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Here, too, on the premise that the the buyer's agent is being paid not just for bringing the buyer but for doing the work involved in showing the property AND shepherding the deal through to closing, working with the lender, inspectors, etc., and if there is no buyer's agent, the seller's agent takes on those tasks and increased liability.
A real estate agent is an independent contractor and as such has a lot of overhead expense, which include but is not limited to:
Office fees
Franchise fees
Broker split fees
E&O insurance fees
Association dues
MLS dues
Office supplies
Telephone expense
Software expense
Website maintenance
Computer maintenance
Automobile expense
Marketing expense for clients
Advertising/promotion expense
Legal fees
Accounting fees
There are no benefits.
No paid holidays
No sick days
No vacations
No retirement plan
No medical insurance
One cannot run a business like that on anything less than $60/hr.
Gardeners charge about $50/hr
Handyman here is $75/hr
Pool service about $65/hr (Runs about $85 month for 4 visits. Each visit is less than 15 minutes.)
Plumber -I was quoted a flat fee of $450 for labor for a job at my clients property. The job took him 1.5 hours. He had a gofer with him.
Roofer - Recently quoted $425 for setting clips on roof vents (home inspector said that was needed on my investment home. My business partner decided to do it himself. It took him all of 30 minutes (one half hour)
House cleaning service - One person with a good reputation quoted my wife $45/hr.
Iron gate repair $80/hr
Locksmith about $75/hr
If I were placing an hourly price on my services it would be $100.
The big argument for flat rate and commission based pay structures is that people don't want to pay for services. They want everything for free.
The roofers will not come out and work on a time/material basis. That is because people are afraid that they will go slow on the job and over charge them. So the roofers charge a flat rate and make sure they cover any contingencies. On small jobs they don't come out to give quotes because they aren't getting paid for the estimate.
So they bid to cover themselves. They may make $400 per hour one time, and on another job they may run into unforseen issues and only make $10/hr.
If one wants to complain about how much a roofer or a plumber makes, then I suggest getting a job doing that work and make all that money yourselves.
If one feels that realtors are getting rich and over charging, then by all means go and get a license and become a realtor. As one poster alluded to, all it takes is a high school diploma, take a test, and go get rich.
Before you do that, consider that many before you have taken that plunge and found that the riches are not there for the taking. It takes a lot of hard work, and a lot of out of pocket money in order to even survive in this business.
To become a successful real estate agent, it takes a lot of different skills, including but not limited to:
Business skills
Organizational skills
Customer relation skills
Negotiation skills
Marketing/Advertising skills
Legal skills (one must completely understand all of the contracts involved in the home sale transaction, be able to explain them so that a 3 year old would understand, and be able to write comprehensive legal addendums. In AZ the agents license allows him/her to actually practice law to the degree stated above as long as it is a real estate transaction that s/he is involved in.)
Escrow skills (Must completely understand the escrow process, and be able to read and understand the preliminary title report and understand & prepare HUD 1 settlement statements.)
Leadership skills
Communication skills
Accounting skills (In order to work with investors one must understand how to prepare spread sheets, pro-formas, and property financial analysis. For commercial and business brokerage sales, the requirement is higher that in 1-4 unit residential sales.
Research skills Must be able to research any home or investment property, comp and price at market, research tax records, deed records, restrictions, determine flood and fissure area, estimate cost of repairs, and do it all very quickly.
Many of the successful agents come from corporate level positions or from owning their own businesses, and have the necessary education and skills, so they can learn the real estate business within a couple of years and become successful. They also have the financial ability to carry themselves through the first couple of lean years.
A large percentage of the realtors I know have college degrees and previous business experience.
A young person who comes into this business with the bare bones high school education and none of the required skills has a long uphill road to travel to reach success.
My point in this is if you don't think a realtor is worth the fee they charge, then don't use a realtor - learn how to do it yourself and go do it; many people do.
If you want to do part of it yourself, then hire a fee for service agent.
There are many different real estate sales plans out there to choose from.
But if you want full service then expect to pay for it. If you think the fee for full service is too high, then I urge you to go into the real estate business yourself, and within 6 months I guarantee you will have changed your mind.
Until one does that, then you have no conception of what it takes to be a good, successful real estate agent, nor what the agent should charge for the services. Therefore, you are not qualified to tell a realtor how much they should charge for their services.
Over here the seller agent takes 100% if there isn't a buyers agent. So you aren't taken the 100%?
No, I think that is unnecessary. I feel 3% for selling a house directly is plenty for me. And to the point that on a direct sale I take on extra liability, that simply is not so. The buyers are made very aware of who I represent and as a result I have no obligation or liability to them. Also, I have virtually no overhead and an average sale of about $3 million, so a $90,000 fee is plenty. I do not have to split that with a broker either. The entire fee is mine to keep, less expenses of course.
To the poster who felt $275 per hour was excessive, there have been numerous occassions where I saved the seller $100,000, $200,000 or more by knowing how to price, market and negotiate a little better than the average broker. I don't think you'd find any of them that feel they overpaid for the advice and guidance they received.
Real estate is like sales-- when the market's strong, the profits are high; when the market's down, times are tough. The good ones budget for the swings between the two.
IMO, the best brokers are the ones who've been successful in all kinds of markets. They know how the game is played and can save you money and time. I don't resent their commission, because they make my life easier and my budget go further. I've been party to 20-some real estate transactions, and I've had only one wretched experience. It was the one time I represented myself, and I paid for it.
Of course, there are bad brokers out there, but I think the good ones are worth it. Just my two cents, offered for free.
It seems like every other topic on this board is someone asking how they can pay us less! I'm just venting my frustrations, so excuse me, but maybe some of you can help me with this.
Why is it that people think we should give back part of our commission, or lower it or rebate it or pay for things for them with it???
In what other line of work would somone say, "Congratulations, you did a great job, now... I don't feel like I should pay you."
In what other line of work would somone say, "Congratulations, you did a great job, now... I don't feel like I should pay you."
What is up with that??
LOL!! A LOT, unfortunately. Basically anyone in the arts immediately come to mind- photographers, artist models, writers, etc.
My optometrist gets people asking him to do free contact lens fittings all the time since they are not covered by most insurances. A lot of people in general expect "free emergency care" and don't even buy insurance!
When i was a therapist, people always asked me to lower their rates (because they are "special" of course) and being in sales, people constantly ask sellers to lower prices (ie, lose income) for them!
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