The most common way people get off to a bad start with your real estate agent is not understanding what we do to earn our money and how little we actually make. This results in sellers trying to cut the listing agent’s commission and buyers asking for a rebate.
I don’t know how it started but there’s a myth that agents do almost nothing to earn our money. Many home sellers believe that all we do is put a sign on the lawn and an ad on the Internet and the property magically sells itself. I give my sellers a list of over 150 things I do to earn my money to make sure that they get the highest price for their home from marketing to doing all of the paperwork necessary to make sure that it closes. If they want to cut my commission I would have to cut some of my services and that would not accomplish their goals.
Many buyers believe that all we do is open doors for them and then go and collect a big fat check. I give my buyers a different list of over 150 things I do to protect their interests on the most important purchase of their life and to help them through the maze of paperwork that is required to buy a home these days. If I gave them a rebate I wouldn’t have time to fully protect them.
There’s another myth that says all agents get around 6% of the commission to sell her house. Even if the seller is paying their broker a 6% commission, that is usually split with the broker that brings the buyer leaving each with 3%. Then, those brokers charge their agent around 30% to be with their company leaving their agent with only 2%. Of the 2% left, they have to pay expenses, like belonging to their board of Realtors, paying for errors and omissions insurance and much more leaving them with about 1%.
And then what most people don’t realize is that agents are in the highest tax bracket in America because we are self–employed. Not only do we pay federal and usually state income tax but we also pay 15.3% additional self-employment tax making our total tax bill, in most states, at or above 50%. So of the 1% we have left after expenses, after taxes we’re down to 1/2 of 1% to feed our families, put our kids to school and keep a roof over our heads. So on a $300,000 sale we make about $1,500 after expenses and taxes to do over 150 things for our clients for 30 to 60 days’ work or longer.
If you understand what an agent does and how little they make you’ll appreciate their efforts and listen to their advice because the best agents will put your interest ahead of their commission. This is how I’ve lasted nearly 50 years in the profession and have helped countless clients to buy and sell real estate.
For clients who appreciate what I do I will go to the ends of the earth for them. For clients who believe that we are overpaid, under-worked and think they know more about real estate than I do, I refer them to my competitors.
I love helping my clients to achieve their real estate goals because it’s not work, it’s a partnership, and hopefully a lifetime friendship. It should be an enjoyable experience and, if not, find another agent.