Whenever I mention my occupation to people my age, or people that are ill informed about the economy, I get the same facial impression or response, "You're the one with ALL the money!" I don’t know if it’s the numerous shows about real estate or the fancy clothes but the general perception of Realtors (from my experience) is that there is MAJOR money to be made in this business.
Do not get me wrong, there is!
A strong indication that this business is lucrative is the fact that many people who sell were once successful in other fields, many boasting degrees in engineering, accounting, financing and etc. The economy is different now, once upon a time you could sell real estate part time and make tens of thousands of dollars. Now, dedication and time is needed in every deal. You are no longer able spend a few hours on the weekend showing a few homes, you now spend months nurturing and reassuring a couple that buying in this economy is the best investment that they can make.
So the big question is how much we get paid?
FIRST, let me tell you the process of getting paid, I'll put this into a FEW steps from a buyers point of view (in 2010).
1) Market yourself in someway to attract a buyer.
2) Find out their finance situation. There can be 2 directions this goes in.
a) They have Grade A Credit and will have no problem calling in an approval letter from a lender of their choice.
b) They have what most people have in 2010, shaky to okay credit and need some type of credit repair. This can be a process taking a few weeks to a few months (I’ve dealt with couples going on a year).
3) Begin the house hunting process! Find their likes and dislikes and SHOW THEM SOME HOUSES!
4) Write a contract, wait for an acceptance, and focus on financing!
5) Have a closing!
Seems fairly easy? It MAY be, but one thing it is not is speedy. Working with a buyer can take anywhere from a month to years (depending on their credit status).
NOW, onto the BIG dollars, right? (I’m going to put this into simple math for you.)
Let’s say your buyers settle on a home for $100,000.
The going commission rate for Realtors is 6%.
That is to be split in two with you and the selling agent, so 3%.
$3,000, not bad right? Wrong!
Depending on your commission split with your company (Yes, you pay to work for someone!) You’re looking at a commission of 1.5%, so $1,500.00.
Okay…not too bad.
NOW you have to subtract a 6% franchise fee, for using the company name.
A $100+ dollar amount is subtracted for closing the deal. This is a “transaction fee”.
You also have your quarterly MLS (allows you to see ALL homes for sale by real estate agents) due of $130+.
You can also add your yearly due that comes from calling yourself a “Realtor” amounting to $500+.
Not to mention setting aside 30% of the gross commission for taxes!
Now for the fun part, adding up how many hours, gas mileage, text messages, phone calls, etc did you use working with this couple.
ALL these things cost, and all are a vital part of the home buying process. So you subtract those costs then divide the hours and tell me how much you make. I’m not a mathematician but I’m certain it’s not a lot.
It can be though, IF you have steady clientele and steady contracts!
I said all of that to say, that this business is HARD, so when people assume that I’m sitting back and racking up the dollars it’s an insult. Any money I do get is hard earned, and this business does not stop.
The inventions of Blackberry’s were one of a selfish man. It doesn’t matter what you are doing, what time of the day it is, where you are, if you get an email it is supposed to be treated as a priority. The age of technology has desensitized us to the fact that the work day stops at 5, and doesn’t fall over into the weekend.
Basically, the business is hard, very hard! As is any other self paced business, but if you work hard you can obviously make more than enough money so comments accusing you of having a “money tree” are accurate. So during this lack luster economy I imagine myself planting these trees, daily. With every person I meet that may not close for a year or so or more. It’s a process, a tedious one, but I’ll take the job
-Premature Millionaire
