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That $200,000 house at 6% creates a commission of $12,000 not $20k. And that (usually) gets split up, so that the actual agent get around $3,000. Takrs a lot of $200,000 homes to maje a decent living.
If the agent also owns the brokerage, the agent gets the full $6,000 under the 6% structure, not $3,000.
And, before you mention photos, marketing etc., every business has expenses.
Homes in my immediate area are selling between $700,000 to $850,000. Paying 6% commission in this price range is well and truly ridiculous.
I really don't get this.... How much would it cost to drive someone around and open lock boxes? $40/hour seems very high. My option eliminates some of the "risk" by getting paid for your time in the event the buyer backs out.
out of curiosity, would you work for $75-80K year if you knew that
1. you received no benefits (100% of your healthcare for example)
2. you paid 15% of that income just for FICA
3. you paid for the vehicle, gas, higher insurance (what happens if you wreck with a client in the car?), and let's just ballpark $1,000/yr extra for the privilege of being given access to those lockboxes.
and then you never ever gave a single piece of experience/advice to your clients - you were merely an order-taker with no moral or financial liability the moment they closed.
out of curiosity, would you work for $75-80K year if you knew that
1. you received no benefits (100% of your healthcare for example)
2. you paid 15% of that income just for FICA
3. you paid for the vehicle, gas, higher insurance (what happens if you wreck with a client in the car?), and let's just ballpark $1,000/yr extra for the privilege of being given access to those lockboxes.
and then you never ever gave a single piece of experience/advice to your clients - you were merely an order-taker with no moral or financial liability the moment they closed.
out of curiosity, would you work for $75-80K year if you knew that
1. you received no benefits (100% of your healthcare for example)
2. you paid 15% of that income just for FICA
3. you paid for the vehicle, gas, higher insurance (what happens if you wreck with a client in the car?), and let's just ballpark $1,000/yr extra for the privilege of being given access to those lockboxes.
and then you never ever gave a single piece of experience/advice to your clients - you were merely an order-taker with no moral or financial liability the moment they closed.
Would you take that deal?
You forgot to include that Saturday and Sunday nights pay exactly the same as Wednesday and Thursday nights.
Commissions are significantly lower in most other countries. The question remains "why does it cost so much more to sell real estate in the US?".
My guess is that it really doesn't, but the current system is a Nash Equilibrium and has been difficult if not impossible to move away from. I'm interested in what others think about this question.
Your premise is incorrect. Houses sell elsewhere with X% commission, therefore houses should sell here with X% commission. Why would you think that? Every country has its own legal, financial, psychological, regulatory, economic, and structural frameworks, all of which act together to establish a fair commission rate.
So it doesn't matter what happens elsewhere, it is a non-sequitir.
We live under a system where there is sufficient freedom and competition that it is a certainty that if commission rates COULD BE much lower than they are, then they WOULD BE much lower than they are, which they are not.
So looking at Portugal or Japan is not going to lead you to any meaningful justification for lower commission rates here. You have to look at the cost structure here, the failure rate of transactions here, the expectations and rationality of buyers and sellers here, the complexity of transactions here, the exact service level here, and everything else here.
After you do that, you will discover that commission rates here are fair and reflect the cost of doing business. If that were not true, competitors would have swooped in, cut commission rates in half, and gotten rich. It's been tried. It has failed.
You forgot to include that Saturday and Sunday nights pay exactly the same as Wednesday and Thursday nights.
I used to manage a retail business and Saturday and Sunday were no different than other days of the week, and that is the same for millions of other people who are not in the real estate business.
if the commission is 20k, how does that divide up in actual man power hours of work, because it seems like if you list a house and sell it within a few days, you're making 20k in 2 weeks that works out to a prorated 500k a year, which is way too much if you ask me.
explain the breakdown of the 20k and if you're doing '20k's worth of work and then if you sell a 10 million dollar house, how does the huge commission break down, a house is a house so selling the 10 million dollar house isn't any more work than selling any other house assuming a buyer calls you up and offers asking price and says i want to buy today.
First off, with sales I don't see how you can break it down in to an hourly rate. You don't work per hour, you work per deal.
Second lets look at that $20K in two weeks. If they were selling a completly desirable house in the right market conditions and everything happened to work out well for them the real question is will every deal work out the same way. They may list a home that sits for a year. I look at my own neighborhood. A home on my street sat for over a year. During that time frame five other homes that I know about came on the market and were sold. All of these homes were in the same four block area. All were similar in design and size. Not all sales are going to go the same way. Some will take weeks and some could take a year or more.
Some years back I remember a family that has a business they owned for years. They had maybe 6 or 7 people working for them. They purchased their dream home and put their home on the market. After it sold the husband tells his wife that they should sell the business and start selling homes. because it seems so easy. He became a realtor, sold his business and tried his hand at selling homes. He found out it was harder to do than he thought. Then 2007 happened and he was out of the business after only two years trying to sell homes.
With a $10million home your available clients will be limited. The only people I know that sell beach homes around here live at the beach. They know the market and know who can buy a sand castle. Also a high end home may have to wait till that specific person shows up to buy it. I would guess with some homes you are marketing to people in other parts of the nation as well as in other countries. You would for sure be hitting your contact list. On top of that it is how you would contact people. Maybe at a party, the only thing is that only people in are in specific circles. Your either in those circles or your not. Also realize that someone with a $10million home are probably more than likely willing to have someone else handle all the details for them.
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