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Very interesting. With all of that said, I wonder how many agents would be willing to work a rate $29.44 per hours worked on MY PERSONAL SALE plus 1/14th of your operating expenses above? If this is what it works out to theoretically anyways then there should be no problem with such a model, correct?
I'm guessing not many.....
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This is for a small indie brokerage of one. You can't bill that little hourly the larger the building or the better location. So no, not many would bill at $30 an hour.
You also need to add in those hours that go toward running a business but aren't billable. When your attorney bills you $300 an hour that includes time for training, meetings, etc that aren't billed directly to a client. They need to recoup those hours through a higher billing rate.
This math was broken down for a commenter who needed to see the math behind why the fees are so high. You do understand that if you work 40 hours on a transaction at $30 an hour you made $1200 pretax and then when you sit in your continuing education classes, do business marketing, etc you are making nothing. You aren't an employee. No one pays you an hourly rate regardless of what you are doing so you have to inflate the hourly rate to compensate for the hours that you aren't billing a client.
I neither missed nor agreed with that part of your message. As I said above some people are much better negotiators than others. A premier negotiator certainly can influence a seller to understand the value in an offer. Some love the process and some want nothing to do with any type of negotiation. I want one of those people who love the process and I believe they should be rewarded for their success, not punished.
I think we are in agreement that you and I would not make a good pairing. That, of course does not mean that you may not be very good at matching a buyer with a property or administering the details of a deal or that I could not find a representative who can get me what I'm looking for, primarily a tough, successful negotiation. "What a buyer will pay and what a seller will accept" is based only upon that negotiation.
You are certainly correct that I would not accept your plan but if you ever want to try your plan out feel free to interview around and try to find one.
A good negotiator can have some influence, yes, but it's minimal influence. There is a buffer of direct contact between the seller assuming they aren't a FSBO, and that is their agent. The best thing a buyer agent can do is make a clean offer and not make the other agent mad by being a jerk. Negotiation is part of the job but there is limited ability to influence the seller, your plan doesn't work in a seller market, it's complicated, it doesn't reward for closing costs/repairs/personal property added, and it's subjective. All a recipe for disaster. We'll agree to disagree on it being a good alternative.
You are certainly correct that I would not accept your plan but if you ever want to try your plan out feel free to interview around and try to find one.
A good negotiator can have some influence, yes, but it's minimal influence. There is a buffer of direct contact between the seller assuming they aren't a FSBO, and that is their agent. The best thing a buyer agent can do is make a clean offer and not make the other agent mad by being a jerk. Negotiation is part of the job but there is limited ability to influence the seller, your plan doesn't work in a seller market, it's complicated, it doesn't reward for closing costs/repairs/personal property added, and it's subjective. All a recipe for disaster. We'll agree to disagree on it being a good alternative.
And that, right there, is the problem I have with the status quo. For anyone to even suggest that there is somehow a relationship between aggressively advocating for one's client and being a jerk is extremely problematic. If an agent does not believe in his ability to significantly influence a deal why should his client believe in any of his abilities? I'd much prefer my agent to focus on the bottom line rather than some patio furniture and an old gas grill. You're right - we disagree.
Very interesting. With all of that said, I wonder how many agents would be willing to work a rate $29.44 per hours worked on MY PERSONAL SALE plus 1/14th of your operating expenses above? If this is what it works out to theoretically anyways then there should be no problem with such a model, correct?
I'm guessing not many.....
.
It would never work because the agent would go bankrupt trying to get his next transaction.
Let's say the agent got your home sold in 50 hours. He would earn ~$1500, and that would have to tide him over till the next listing. You can see how he would quickly burn through that money.
Even if the $29.44 agent managed to get enough business to work full time 2000 hours a year, he would gross less than $60000, with no benefits you would get in a normal salaried job.
If he wanted more money, then he would have to sacrifice sleep and be a slave to his job.
Very few would be willing to work this model. It is very painful.
Does $29.44/hour mean Monday-Friday, 9-5 hours?
Overtime and doubletime pay for off hours, weekends, and holidays?
I think I would decline. $29.44/hr. is still not good enough, when you consider that the self-employed directly pay the full Social Seizure that W-2 employees see only half of, even though they have to earn it all + margin. And the other necessary benefits have to come out of the hourly wage that is left?
And as mentioned earlier, I have little interest in the minutiae of calculating billables when working with multiple tasks for multiple clients.
There is a premium to be paid for business risk, and for other overhead.
Actually, while many of my expenses parallel hers, I think Silverfall underplayed some key expenses in her list, and I would prefer not to have an office in a crummy area. I pay about double that rent.
There is a premium to be paid for business risk, and for other overhead.
Actually, while many of my expenses parallel hers, I think Silverfall underplayed some key expenses in her list, and I would prefer not to have an office in a crummy area. I pay about double that rent.
I forgot phone service which is kind of a big deal, but I also didn't include REALTOR dues which are optional here.
I wouldn't have an office in a dumpy location either, but I think it is important for people that think agents can charge $25 a billable hour to see that it doesn't work that way with the most lean and cheap of brokerages. About double that rent gets you in a better space here too. That is the leanest brokerage cost that I think would work in my city. I wouldn't work weekends, evenings, etc for an average of $30 an hour, pre-tax, either. Then pile on the divorces, short sales, illness, deaths in the family, personality types, agent drama... on and on for that.
suggest that there is somehow a relationship between aggressively advocating for one's client and being a jerk
No, there is a difference. I'm good with advocating but collaborative give and take negotiation strategies are more effective than "fighting" for your client. "Fighting" for your client often creates an oppositional relationship that creates and natural push back from most people making it harder to get what you want and sometimes undermining negotiations. I've seen it happen. I don't "fight" for my clients but I'm 4% better than my market average by the numbers. I don't "fight" with other agents. You want an agent that's a good negotiator, get someone that understands this and controls peoples egos while putting their own ego aside (buyer, seller, other agent). People in general are their own worst enemies. More flies with honey than vinegar or something to that effect. [Drops mike, walks away.]
Good for you! It is way past time to bring the commission greed under control and only pay a reasonable fee. But why would you pay the buyer's agent when it is buyer who employes them?
It is laughable that a comparison is made to a Christie's auction as I think most people see the average commissioned sales work along the lines of a used car salesperson. Education requirements are more similar. Also, who gives a hoot who the sales people chose to split their commissions with? It is just a tired old excuse to they claim they aren't getting paid enough. No one forced them into commissioned sales so how is it anyone else's problem?
Our equity belongs to us and we decide who, if anyone, we will share it with. Why would anyone want to give away what is equivalent to, for some people, a year's pay to fill out a form? This especially true for people near retirement as no one knows what the future will bring.
You aren't sharing anything with anyone. A real estate agent offers a service. If you want to use that service, pay the price. There are many agents and many brokers, who offer many different compensation levels and types, so you can find one that suits your needs. If none fit your needs, you are free to not use the service, and do the work yourself.
Why is there all this angst over the payment asked for by service providers you never have to use?
Exactly. I dont care that these agents have heartbleeding stories about how long it takes them to close on a house and how many bills they have to pay. They chose to go into this line of work and they merely provide a convenience factor. What other industry asks you to ditch out $10k+ for a convenience factor??? Ive owned my home for 2 years now and have paid in about 15k of equity, but guess what...if I were told to relocate for work Id have to sell my home and lose all equity....to the realtors. Im sorry if you guys think you provide some magical service but with the increasing tech around us you may want to start looking for a new line of work...
You haven't paid in any equity. You borrowed money to buy something you wanted, at the market price. Your payments are to repay the loan, and have nothing to do with the value of your house. If you decide to sell it now, you will sell it at the current market price. If you decide to hire a real estate agent to sell it for you, you will need to pay that agent. Shop around. Talk to several. Find an agent that you feel will do the best job for you or the price you are wiling to pay. Feel free to negotiate the price of that agent's services. If you can't find an agent willing to do the work you want for the fee you are willing to pay, then by all means feel free to do it yourself. No real estate agent can ever force you to hire them if you feel they aren't worth what they demand in payment.
No, there is a difference. I'm good with advocating but collaborative give and take negotiation strategies are more effective than "fighting" for your client. "Fighting" for your client often creates an oppositional relationship that creates and natural push back from most people making it harder to get what you want and sometimes undermining negotiations. I've seen it happen. I don't "fight" for my clients but I'm 4% better than my market average by the numbers. I don't "fight" with other agents. You want an agent that's a good negotiator, get someone that understands this and controls peoples egos while putting their own ego aside (buyer, seller, other agent). People in general are their own worst enemies. More flies with honey than vinegar or something to that effect. [Drops mike, walks away.]
And it also helps that if the price is not negotiated lower, both those honey sharers make more money, the seller makes more money and the buyer loses, right?
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