to get the job done and to get the most money for the seller. There are statistics that prove sellers make more money on their homes by using a professional Realtor vs. trying it on their own. The money a seller makes should be calculated into this equation also. (if you are determined to use an equation) One final thought--if a doctor spends hours in the operating room making you better, do you try to convert that to an hourly rate or are you just thankful that he knows what he's doing?? A good Realtor is worth every penny!
Web Reference:  http://www.amywengerd.com
1 vote
Deborah Madey, Agent, Brick, NJ
Mon Sep 24, 2007
Hi Jennifer,

I suspect that Ed makes much more than $2/ hr on an aggregate total hours worked per year.

But I would feel safe in saying many Realtors have exited transactions many times upside down or at $2/hr or $3/hr pay. I also know of several Realtors who work an average of 40 hrs/wk (one week 25, another week 55) whose year end income after expenses would be less than $10/hr, and some less than that. That is not much pay for risk, liability, and on call nights & weekends.

I have definitely been upside down in a transaction before, or had my income for a transaction be negligible.

The concept that all Realtors are rolling in $$$ is a myth. Yes, some Realtors make a very nice living.
0 votes
#1, , San Francisco Bay Area
Sun Sep 23, 2007
I am not even going to read all the posts. Realtors for the most part get paid @ 2.00 per hour for what they do.

They are worth much more but most sellers have the idea that Realtors are overpaid for what they do.

I sell real estate to my clients only. Past clients and referrals from my past clients. Everyone knows that that they will receive a predictable result from me.

I also work by the hour for attorneys and for the courts as an expert witness. I get paid $250.00 per hour plus travel time for this service.

You want to hire me by the hour or do you just want to pay me a percentage of the sales price to sell your home? Under these conditions, I pay all the costs.
0 votes
Silvia Miceli, Agent, Toms River, NJ
Sun Sep 23, 2007
Bob,

Look at what you have started. Still haven't been able to read all the posts. Deborah, wow, you said it. Jennifer: One other detail is that although an Architect may require much schooling, everyone selling or buying a home, commercial property, office space, investments, etc., rarely requires the use of an Architect. While everyday in every community someone is moving, growing and needing more space, starting a family, a business, and the many other situations that bring about the need for a Realtor. Housing is an essential need for survival (Shelter, food, and water). Supply and demand. While the Architect is involved in the initial stage of housing and if someone is adding or changing a structure. Once the job is done. It will change hands many times and then the architect is not involved.
0 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Sun Sep 23, 2007
Man, this has turned into a fun thread!

You account for your expense, Jennifer, but not the agent's. Expenses tied to the specific property marketing aside, don't forget that an agent has to pay the brokerage as well. Whether it is a commission split or a monthly fee, plenty of the figure that you see designated on the closing sheet does not make its way into an agent's bank account. You also miscalculate the time an agent typically puts in. We put in far more hours with a client other than the time it is actually listed or in escrow. Reading your fee structure, I would agree that you are getting a raw deal. The market determines value, however, not me. Please don't take this as a snide remark as that is not the intent at all, but for some reason or another, the market does not find your service as valuable as you believe it to be.

One quick aside. The example you make is flawed because you are comparing compensation of today's value versus future value. When I list the home for 1.25 million in 3 years, I'm sure you will be getting compensated for the increase in values on your projects as well. Let's compare apples to apples. If I am selling the 3 year old property for 1.25 million, something tells me that you are no longer building the same house for 500k either. If the resale property I am selling is 1.25, I'm sure a similar brand new property that you design will be closer to 1.5-2 million. The argument doesn't hold up.
0 votes
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