10 things you should know...about real estate.
Something I always have in the back of my mind when I encounter some not so nice folks in our industry or I've been tested to my wits end for the day, I think about writing this post. I never really realized how uneducated the general public is about real estate agents and how we get paid, how our job works and the things we do behind the scenes. Generally and I really do hate to generalize everyone, most folks think its just like HGTV and we show three houses and get this 3% fat check. Man, wouldn't everyone be doing this job if it was really that easy? I WISH for my clients sake sometimes it WAS that easy because I want to make the process for them as painless and simple as possible with as little worry and stress as possible for them.
But then I have these thoughts and I think even if I can help educate one person on this subject, then this post is worth it. Ten things that every real estate agent secretly wants you to know.
1. This is not HGTV.
As most HGTV shows, (which I watch and love but secretly shake my head at the tv!) the couples have generous budgets, long wish lists and only choose between three houses. In reality, finding your home in three showings or fifty will depend on your local market, the housing that is available and your budget. Unrealistic expectations lead to unrealistic results and no one likes disappointment so it's better to prepare and educate before you house hunt with a local real estate agent and/or do some research on your own.
2. We are not all millionaires & no, I don't make six figures either.
Although I can think of a handful of shows right now where most agents featured drive Mercedes, Range Rovers, etc. that doesn't mean the majority of agents do the same. In all actuality, the average real estate agent makes just $40,000 or less per year, depending on if they are full time or part time. This however can vary dependent upon their expenses for the year as well as many other factors.
3. The "big, fat" commission check.
Most folks get their final statement at their closing and think we take home that huge lump sum. If we did, can you imagine how many MORE people would be doing this job? But just so you are educated, let me break down an average agents expenses & costs for a regular old listing.
Let's say your client purchases a home for $150,000 with a 3% commission split. Ok, so 3%... is not ours. Actually, most folks don't even get paid until everyone else does. The 3% goes directly to their brokerage where they have what is typically referred to as the "broker split" between the agent and the broker. This can range anywhere from a 50/50 split all the way to 90/10 depending on the agent. Now keep in mind, this isn't something that is cut and dry. Most agencies who offer a 90/10 split which means 90% you keep, 10% to the brokerage, there will be a catch of sorts. You may have to pa a flat fee upfront which I've seen range anywhere from $7,000 annually to $15,000 annually. Yes, I am serious. For an agent with a higher production volume, this may be a great investment up front to get that split but most agents won't be able to afford that split so opt for a lower split to prevent more upfront costs. Just for kicks, we will say we have a 70/30 split for this transaction. So, 3% of $150,000 would be $4,500. But we have our split, so 70% of the commission would be $3150. Not bad for 30-45 days of work right? But it doesn't stop there. Depending on your brokerage, we have desk fees, transaction fees, document fees & preparation fees, etc. Let's just say for this particular transaction, the fees are a good round number of $300. We are now at $2850. Great! But we still have to pay taxes just like everyone else so let's take away 30% because most agents put away around this amount to be safe. That leaves $1,995. Now if the closing took 45 days, if you wanted to divide that up into let's say three paydays, it wouldn't be anything to write home about. Nothing to write home about but still depending on the complexity of the clients, the house & the process, this could be good money. But we are still not done. Subtract your time spent with the client as well as gas mileage, food expenses and anything else you may have incurred. Not to mention thinking of the fees annually that we incur as well as semi-annual fees and monthly fees. We pay to have access to the MLS monthly and we also pay to have access to homes by electronic lock box monthly. Those fees can vary depending on the company and association. We pay for E&O insurance annually, REALTOR association annually, brokerage yearly fees, any other associations you wish to take part in as well as lockbox fees, printing fees, again transaction fees, office fees, etc. If you were SELLING a property for someone, you would also have photography fees, advertising fees, etc. Please keep this in mind next time online you bad mouth agents and that "big, fat commission check" that we don't receive.
4. You can't afford this house.
We can definitely help you find a house, sell a house and buy a house but we can't make miracles happen and we are not miracle workers. If your budget is $200,000 and you want to see a $300,000 house. Chances are, we can negotiate but would you take $100,000 less for your house if you were the seller? I will go to bat for my clients all day long but don't set me up for your disappointment which in turn, makes me look and feel bad.
5. Are you pre-approved?
To put this honestly, you don't want to invest 15-20 minutes to get pre-approved for a mortgage, that you will have to do anyways if you find something you love unless you are paying cash of course but you want me to spent all day Saturday away from my family, using my gas money and my time to show you 20 houses that you want to look at and may or may not be able to buy.
6. For sale by owner is cheaper.
You want to save on listing & selling fees by doing a for sale by owner... but you follow buyers around your house, making them feel uncomfortable and ready to leave. You take your own photos not realizing about 90% of buyers decide if they want to view the home or not, dependent on the photos. Finally, you accept $20,000 under your asking price... but you saved $9,000 by not paying real estate commissions. There is value in speaking with an agent in your area and the job that they offer. Do your research and find someone you can see yourself working and communicating well with.
7. Third Party websites with their value estimators.
When was the last time that Zillow came over and had some sweet tea? They can't calculate the local market in your area as well as the upgrades and comparables in each home. Only a licensed agent, broker and local real estate appraiser in the area really has that insight to the market, the comparable and pricing for the market you are in. Off subject, did you know the CEO of Zillow just sold his home for 40% less than his zestimate estimated?
8. If it falls through, we don't get paid.
Please don't open a credit card in the middle of establishing your mortgage and before your closing on your home. Please get your paperwork to your lender and please be honest about all of your monthly costs and bills because they will surface. Remember it is just as disappointing to us when a deal doesn't go through for various reasons, mostly because we are disappointed for you. But also, we don't see a dime until closing if we even get paid at closing. This depends on the agent & the brokerage of course & their rules/regulations. So if we searched 6 months for a house with you only for you to open a credit card or buy a new car a week before closing & everything falls through, we literally lost 6 months of work.
9. It must be nice to work your own hours.
Sure, if you count working 7 days a week, definitely on Friday, Saturdays and Sundays and being available on a moments notice, even if its your husbands birthday or your kids soccer game. Not to mention, missing dinner, breakfast, lunch etc, eating on the go, taking calls all hours of the day, emails all hours of the day, etc. Remember most of us are taking out multiple clients a day so if you're our evening client, we may be writing an offer at 11pm at night.
10. You won't get everything you want.
Please be realistic. If I could give you the dream house from Pinterest, sure I would! I'd have one myself. But you will have to compromise somewhere. Please don't complain about every single thing wrong with a house because any house, old or brand new will have issues. I guarantee it. And I guarantee that will be something you don't care for about it. Life is about compromise. What is important is your "must have" lists for your daily lives.
Basically, just respect your real estate agents profession like you would want them to respect yours. Please remember we are people too and we have families too. Be considerate, use your manners and always remember that people who feel appreciated will always do more than expected.