Realtor Pay by the Hour (agent, closing, percentage, rebate)

[MikeJaquish]

9 to 5 with OT pay outside that, and over 40 hours, and doubletime on weekends?
Minimum billing increment of 30 minutes?

[Captain Bill]

Originally Posted by MikeJaquish

9 to 5 with OT pay outside that, and over 40 hours, and doubletime on weekends?
Minimum billing increment of 30 minutes?

I think attorneys bill on 6 minute increments.

[Captain Bill]

There is a group that is studying alternatives to commissions, including pay by hour, or pay by specific duties within the transaction. Each would end up with a lower out of pocket cost to the client, but it would guarantee the agent to be paid for all the work that s/he performs.

The client, if it's a listing client would pay for any out of pocket costs, such ad professional photos, flyers, and post cards specific to that property.

There is a lot of interest by the agents in that discussion because they feel that by being paid for all their work, with less money out of the clients pocket, that the agent would end up making more money on an annual basis.

If on an hourly basis, there would be a retainer, and billing for the work would be done on a weekly basis, so the conversations, emails, and other type billable work would be rather fresh in the clients mind.

As was mentioned earlier, one problem is since the public has no conception of how many hours an agent spends on a transaction behind the scenes, they will not trust the billing. Therefore, a Transaction Management program where records of telephone calls, and all emails can be documented would be required to support the billing log.

[Silverfall]

People should have a transaction management log regardless of whether or not they are billing hourly or not. You would just have to enter in travel times. I bill on 15 minute increments when I do hourly. I'm doing an hourly contract right now, as a matter of fact. It's great for consumers that just need a little bit of help with something.

And yes...consumers would be astounded by the hourly billing. They tend to forget that they still pay hourly billing even if the transaction fails.

[Rakin]

Originally Posted by Silverfall

And yes...consumers would be astounded by the hourly billing. They tend to forget that they still pay hourly billing even if the transaction fails.

I'd love to be paid for all the transactions that never work out. Want me to do an open house ? Great way to pick up a few extra hundred $$ from the seller and meet a few buyers. I'd bet I could stretch that OH into an all day event in the winter when times are slow.

[Captain Bill]

I have a spread sheet set up for pay by task but haven't used it yet. It is full service, but it's broken down by tasks, and the amount of pay is shown for each task. The end amount will be roughly a 20-25% savings for the buyer which is rebated to them at COE.

So if the commission is 10,000 and the task fee was 7,500, the buyer would be rebated 2,500 at COE.

The benefit to the buyer is the rebate of $2,500 (plus they get all the money back they paid in advance for the tasks.)
In order to obtain that savings the buyer is charged a retainer fee and at the end of each month they pay for the tasks completed to date.

The benefit to the buyers agent is that s/he is paid for all work performed.

I think the big questions are:

• What compensation method would work best for both client and agent?
• Is there a one size fits all?
• Should agents adopt several alternate methods such as Contingency; Tasks; Hourly; and be willing to use whichever the client prefers?
• How can each of these methods insure the client that the agent will be working in the clients best interest? (Not trying to pad the bill--making sure the client is not overcharged.)

[NinaN]

What happens when the commission is less than the transaction fee? Or if the buyer never actually buys? Do they still pay?

If I wanted an hourly pay job, I would go back to the corporate world.

[Silverfall]

Originally Posted by NinaN

What happens when the commission is less than the transaction fee? Or if the buyer never actually buys? Do they still pay?

If I wanted an hourly pay job, I would go back to the corporate world.

It wouldn't work for large brokerages because of the way they do fees. I had a client that wanted to buy a FSBO and they terminated over the inspection. They ended up not moving here and they still paid me. It was around $700.

There is a difference between an hourly rate job as an independent business owner vs. corporate employee.

[MikeJaquish]

Originally Posted by Silverfall

It wouldn't work for large brokerages because of the way they do fees. I had a client that wanted to buy a FSBO and they terminated over the inspection. They ended up not moving here and they still paid me. It was around $700.

There is a difference between an hourly rate job as an independent business owner vs. corporate employee.

And someone wanting to pay $25/hour wants the independent business owner's acumen and resources at the corporate employee's hourly rate.

Everyone should be self-employed for a minumum of 2 years. It would be quite enlightening.

[Silverfall]

Originally Posted by MikeJaquish

Everyone should be self-employed for a minumum of 2 years. It would be quite enlightening.

It would be quite entertaining, I think.