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Most sellers here, in my experience, don't have a floor plan of their house. Many of them are the third or fourth owners of the house and any floor plan that might have been provided by the seller (along with any measurements) is long lost somewhere along the way. Pricing on (and quality of) virtual tours varies widely.
In the houses I have sold over here, the agent took the pics them self or I presented them since many can't make very good pics, the floorplan came from the builder and the measurement were in that too, the virtual tour is $ 200.- that realtors can buy and use it for all their properties so spread out over a couple of properties means not too much costs.
That is the only part I'm making a comment on.
Those expenses exist.
Builder measurements are not acceptable where I live.
Professional photos are reasonable expectation at the OP's price range, if the agent's work is not good enough.
Yes, a virtual tour can be done for $200, but it was not included in the post.
Neither was group health insurance for the agent, which is much more common for the W-4 worker than it is for an independent contractor.
Some other expenses I haven't seen mentioned here: auto, gas, maintence, clothing, lunches/dinners with clients, personal advertising (signs/ads/boards), paper products ect.
I really dont care what my agent drives but I have known people that will not hire due to personal appearance.
I responded to a similar question that the OP raises in another forum. Although most everything that has been mentioned previously is a component of commission justification, one element that I have not seen is the element of RISK. Below is how I responded to the commission justification question by trying to explain the role of risk in that justification:
I see many posts on many different real estate websites where the Realtor is trying to explain or justify their commission by breaking down how the commission is split, what work they do for the commission, and what expenses they have. These are all well and good and a part of the equation. The parts of the commission equation that seldom, if ever, get explained are the knowledge we bring to the transaction and risk.
The knowledge we bring to the transaction has value. Plumbers, doctors, lawyers, etc. aren't just paid for their time, they are also paid for their knowledge. The knowledge a good Realtor brings to a transaction helps insure that the transaction will be closed with minimal problems for the client, or if problems do come up, they are resolved because of the knowledge that the Realtor has.
Risk is the other commission justifying component that is rarely discussed. A Buyer Agent or Seller Agent takes on a huge amount of risk in any transaction. They commit their time, money, and knowledge with no guarantee that they will be paid, and in fact will only be paid if the transaction closes. Risk and reward are related concepts in our society. The higher the risk the greater the reward. When I am asked to lower my commission rate I explain the concept of risk and how and why that is built into my commission. I also tell my potential client that if I were not taking this risk that my commission could be lowered. I then offer them an alternative that would include a lower commission. The alternative is this. If my normal commission is 3X I tell them I will work for them for 2X if they take my risk out of the equation by paying me 2X upfront, whether or not we end up with a closed transaction. I have never had any takers on this offer as the clients now seem to have a better understanding of risk, especially when the risk is shifted to them.
JBrown, agents don't need to justify their commissions to you. Do you ask everyone (plumbers, lawyers, gardners, etc.) for the same justification? It is pretty simple: if you think someone is charging you too much, don't use that person. I am not a realtor, but I am an independent contractor in my field. So I understand what is involved. Obviously you have no clue. But in the end it doesn't matter. The top agents will continue to get the commissions they ask for because enough people realize what it is that they do and are willing to pay for that service, and bad agents will find that they can't make ends meet no matter what they do in this market (and will therefore quit). The person who thinks all agents are equal and doesn't work at finding a good agent, and then gets angry when the agent seems to have overcharged has only himself to blame.
Honestly, I feel bad for all good agents out there, who often are asked to justify their very existence. I just had to let you guys know not everyone is against you.
Abuti...thanks for being respectful and level headed. You hit the nail on the head ... if you think the industry charges too much... simple choose not to use it. It is your choice...Sunny
From the outside looking in, sounds too good to be true. No one talks about all the times, agents are abused, used as a taxi service, search agent, and often all the work goes unrewarded, with no pay, and the hours worked are so much more, and always at the odd hours, to meet needs, so is 2.5% and paying taxes, and all the mentioned expenses, so come on board and join in the fun.
Time and cost to be a realtor: 8 week training course at a cost of about $1000
Time and cost to be a dentist: 8+ YEARS of college at a cost of about $100,000
Only an 8 week training course and 1k of training?
Sure, if you get a brand new agent fresh off the assembly line.
Appearantly you weren't aware that we are required to take continuing education courses regularly, with those courses running between $95-$150 a day.
And then there are those designations you see at the end of an agents name, such as ABR, GRI, SRE, etc. Each of those indicate further specialized training and experience, with those classes also being quite costly.
Still, they're an indicator of experience, knowledge, and a dedication to the craft.
This can be discussed, and has been, ad nauseum.
There are those who will always think others are overpaid, regardless.
The bottom line is, once you work with a quality Realtor, you'll never ask them to justify their commission again.
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