Do Realtors earn their commission?

What can a Realtor do for you that you cannot do for yourself?
  • March 15 2011 - Neosho
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (76)

Profile picture for wetdawgs
I've never figured out this one (i.e. what they can do that I can't do) after many purchases and sales, what do you think?

I have not yet see an agent earn their commission.
  • March 15 2011
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Profile picture for workabee
Nothing but whine about how hard they work and take 6%. I don't do that myself.
  • March 15 2011
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I am so glad you asked!  When you enlist the services of a Realtor, you get access to information that you cannot do for yourself, like: the price of comparative homes in your neighborhood, regional and national marketing, and  clients looking for your particular type of property.

A professional Realtor will help you see your property with a fresh eye, help you stage your home, prevent unexpected drop by's, provide flyers, and bring qualified buyers to the table.

It takes no less than 3 people to help you sell your home, the Broker(s), the Agent(s), the secretary(s) and usually double that.  The agents are self-employed.  They pay for their licenses, office, phone, gas, education, computer, internet service, to name a few things. 

Maybe a few other agents will join the discussion and help you see that time, expertize, and energy is our gift to you.  Most of it without any compensation. 
  • March 15 2011
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Profile picture for wetdawgs
I certainly know what agents claim they can do, but I am not convinced that it is worth what I have to pay for them to do so as we can do much of the same at considerably less cost.

With the creep of electronic communication into every corner of society, agents will have to increase their skill sets to truely add the value they charge to the buying/selling process.
  • March 15 2011
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Profile picture for SteadyState
No they do not. The following situation proves the case.
Two REAs from same office and with same years of experience make sales in two parts of town - one where homes are higher priced and one where homes are modestly price. It takes same effort and enrgy to complete the same because both buyers came from Zillow.

Realtor A: Sells $1M home and earns $60K for at most 1 week of work.
Realtor B: Sells $200K home and earns $12K for at most 1 week of work.

Same experience. Same office. Same work. Why the income disparity?
  • March 15 2011
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Profile picture for hpvanc
You were the only one that asked.  Maybe this evening you will get responses from other Realtors that talk to themselves on public forums.  Perhaps if you are lucky you will get responses from agents that have some understanding of how they might add value.  All you have done is describe costs of being an agent.
  • March 15 2011
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I am so glad you asked!

Are you kidding me?

Excuse me while I hang my head in shame.
  • March 15 2011
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Ms. Homefinder is correct in her response. Please keep in mind that no commission is earned until your home is sold.  Until that point we are working for free and everything is at our expense.

My national company provides tools for you as the home seller, my local company pays for internet placement of your home...among many other tools, I provide yearly education for myself to keep up on the latest trends on how buyers are looking for homes and current real estate information by using YouTube, QR codes, and blogging sites.  If you are a seller using these tactics then you are doing a great job for yourself!

Workabee, keep in mind that we split the commission 50/50 with the agent that brings the buyer to the home and then most agents split that amount with their company, then pay taxes, advertising, health insurance and other items that many other companies provide.  
  • March 15 2011
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Profile picture for sunnyview
Ridiculous to ask a question and answer it yourself. The canned answers leave me wanting to FSBO just out of spite. Makes me glad I'm not selling.

The real answer is that some agents do not earn their commission. There plenty of agents that do not do a good job and unfortunately the good agents have to work twice as hard on the other side of those transactions.
  • March 15 2011
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Profile picture for the_country_hick
A realtor can do one thing I can not do. Only 1 thing.

Put my listing in the MLS.

That is it. If they did not have the MLS locked up I could do that myself also.
  • March 15 2011
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Profile picture for wetdawgs
@Jana:
 
"we work for free".    No, you are not working for free. This is one of those ugly NAR myths.   You are working in anticipation of a paycheck, just as most of the rest of the workers in the world.    Would you do the same job if you didn't have anticipation of a paycheck?   I guess I'm working for free also, because I don't get paid until after the job is done.  

You describe what is costs to keep yourself in business.  The fact that you have costs to stay in business is not telling me how you add value to the transaction.  I can blog, put home on youtube, and many other internet marketing places.  I can stage.  I can take far better photos than 99% of agents.    Interestingly, you didn't mention many of those services (staging, photos etc) but would probably charge me extra for them.
  • March 15 2011
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Profile picture for Dunes....
"Maybe a few other agents will join the discussion"

Unfortunately that is the very thing that usually makes a Discussion a Back-Slapping Festival of Prevarication...


Just as a beginning:
 I think a very large number of RE Agents should return every penny they ever SUPPOSEDLY charged for Marketing/Social Media...
Going through this Forum/ActiveRain and other RE sites it's pretty obvious they don't have a clue what to do after puffing out their chests and declaring "I am full of Expertizeness cause I has me a RE License"
  • March 15 2011
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Profile picture for Laral Leigh
"Maybe a few other agents will join the discussion and help you see that time, expertize, and energy is our gift to you.  Most of it without any compensation."

I really disagree, you are actually highly compensated for your "time, expertize, and energy." It is hardly a gift to your clients. They pay through the nose to get this supposed gift.

With this wonderful thing we have nowadays called the internet, I had a pretty good idea what my last home should have been listed for, and what I should offer on the house I own currently. I researched extensively the houses in the area I purchased, and only needed the realtor to get the key out of the lock box. She had absolutely no value-add in me finding my last house. Anything my realtor did, I could have done, I just didn't have the time since I have a job and a family to deal with.

People are all up in arms about what lenders are making, but they don't seem to bat an eye about the amounts realtors pocket after a sale.
  • March 15 2011
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Profile picture for hpvanc
I just noticed, that this is posted in Home Selling > FSBO.  Agent don't earn a sellers agent commission on a FSBO.  So given the context ...

I also have a suggestion for Jana, how about instead of trying to get into buyers heads and use tactics to get them to buy, why don't you try understanding the economics of the real estate market.  I think that would be more effective with current buyers.  If easy loan money comes back unfortunately your strategy will be effective again and we can start the manic depressive cycle over again.
  • March 15 2011
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Wow harsh group. It isn't about getting into the buyers heads, it is about having the sellers home advertised in all of the places that buyers are currently looking so that I can provide the best service to the homeowner.  Why advertise in print if thats not where buyers are looking? The youngest generation is expecting YouTube videos, QR codes, etc.  Of course, home staging, fantastic photos, and a pre-inspection are a given.  I am talking about thinking outside of the box.  You all seem pretty savvy so good thing you have a choice to go with one of your local Realtors or to list your homes yourself.  I am speaking on my own behalf that I work 60+ hours a week and certainly feel that I "earn" every penny that I make.  Thankfully I have never had one seller say, "Jana we think that you have just made way too much money after getting our home sold.  We would like a little back!"  
  • March 16 2011
  • 3Yes

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It is funny, the people that think agents are not earning their commission are non licensed and are not actively working in the industry.  Please, get your license-- then pass judgement.  There is a lot more that an agent can provide for a seller or buyer that is invaluable to them and they would otherwise have to spend hours researching the net to figure out...available state down payment grants, history of home facts and discloosure info, fha rules, short sale info, loan products ---all are just a tip of what we can provide.... listing the home or putting it under contract.. .thats easy enough... agreed.. .but following it through to make sure it closes... priceless !
  • March 16 2011
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Interesting article on home gain.

Some Realtors may do nothing.  Some do more.  More than 4 out of 5 recent sellers say that they would use one on their next transaction. This is for people that previously used one as well as For Sale By Owners.
  • March 16 2011
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As an Real Estate expert, it is our job to not only pay for all the services our clients are receiving, but gracefully and happily understand when buyers back out, sellers situations change and they decide not to sell, and all the while agent put a LOT of time into their clients needs. Agents do not get paid until the sale closes. The risks are huge and consistent being self employed in this manner, and most especially in today's market, deals don't close, homes get foreclosed upon while the houses are in escrow, buyers get spooked and back out if their is fluctuation in the marketplace etc. And all this time, agents still (hopefully) keep their can-do attitude up, work hard for their clients, and hope that one of the 30 deals they are working on will actually go to closing. It can be very demanding work, with long stretches in between paydays. I used to think agents didn't really earn their money either, until I became one. Believe me, we can work 70 hours a week (and a lot of us do!) and still wait months to get paid. Not too many people are willing to brave that risk. The pay-offs can be huge, but again, are offset by long stretches without being paid.
  • March 16 2011
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Do all agents earn their commission? No. Do I earn my commission? Absolutely.
The truth is most people (not just agents) have access to most of the same tools, although my brokerage does have proprietary tools that provide exclusive market insights and exposure that someone wouldn't have on their own. That said, the key thing is whether an agent (or FSBO) uses those tools at all, and how well they use those tools.
Next, there is problem solving. Could anyone keep a buyer from walking away when the appraiser won't bring in the value, termites are swarming, there's a slab leak and the HOA is filing a lien and the lender is threatening to foreclosure? Sure. But most can't do this, let alone keep it closing on time with no additional cost to the seller.
How about negotiations? Can anyone do this? Of course. Do it well? No.
I could go on, but I've got to get back to work for my clients getting them more money than they could on their own.
  • March 16 2011
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Profile picture for sunnyview
"Do all agents earn their commission? No..."

I have to give you a thumb just for admitting that all agents are not good ones or "experts" just because they have a license. Some agents earn their commission, others do not. That's why buyers/sellers need to do their homework before they choose one.
  • March 16 2011
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Profile picture for SteadyState
Elisa -

"It is funny, the people that think agents are not earning their commission are non licensed and are not actively working in the industry.  Please, get your license-- then pass judgement."
- You mean a patient cannot complain about excessive medical charges because he/she is not a doctor, or a parent cannot suggest that the cost of education is too high because they are not professors? How ridiculous? At least attempt to think before answering.
"  There is a lot more that an agent can provide for a seller or buyer that is invaluable to them and they would otherwise have to spend hours researching the net to figure out...available state down payment grants, history of home facts and discloosure info, fha rules, short sale info, loan products ---all are just a tip of what we can provide"
Most high school grads have the skills to answer these questions. So where is the value you provide?

I hate to be harsh but given REO overinflated opinions about themselves prompts me to assert:
REAs earn a living on the backs of taxpayers through government backed market intervention programs lobbied for by a monopoly called the NAR.
Remove the tax payer funded incentives and allow true competition to the NAR (say the American Association of Realtors, etc.) then this question need never be asked - the compensation will be based on true value produced.
  • March 16 2011
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Profile picture for blank screen EXILED
Steady State -

You need to change the word Realtors® in your proposed alternative national organization, as that term is a licensed trademark of the "National Association of Realtors®" (NAR) which stands for "Not about to Read", and "Not Able to Reason" which any self respecting business person would never want to be associated with nor be a member of if they had a choice.

Try "American Association of Real Estate Agents" (AAREA) instead.

Or perhaps, "American Realty Coalition" (ARC).

Or coin a new word that implies the ethics that Realtors® are missing since the 17 articles of the NAR Code of Ethics states nothing about being truthful in seeking clients or being truthful about present market conditions, or even being truthful about ones experience and skills?
  • March 16 2011
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With my experience in the real estate market, I most certainly can empathize when the public does not think Realtors earn their commission.  In our market, homes are on the market on an average 180 days.  Let's say I have a home listed for $100,000 and it is on the market for 180 days.  Susie Realtor with ABC Realty sells my listing.  Our office would keep 3% and pay ABC Realty 3%.  In turn, I would split that commission with my broker giving me a GROSS check for $1800 before taxes.  So, 180 days of work for $1800.  Let's break it down further.  Let's say I work 10 hours a week on that listing, by the time I close on it, I have made $7.50 an hour! 

Some markets are much different.  Realtors are selling 12 million dollar houses in 3 weeks............yes, it must be nice!  However, when criticizing what anyone earns in any field, you must look at the BIG PICTURE! 

  • March 16 2011
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Profile picture for blank screen EXILED
No consumer cares what Real Estate Agents think about whether they "earn" their income or not!  Really, do you care if someone at McDonalds thinks they earn their income for flipping burgers, running the cash register, sweeping the floors, taking the orders, cleaning the toilets and bagging the fries?  The only one that cares is the franchise owner!  And if the franchise owner has a difference of opinion than the employee?  Guess what?  The employee can look for work elsewhere.

The HUD 2008 study of FHA financed homes indicates the commission for sales of homes should be a total of about $970 + 4.5%.  That is the STARTING point for negotiation, not 6%!

It is only up to the seller what it is "worth" and whether someone "might" be "earning" their commission.  What the broker breakdown is, is only up to the broker and the agent.  And if the broker is taking 50%, that certainly is not the sellers' fault nor problem!

As for those agents that stated they earned the commission due to the 30 homes that fell through escrow and the 50 homes they had to show a potential buyer in order to get one valid offer, and the 2 years they spent chasing a short sale...  That is called "inefficiency" and "ineffectiveness", and is no reason to be raising the fees for some other client, but is a good reason the client should be looking for better more efficient representation!

For many of the agents posting here about how much they "earned" the commission, a good starting point for the seller negotiation of fees is 1.5% listing agent, 1.8% buyers' agent since they have stated they have done NOTHING to "earn" any commission.
  • March 16 2011
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Profile picture for blank screen EXILED
"following it through to make sure it closes... priceless" -

Really?  You PERSONALLY would pay more than the house is worth just to get escrow closed?

In that case, why not just bribe someone $2 million to take the house off your hands and forget listing and selling it in the first place?
  • March 16 2011
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Profile picture for SteadyState
Priscilla says -
" In our market, homes are on the market on an average 180 days.  Let's say I have a home listed for $100,000 and it is on the market for 180 days.  Susie Realtor with ABC Realty sells my listing.  Our office would keep 3% and pay ABC Realty 3%.  In turn, I would split that commission with my broker giving me a GROSS check for $1800 before taxes.  So, 180 days of work for $1800.  Let's break it down further.  Let's say I work 10 hours a week on that listing, by the time I close on it, I have made $7.50 an hour!"

Do you think people are that dumb that they will fall for your reasoning? From the 180 days how many hours did you spent actually working on that home? I believe at most 10 full time days - that is 2 weeks at most. Giving you $22.5/hr.
Now we sold our home in 2005 for $850K and getting attention from the REA was like extracting teeth. I estimate he worked at most 2 weeks. (Standing at open houses is marketing activity that benefits agents so the 6 open houses over a month should not all be debited from the sale of our home).
Now his commission was $51K yielding him a whopping $6375.00 per hour. Divide by 4 and you get $1593.75 per hour.

Now tell me - do REAs earn their commission?
  • March 17 2011
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Profile picture for Dunes....
Agents can pay 25-40% of their share of the Commission for a Referral but can't afford all those Gas and Marketing costs?....

Perhaps another one of life's mysteries is how you can visit many Questions/Discussions/Threads and it's all about how a Great asset/value of Agents is their Negotiation Skills yet after all these years they can't seem to negotiate a Fair Broker/Agency split for themselves...
  • March 17 2011
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(Please note this post is only a reply to the woman who posted the initial question in this thread)

What a Realtor/real estate agent does for you (a seller) that you can't do yourself is a matter of opinion...Do YOU WANT to do all the dirty work yourself?

Speaking for CA agents, nowadays, it's harder than ever to get licensed/bonded. To get that license, the DRE requires you to take several college level classes: Real Estate Practice, Real Estate Law, and Real Estate Principals. These classes are each, the equivalent of a 4 unit college class.

Real estate transactions are chalk-full of intricacies and loopholes. Mountains of paperwork are involved when a home is being financed. Even in full cash-money offers, there are loads of paperwork involved.

Agents deal with these documents day in and day out. We know how to navigate clients through this complicated process. While some people may feel they have the ability to do this themselves, MOST of the general public cannot. Nearly 90% of sellers who initially try to go it on their own, wind up enlisting the help of an agent down the line.

It's not only about tedious paperwork but also about the physical labor involved. Agents do the physical leg-work of showing people around. Fielding questions. Answering calls, emails, etc.

We know the legalities of what you can or cannot say to people, while we're doing it. In a lawsuit crazed place like Los Angeles, would you want to bear the brunt of someone who claims you didn't sell them the house because of their race, gender, sexual orientation, etc... because you "may" have said something perfectly innocent that could be misconstrued?

Lastly, only because I'm attempting to keep this post somewhat succinct, it's about your agent's REACH. Yes, reach. Reach is lingo from the marketing/advertising world meaning: How many people can they get to put eyes on your property?

If you have a good, efficient agent, they will be knowledgeable in these 3 important areas and most importantly, not mentioned above - a skilled negotiator. You find an agent who is an adept marketer and boiler-room buster, you're sure to find their services of value.

Simply put - Dermatologists...some people call them glorified pimple-poppers. But they're doctors. They're MDs. Sometimes they may pop pimples, other times they may save a life by catching the early stages of skin cancer, but either way their office visit costs whatever their office rate is. THE SAME APPLIES TO REAL ESTATE AGENTS.
  • March 17 2011
  • 1Yes

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Profile picture for Dunes....
California Requirements for RE salesperson license

18 years old or older....Proof of Legal Presence in the United States..Conviction of a crime MAY result in a License denial

Successful completion of three college-level courses is required to qualify for a real estate salesperson examination..California DRE site

California Broker License....

18 years old or older....Proof of Legal Presence in the United States..Conviction of a crime MAY result in a License denial
Applicants for a real estate broker license examination must have successfully completed the following eight statutorily required college-level courses.....CA. DRE Site

Yep...Just like Doctors

  • March 17 2011
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Ms. Homefinder,

Looks like a hot topic here. Being a full time agent I truly try not to argue with some not so nice comments. I usually say, it's easy from the stands.
Much like my hockey college coach would tell us, when "fans" would yell how easy that shot was and I should have saved it. Most of said "fans" couldn't skate, let alone stop a puck at speeds upwards of 100 mphs.

Sure, some agents do more, some less, but in the end, if the service offered was the service provided and the customer is or was happy, then
promises were kept. I don't question my doctor or her bill, when I go in sick and come out healthy, most people mock what they don't understand. I pride myself on saving clients time and money, each
value is different to each client, much like their thoughts and opinions on if we earned our pay, I believe most professionals do.

Have a BEAUTIFUL night.

Shawn, REALTOR, AZ.
  • March 17 2011
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