Contributed by Charli Radke (charliradke@gmail.com) December 19, 2012.
Does it seem like real estate agents make too much money? After all, they just spend a few hours a day showing homes to their clients, right? Wrong! Being a real estate agent takes so much more work than that.
Is an Agent Worth the Costs? I don’t know about you, but I would not know where to begin when it comes to buying or selling a house. In an effort to minimize realtor remorse, I wanted to bring to light the value that is generated from attaining a real estate agent and some of the overlooked expenses they incur. As with anything that is purchased it is a matter of balancing costs with value.
It is More Than Just Selling a House. Remember, real estate agents don’t only show available homes to their clients. They also put clients’ homes on the market. This takes a lot of work, and a lot of their time. They must make efforts to get the word out about the homes up for sale, do presentations of the homes for both buyers and sellers, monitor feedback on their showings, complete required inspections before closing a sale, continuously compare prices on homes for sale, all while handling transactions, titles, and escrow. This requires a great deal of organization skills as numerous homes will be in various stages of the sell process. The ability to juggle these tasks for every listing is a daunting skill that many people overlook and any realtor would be lucky to fit all of that into a forty-hour work week.
The Real Estate Market is Ever Changing. Any occupation is going to require constant adaptation in order not to get left behind. Real estate is no different and with the constant flux of the market, gaining a competitive advantage has never been more important. Real estate agents must do their research. In order to stay on top of the competition, agents have to check around to see what their competitors are doing to sell homes. Are they taking on more clients? Moving from selling residential properties to business properties? What about changes in taxes and licensing fees? Determining all of this information takes a lot of time and effort, whether it’s reading up on information in magazines, on websites, or on a real estate investing blog(http://blog.freedomsoft.com/). The real estate market is not a stagnant entity and an agent spends a great deal of time staying current so that they can maximize their value to customers.
Continuing Education Requires Time and Money. A real estate agent makes a huge upfront investment into their licensing and certifications. Most states require a completion of at least 30 hours in a real estate class. After the hours are completed the agent then has to register for the State Licensing Exam. Upon completion and passing of the exam the agent has the option of attaining advanced designations through further schooling. As you can see, by the time it comes to helping you buy or sell a home your agent has more than justified their value. These credentials and licenses are also required to be up-to-date, many of which necessitate annual renewals. Not to mention, all of these licenses and certifications require fees and a great deal of time.
The Hidden Expenses. Everyone knows the basic equation of an income sheet (Earnings - Expenses = Income). Let’s take a brief look into the expenses of a real estate agent. We have already mentioned there are substantial fees associated with continuing education, licenses, and certifications. But what else could an agent have to pay? If they have an office, they are paying rent, utilities, taxes, and likely have to pay staff. Agents also have to market themselves. Many agents have a website which required a fee to design and a monthly fee to host it. Business cards, brochures, flyers, signs, and other marketing collateral are all expenses that have to be taken into consideration. Also, these marketing pieces are usually tailored for a specific home, so once that house is bought or sold the pieces become useless. If an agent is using a broker they pay a brokerage fee or fee for leads. These costs add up significantly month-to-month and eat up a good portion of their income.
The Realities of Commission. If after reading all of this you’re still thinking that a real estate agent’s commission more than compensates for these expenses, take a look at the real picture. Yes, agents take a certain percentage of the sale, but they also have to pay a brokerage fee if they worked with a broker, taxes, and the aforementioned marketing expenses. They spend a great deal of time working at open houses, negotiating contracts, showing houses, doing research, and staging homes for the sale. All of this work adds up. When you take their final pay from a sale and divide it into all the expenses they spent, the hourly wage isn’t as high as you might expect.
As you can see, real estate agents have a lot of expenses that they must cover. Those big commissions you think they receive quickly deplete to cover these costs. The next time you buy or sell your home, remember how much work your real estate agent is doing for you before you complain about the cost of their services or how much commission they are charging.
Want to learn more about becoming a real estate agent and Realtor? Contact Joe Bornstein, Broker, Rock Springs Realty, Cell# 407-252-8092, Toll# 877-333-2811, joe@rockspringsrealty, https://www.rockspringsrealty.com
