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In the realm of real estate, there's a lot of chatter in the news about real estate agent commissions. We, as real estate professionals, have an unshakable love for what we do. Our motivation stems from the profound joy of assisting people in fulfilling their homeownership dreams. However, there exists a prevalent misconception regarding our roles and how we earn our keep. Today, I aim to lift the veil on these matters.
Setting the Record Straight on Commissions
Let's address the elephant in the room. The average FULL-TIME REALTOR earned just $31,900 last year, while dedicating over 40 hours a week to their profession. It's crucial to emphasize the "full time" aspect here, as this isn't a job with part-time hours. This income falls well below what most consider a living wage. Unlike traditional employment, we do not receive an hourly wage or salary. Our livelihood is tied to successfully closing real estate transactions.
The Reality of Real Estate: Constant Uncertainty
In our profession, every day begins with a degree of uncertainty. We essentially wake up "unemployed," ready to embark on a series of job interviews. Rejection is a constant companion. We sacrifice precious time with family, expend personal resources on gas and childcare, miss out on family dinners, and forgo weekends and vacations. The real estate industry demands a 24/7 commitment; opportunities can emerge at any moment. If we let our guard down, we risk missing out on valuable prospects.
The Upfront Costs We Bear
Before a commission check ever lands in our hands, we bear numerous upfront expenses. These include broker splits and fees, office rent and utilities, MLS fees, NAR fees, local association fees, insurance costs, and more. Additionally, there are personal expenses like gas, self-employment taxes, state licensing fees, advertising expenses, and website fees. The list goes on to encompass assistant salaries, transaction coordinators, signage, photographers, videographers, office supplies, and even legal fees.
Income taxes are not withheld, so we must set aside a significant portion (around 25-30%) for tax purposes. Health insurance is another consideration, especially for those without a spouse who provides it.
The Tasks Beyond Buying and Selling Homes
Being a Realtor entails much more than merely facilitating property transactions. Let's delve into some of the myriad tasks involved:
Tasks of a Listing Agent:
1. Prepare Listing Presentation for Sellers
2. Research Seller's Property Tax Information
3. Research Comparable Sold Properties for Sellers
4. Determine Average Days on Market
5. Gather Information From Sellers About Their Home
6. Meet With Sellers at Their Home
7. Get to Know Their Home
8. Present Listing Presentation
9. Advise on Repairs and Upgrades
10. Provide a Home Seller To-Do Checklist
11. Explain Current Market Conditions
12. Discuss Seller's Goals
13. Share Your Value Proposition
14. Explain Benefits of Your Brokerage
15. Present Your Marketing Options
16. Explain Video Marketing Strategies
17. Demonstrate 3D Tour Marketing
18. Explain Buyer & Seller Agency Relationships
19. Describe the Buyer Pre-Screening Process
20. Create Internal File for Transaction
21. Get Listing Agreement & Disclosures Signed
22. Provide Sellers Disclosure Form to Sellers
23. Verify Interior Room Sizes
24. Obtain Current Mortgage Loan Information
25. Confirm Lot Size from County Tax Records
26. Investigate Any Unrecorded Property Easements
27. Establish Showing Instructions for Buyers
28. Agree on Showing Times with Sellers
29. Discuss Different Types of Buyer Financing
30. Explain Appraisal Process and Pitfalls
31. Verify Homeowners Association Fees
32. Obtain a Copy of HOA Bylaws
33. Gather Transferable Warranties
34. Determine Need for Lead-Based Paint Disclosure
35. Verify Security System Ownership
36. Discuss Video Recording Devices & Showings
37. Determine Property Inclusions & Exclusions
38. Agree on Repairs to Be Made Before Listing
39. Schedule Staging Consultation
40. Schedule House Cleaners
41. Install Electronic Lockbox & Yard Sign
42. Set-Up Photo/Video Shoot
43. Meet Photographer at Property
44. Prepare Home For Photographer
45. Schedule Drone & 3D Tour Shoot
46. Get Seller’s Approval of All Marketing Materials
47. Input Property Listing Into The MLS
48. Create Virtual Tour Page
49. Verify Listing Data on 3rd Party Websites
50. Have Listing Proofread
51. Create Property Flyer
52. Have Extra Keys Made for Lockbox
53. Set-Up Showing Services
54. Help Owners Coordinate Showings
55. Gather Feedback After Each Showing
56. Keep track of Showing Activity
57. Update MLS Listing as Needed
58. Schedule Weekly Update Calls with Seller
59. Prepare “Net Sheet” For All Offers
60. Present All Offers to Seller
61. Obtain Pre-Approval Letter from Buyer’s Agent
62. Examine & Verify Buyer’s Qualifications
63. Examine & Verify Buyer’s Lender
64. Negotiate All Offers
65. Once Under Contract, Send to Title Company
66. Check Buyer’s Agent Has Received Copies
67. Change Property Status in MLS
68. Deliver Copies of Contract/Addendum to Seller
69. Keep Track of Copies for Office File
70. Coordinate Inspections with Sellers
71. Explain Buyer’s Inspection Objections to Sellers
72. Determine Seller’s Inspection Resolution
73. Get All Repair Agreements in Writing
74. Refer Trustworthy Contractors to Sellers
75. Meet Appraiser at the Property
76. Negotiate Any Unsatisfactory Appraisals
77. Confirm Clear-to-Close
78. Coordinate Closing Times & Location
79. Verify Title Company Has All Docs
80. Remind Sellers to Transfer Utilities
81. Make Sure All Parties Are Notified of Closing Time
82. Resolve Any Title Issues Before Closing
83. Receive and Carefully Review Closing Docs
84. Review Closing Figures With Seller
85. Confirm Repairs Have Been Made
86. Resolve Any Last Minute Issues
87. Attend Seller’s Closing
88. Pick Up Sign & Lock Box
89. Change Status in MLS to “Sold.”
90. Close Out Seller’s File With Brokerage
Tasks of a Buyer's Agent:
1. Schedule Time To Meet Buyers
2. Prepare Buyers Guide & Presentation
3. Meet Buyers and Discuss Their Goals
4. Explain Buyer & Seller Agency Relationships
5. Discuss Different Types of Financing Options
6. Help Buyers Find a Mortgage Lender
7. Obtain Pre-Approval Letter from Their Lender
8. Explain What You Do For Buyers As A Realtor
9. Provide an Overview of Current Market Conditions
10. Explain Your Company’s Value to Buyers
11. Discuss Earnest Money Deposits
12. Explain the Home Inspection Process
13. Educate Buyers About Local Neighborhoods
14. Discuss Foreclosures & Short Sales
15. Gather the Needs & Wants Of Their Next Home
16. Explain School Districts' Effect on Home Values
17. Explain Recording Devices During Showings
18. Learn All Buyer Goals & Make A Plan
19. Create an Internal File for Buyers' Records
20. Send Buyers Homes Within Their Criteria
21. Start Showing Buyers Homes That They Request
22. Schedule & Organize All Showings
23. Gather Showing Instructions for Each Listing
24. Send Showing Schedule to Buyers
25. Show Up Early and Prepare for the First Showing
26. Look For Possible Repair Issues While Showing
27. Gather Buyer Feedback After Each Showing
28. Update Buyers When New Homes Hit the Market
29. Share Knowledge & Insight About Homes
30. Guide Buyers Through Their Emotional Journey
31. Listen & Learn From Buyers At Each Showing
32. Keep Records of All Showings
33. Update Listing Agents with Buyer’s Feedback
34. Discuss Homeowner’s Associations
35. Estimate Expected Utility Usage Costs
36. Confirm Water Source and Status
37. Discuss Transferable Warranties
38. Explain the Property Appraisal Process
39. Discuss Multiple Offer Situations
40. Create a Practice Offer to Help Buyers Prepare
41. Provide Updated Housing Market Data to Buyers
42. Inform Buyers of Their Showing Activity Weekly
43. Update Buyers On Any Price Drops
44. Discuss MLS Data With Buyers At Showings
45. Find the Right Home for Buyers
46. Determine Property Inclusions & Exclusions
47. Prepare a Sales Contract When Buyers are Ready
48. Educate Buyer’s On Sales Contract Options
49. Determine the Need for Lead-Based Paint Disclosure
50. Explain Home Warranty Options
51. Update Buyer’s Pre-Approval Letter
52. Discuss Loan Objection Deadlines
53. Choose a Closing Date
54. Verify Listing Data Is Correct
55. Review Comps With Buyers To Determine Value
56. Prepare & Submit Buyer’s Offer to the Listing Agent
57. Negotiate Buyer's Offer With the Listing Agent
58. Execute A Sales Contract & Disclosures
59. Once Under Contract, Send to Title Company
60. Coordinate Earnest Money Drop-Off
61. Deliver Copies to the Mortgage Lender
62. Obtain a Copy of the Seller's Disclosure for Buyers
63. Deliver Copies of Contract/Addendum to Buyers
64. Obtain A Copy of HOA Bylaws
65. Keep Track of Copies for Office File
66. Coordinate Inspections with Buyers
67. Meet the Inspector At the Property
68. Review Home Inspection with Buyers
69. Negotiate Inspection Objections
70. Get All Agreed Upon Repair Items in Writing
71. Verify any Existing Lease Agreements
72. Check In With Lender To Verify Loan Status
73. Check on the Appraisal Date
74. Negotiate Any Unsatisfactory Appraisals
75. Coordinate Closing Times & Location
76. Make Sure All Documents Are Fully Signed
77. Verify the Title Company Has Everything Needed
78. Remind Buyers to Schedule Utilities
79. Ensure All Parties Are Notified of Closing Time
80. Resolve Any Title Problems Before Closing
81. Receive and Review Closing Documents
82. Review Closing Figures With Buyers
83. Confirm Repairs Have Been Made By Sellers
84. Perform a Final Walk-Through with Buyers
85. Resolve Any Last-Minute Issues
86. Get CDA Signed By Brokerage
87. Attend Closing with Buyers
88. Provide Home Warranty Paperwork
89. Give Keys and Accessories to Buyers
90. Close Out Buyer’s File with Brokerage
Whew! As you can see, being a Buyer's Agent involves a myriad of tasks and responsibilities to ensure a smooth home buying process for our clients.
In conclusion, being a Realtor is a demanding profession with a wide range of responsibilities. The common misconceptions about real estate agent commissions often overshadow the significant challenges that agents face. From guiding clients through complex transactions to dealing with upfront expenses and constant job interviews, Realtors work tirelessly.
Supporting Realtors doesn't require buying or selling a home. Simple gestures like sharing listings, referring friends and family, or leaving positive comments and reviews can make a big difference. Let's recognize and appreciate the hard work and dedication of these professionals who help people achieve their homeownership dreams and play a crucial role in our communities.
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