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Value of a Real Estate Agent: Rebutting "CBS Market Watch" Claim that Real Estate Agents are Overpaid!

It seems that every year or so, someone in the media takes aim at our profession. Last year it was 60 Minutes (see A REALTOR's Worth: What 60 Minutes "forgot" to tell you.). Before that, it was Chris Pummer, a personal finance editor for CBS.MarketWatch.com in San Francisco.

Mr Pummer wrote an article: Ten most overpaid jobs in the U.S.

He ranked real estate agents #6 on his list, saying, among other things, that "anyone...can get a real estate license." He called some agents income "stupefying."

Now, I realize that this article first appeared back in 2003, before I even became a real estate agent, but I couldn't help but notice the article is currentlyone of Market Watch's "most read articles." Like many others, the headline grabbed me, and I read it too. After reading it, I felt compelled to reply:

Dear Mr Pummer:

"I realize your article was meant to be more entertaining than informational, because purely accurate information doesn't sell many newspapers. However, I think that by taking the liberty of inserting your opinion, you did yourself and your readers a disservice.

Let me back up that statement with specifics, pertaining to my own occupation: In your mention of Real Estate Agents, you try to soften your finger-wagging by saying that "most agents hustle tail to earn $60,000 a year." The fact is -- as reported by the Bureau of Labor and Statistics (BLS)-- that the mean income for real estate agents (in 2007) was $55,090. (Additionally, the median hourly wage is less than $20 per hour!) Therefore your statement that "most agents...earn $60,000" would seem to be an exaggeration. If the average agent makes about $55K, how can you say that "most" earn $60K?

Additionally, I take issue with your statement that "Anyone who puts in a little effort can pass the test to get a real estate agent's license." The fact is that the requirements for a real estate license vary from state to state. Your characterization is overly broad, and as such misleads the public, and insults the hundreds of thousands of Real Estate Licensees who I daresay would be offended by your valuation of their license as requiring only "little effort." Statements like yours, if taken on their face by the public, could lead your readers to believe the services of a licensed agent are without merit. This in turn could lead to consumers foregoing hiring an agent, and potentially entering into contracts that leave them with considerably more financial liability than they may have had if represented by a skilled agent.

A real estate transaction is likely to be the highest price transaction in a person's life, with long-term implications. The implications in your article are inaccurate, misleading, and potentially damaging to relationships that consumers may have with their agents. As such I feel that a clarification, apology, revision or retraction of your statements is warranted.

Interestingly, again according to the BLS, your own occupation, "Writer or Author" in the "Newspaper (et al)" industry, has a mean income of $48,200, only about $2,000 less than an occupation you say is overpaid. In my industry, if I were to misrepresent facts, or represent opinion as though it were factual, I could be fined, and potentially lose my license. Does the same hold true for you, Mr. Pummer?"

I cant help but wonder if the type of sentiment toward real estate agents that he expressed contributed in some way to the housing market downturn. Perhaps I give him too much credit -- perhaps his readers recognized his article as a rant, and not meant to be factual. My fear is that this type of "journalism" does have an impact on consumers -- an impact that leaves the consumer not knowing where to turn for trusted advice.

I would love to hear from all the other real estate professionals out there:

How do you feel about media commentary like Mr. Pummer's article?

How does the media portrayal of our industry affect our reputation and relationships with our clients?

Posted by Rich Schiffer, REALTOR, e-PRO on 07/24/2008 03:25 PM

Comments (86)

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86 Comments on Value of a Real Estate Agent: Rebutting "CBS Market Watch" Claim that Real Estate Agents are Overpaid!

JUL

2008

This man should spend six months looking with a needy ankle bitter of a client that changes his mind about what he wants every thirty minutes. Lets not forget he is calling 3-4 times every day. See how happy he is to make a $6700 commission on a $320K home. That sounds like a lot of money until you think about it. Who could survive on $1000 per month, forget about LIVING! Did I mention the expenses associated with the job, gas is over $4 a gallon?!?!

Betina

He had an interesting take on agent income, since he obviously forgot to take into account any marketing expenses, or other expenses we incur for being inedpendent contractors.

I love when people make generalizations about our industry, for instance, the people on a weekly basis who say, "it must be great to show houses all the time".

Well done and well said. Thanks for sticking up for us all.

What do expect from a journalism major?

Dominick

Rich, you are on target. Most people equate what a real estate agent makes to their salary meaning we don't have any expenses and the whole amount is take home pay. The mean income of $55,090 sounds good, Half of all the real estate agents make more, however, the other half make a lot less. Being conservative, I would think after expenses and taxes, an agent is luck of half of that amount in their pocket.

The media has a way of sensationalizing everything towards the negative and unfortunately it does hurt the real estate industries reputation.

Good post. Did you send the letter. I would be curious to see Mr. Pummer's response.

Many agents are overpaid, and do nothing to earn one cent of their commissions. We've closed many deals over the years when all the other agent does is show up to collect their chaeck. The truth of the story is that the other agents are worth double. Those that get the job done, get it under contract in this market, have great negotiating skills...they are priceless.

How fortunate for Mr Pummer that he gets paid six figures for reading me the news from a teleprompter. I wish I had it so bad.

Nice response to his article!

The fact we also put money out of our pocket BEFORE we ever get paid seems to escape most people. And sometimes the payoff never comes. Do you know many other professions that do this?

Betina -- I don't think I have ever felt the need to refer to my clients as "needy ankle biters" but in this day and age, the "Google Shift" has delivered clients to us much earlier in the process than traditionally. I understand your frustration, but it is part of today's marketplace, so to borrow a phrase from my days in the Army, we have to "adapt and overcome."

The misconception of what we do and how we are paid continues and our commissions do sound outlandish to the uninformed. The bottom line is the seller wants his home SOLD as quickly and for as much money as possible. Of course he'd like us to reduce our commission as well - but it comes down to perception of value and it's up to us to demonstrate it. This type of reporting brings in the advertisers - so don't plan on seeing less of this type of reporting. Ughhh.

Cameron -- His take on a real estate agent's income was only "interesting" if you define "interesting" as "incomplete and inaccurate." People often fail to realize the expense side of things. This is probably the single greatest factor that contributes to the high failure ratio for new agents. Nearly 80% of new licensees leave the business before the end of their 2nd year due to the high costs of marketing. (Fortunately, there are now some low-cost marketing tools that can help offset these rising expenses and help agents survive in this market.)

Dominick -- Thank you for the compliment. I have to add that I have not checked Mr. Pummer's curriculum vitae, so I won't jump to the conclulsion that he was a Journalism major. I will assert though, that regardless of his background, he ought to have the sense to back up subjective commentary with objective facts.

Rich: Everyone CAN do the job, but not WELL. That $ 55K per year is the mean average, which takes the meager $ 18,000 per year of 80% of the agents who don't do the job well and adds it to the $ 355K per year of the 20% that do...

I guess Mr. Pummer is focused on the 80%... and in that case, I concur.

Michael -- Thank you. Based on your comment, however, I think you have confused "mean" with "median." A Mean is essentially an average. Total value of data, divided by number of data points. Median is the "middle ground" where half the values are higher and half are lower. I did not "send" the letter, but I did post it as a comment on the Market Watch website, after the article.

By the way, thank you for standing up for what you believe in and for our profession! You did an awesome job with the letter! You are a WINNER!

Rich: We don't have any 80 percenters here on AR, do we? Not the active AR'ers... We are ALL in the 20percentile....

Jim -- is sounds like you have experienced first hand the value of a good agent, and had to pick up the slack for agents that didn't pull their weight. It is my hope that we can make the services we provide to our clients more commonly known. By keeping what we do "invisible" to the public, we add to the perception that we do not earn our fees. I think that only by dispelling the "mistique" and creating more "transparency" in our operations will we actually achieve a better public perception.

John -- Similar to one of my comments above -- I can't say with any certainty what Mr Pummer's salary is, nor the degree of difficulty he faces in the performance of his duties. I would venture a guess though, that he would not trade what he does to earn his pay for what we do to earn ours.

Kathy -- the only other job I can think of that lays out expenses without promise of return is that of a Parent. Although to be fair, any business that spends money on advertising does so without guarantees of return. What the general public usually fails to realize is that the great majority of real estate agents are in fact, small businesses, and the "income" statistics that get reported are most likely "gross income", and do not relect expenses, including the self-employment taxes that independent contractors are liable for.

Alyce -- unfortunately, if things don't change, I fear you are correct in your assessment of the media, and the type of reporting that will continue. If we can counter the mis-information that the media perpetuates, we can begin to lay the foundation for that change.

Mirela -- regarding the 80/20, you can look at the statistics and it is not as bad as that...

Percentile wage estimates for this occupation: (From Bureau of Labor and Statistics)

Percentile 10% 25% 50%
(Median) 75% 90%

Hourly Wage	$10.06	$13.32	$19.52	$31.27	$51.34
Annual Wage (2)	$20,930	$27,700	$40,600	$65,040	$106,790

10% of agents earn less than $20,930 per year

10% of agents earn more than $106,790 per year.

Mr. Pummer's article talked about agents that make more than $200,000 per year, so he is clearly talking about a very small percentage of agents.

Again, to be fair, the agents that work those high-priced listings do have a much higher set of expenses than the average agent might. While I might get away with serving Philly Soft Pretzels at an open house, an agent servicing a multi-million dollar property might have to serve caviar and champagne, and hire a caterer, valet parking service, and private security for an open house.

This kind of stuff is really irritating. If only some of these people walked a day in our shoes they would realize something very important. The higher the risk, the higher the reward. It's a basic principle of business and investing.

Thanks, Rich. My perspective as a lender right now is the agents who are left are earning every penny. And for many of them their income is still down. I know for a fact I couldn't or wouldn't be interested in doing your job admire all realtors who do. Best of luck to you. Nice rebuttal!

Paul

I think all the comments made here cover what's on my mind. It shows with articles like this some poor "fool" (not literal) will go out there and try to put this together. Somewhere along the line the deal goes south and the attorneys come out of the woodwork suing someone (buyer or seller). I like the comment about putting money out there and the deal falls apart. Been there done that.

I agree with Kathy, MOST people usually FORGET that we pay all of our expenses up front first, then receive payment after a home has successfully closed. In addition to that, our checks come BEFORE taxes are taken out. Sometimes I think that NAR really should have a salaried position solely for sticking up for us and making it a point to let the public know how it really is! These articles and reporters don't present/report what happens when we work with sellers for months for a house that doesn't sell, or with buyers who look for months and don't buy. I guess the truth would be too boring for the public.

Nice to see that we not only work, but also take the time to defend what we do. I can't say that for any other line of work where payment comes after the work is done. If we continue to look and act professional, it's the best message we can send. Kudo's on the support!

Damn,

I thought we not only received the Gross amount of the commission, but were provided cars and expense accounts as well. That's what one client thouyght, pre-education. Perhaps the most fun I have is when an out of state client's parents accuse me of fraud for not having 4 or 5 attorneys at the table during closing. I politely tell them that in California, we have 3 attorneys for each resident and it's hard to determine just which 6 should be at the table.

Bravo Rich, Bravo! I'm anxious to see if Mr. Pummer retorts... do let me know.

Hi Rich:

Thanks for your comments, I hope that they are read by Mr. Plummer. I think that the writer and many others critical of real estate agents, just assume that when we take a listing we receive 100% of the commission. They are totally unaware that the commission is usually split 50/50 between the Listing and Selling Brokers and that the agents involved then receive a percentage of their Broker's share according to their split. Out of this the agent must pay marketing costs (if the Listing Agent), MLS fees, Lockbox fees, E & O Insurance etc. etc. I always advise my clients and they are always very surprised.

In his article Mr. Plummer seems especially upset by the fact that "Luxury home agents live off the economy's fat, yet many put on airs as if they're members of the class whose homes they're selling, and eye underdressed open-house visitors as if they're casing the joint." So there is his problem - obviously he went looking at a home he couldn't afford, and no doubt dressed like a slob. Agents always need to be wary of visitors to an Open House and especially a high-end home with expensive artwork and objects on display.

I wonder how Mr. Plummer earns his living; and maybe he is "living off the economy's fat" also. It seems as though our profession is the only one where we do not get paid until we consummate a transaction; we do not get an hourly retainer like lawyers or CPA's, but we are held to a higher standard, in some cases. Also, the liability factor is one that is often ignored. Also, Mr. Plummer probably does not have to spend his own hard earned money on marketing himself and his company like we do. I have become accustomed to many people having the opinion that we work very little for a lot of money. I learned long ago to ignore them and focus on our clients wo do appreciate and understand our work ethic, hours, flexibile schedule and the time it takes to keep up with the market, continuing education, marketing, etc. etc. Let's ask Mr. Plummer how much he earned last year.....and what he did to earn it! Terri White, Broker/Owner Las Vegas Properties

Rich: We all do ourselves a disservice when we don't comment or write guys like this. I work hard for every dime in commission that I earn and in this market it is even tougher. I resent the fact that this guy gets to use his national publication/station identification as a launch for his personal views. A rant from him gets credibility just by the fact it comes from CBS News.

Great post, well written and also describes my views completely.

That's a great letter. Thanks for writing it on our behalf. I think someone should write an article and call it "Ten of the Most Mentally and Emotionally Challenging Jobs in the US" or how about "Ten of the Most Expensive Jobs to Have in the US", or even, "Ten of the Most Difficult Professions to Actually Get Paid For the Work You Do In the US". Don't you think we'd fall into one or all of those categories? Not that I'm knocking my profession; I love it. It could also be said that it's one of the "Ten Most Rewarding Professions in the US...when it all goes good, that is."

Kristina -- "Basic Principles" are often overlooked by those in the media. Basic principles like accuracy, objectivity, and balanced reporting quite often take a back seat to concepts of sensationalism, half-truths, and bold hyperbole. "If it bleeds it leads" is an all too common mantra in "news" organizations across the globe. If you get irritated with it, express your views, and get your news elsewhere. If the readership leaves, so do the sponsors, and that will ultimately put an end to this type of irresponsible journalism.

Paul -- Thank you for the compliment. Your own industry has also come under fire as of late, and the finger of blame for the foreclosure crisis, the sub-prime mortgage implosion, and the collapse of countless lenders has at some point been aimed in the direction of loan officers. A good loan officer is priceless. Not only will they help the agent get the best options for the consumer, but they will also advise against purchases that don't make long-term sense for the buyer. When a good agent teams up with a good loan officer, they may help each other earn their living, but the real winner is the consumer who gains two watchdogs, each looking out for the consumer's best interests.

Robert -- your "fool" comment reminded me of another bit of wisdom. "He who represents himself has a fool for a client." This may have been first uttered about lawyers, but it holds equally true in real estate. Knowing what I know about the business, if I were to sell my own home, I would use someone else as my listing agent. The value of a negotiator with no emotional ties to the property is often overlooked.

Rich,

I am not sure what everyone is complaining about. Did any of the commenters actually read the article by Mr. Plummer linked above? He did not express any problem with what agents make in general. He did not even mention agents as a whole. He was specific in limiting his "rant" to Real estate agents selling high-end homes... heck, that is the very title of his section dealing with real estate.

Mr. Plummer goes on to point out that most agents hustle tail to earn $60,000 a year, those in affluent areas can pull down $200,000-plus for half the effort, courtesy of the fatter commissions on pricier listings. So, in fact, Mr. Plummer is empathizing with the vast majority of agents. His beef is with agents that pull down commissions exponentially larger than the median. He doesn't come out and say it in so many words but his question seems to be this: When you sell a home for $1,000,000 are you doing twice the work and incurring twice the costs as the agent selling a home for $500,000? What about an agent working an area median price of $200,000? Is the Million dollar listing agent doing five times the work? These are legitimate questions. The median price of a home here in SoCal is still around $500,000 while the median in some mid-western states is half that. Are the SoCal agents working twice as hard? I might even suggest that the mid-western agents are working harder exactly because their income per home is halved.

Did anyone read the link before commenting or are we all so beat up by the press that we react with a knee-jerk reflex. Mr. Plummer raised some interesting questions, albeit in a lazy way. They deserved a more thoughtful analysis than they received here.

Tamara -- If NAR did open up such a position, I hope in the interviewing process they would ensure the candidate knows how to write persuasively without resorting to exaggerations, speculation, and unfounded conclusions. I might consider applying for a job like that, but I am sure it would show up on a list of 10 Most Overworked Professions.

Excellant thread; please let us know if you get a response from Mr. Plummer.

Toni -- looking and acting in a professional manner is unfortunately not enough, when there is a media biased toward exploiting negative aspects of daily life. When was the last time you saw an article lauding an agent's skills when they helped a client succesfully close a transaction? The media jumps at an opportunity to tear down individuals and institutions, but rarely takes similar interests in giving deserved praise.

Mike -- some states require an attorney to review the transaction prior to closing. In my state, (Pennsylvania) we do not require an attorney review, but I try to explain every step of the process to my clients, so that if they do choose to consult with an attorney, they know what questions to ask, and they do not have to waste billable hours asking questions that I should have provided answers to ahead of time. I educate my clients about the contract, but am always sure to advise them that if they have any questions about the legal ramifications, they need to consult their attorney. My expertise is limited, and perhaps more to the point, the scope of my license is limited. I welcome clients that which to have their attorney's present at closing. The attorney's often will do the same things that I would do for my client (review the accuracy and completeness of the HUD-1 closing statement, ensure my clients understood what they were signing, and negotiate any last-minute changes. When the attorney does that, I can almost just sit back and relaxe. It is about the only time in the process I can do even consider doing that.

Its about time someone stood up for us. Don't forget we also spend a big portion of our income for advertising. When we sell a home let us not forget unless we sell our own listing we split the commission with another Broker, and our Broker also gets part of the cut. We can be held liable for everything by everyone. We can work with people for months only for financing to fall through or they run off to a FSBO or another agent. I work hard for my income.

Jason -- I am not going to hold my breath.

Lesley -- I applaud you for informing your clients about the way we get paid, and the expenses that precede a paycheck. It is the transparency that this type of open communication creates that will help change the public perception, if ever so slowly.

Terri -- From what I can see, Mr Pummer gets paid by his company, who get get their money from sponsors and advertisers that want to be seen by their readers/viewers. The advertisers get their money from companies that sell services and merchandise. Those companies get their money from consumers who buy their products. The consumers get their paychecks in large part through the sweat of their brow. So ultimately, Mr Pummer gets paid because the American Workers but their butts to provide for their families. The sad thing is that one-sided, inaccurate reports like Mr Pummer's actually mislead the very same people that are the source of his livelihood. I guess he never understood the concept of "Don't bite the hand that feeds you."

We only get paid when the home sells. If if does not sell we just have expenses. If the patient dies the doctor still gets paid, if the lawyer looses he still gets paid(unless on contingency and good luck with that), if the mechanic does not fix the car right the first time, he will just fix something else and we pay for it. The hairdresser fries your hair, usually we just pay and go away.

How many professionals go to work every day not knowing whether they will be paid or not? Maybe we should all charge a flat 2% plus expenses whether it sells or not.......I don't think the public would like that one very much either.

Lyn -- I agree (obviously) that comments must be made to set the record straight anytime the national media delivers such an incomplete, inaccurate statement. But I caution you to you rethink one of your statements, however. Don't "resent the fact that (he) gets to use his national publication (to) launch...his personal views." Instead, take issue with the irresponsibile way he did it. Bloggers worldwide use "national" platforms to express personal views. Freedom of speech is a right under our Constitution. He has a right to say what he feels. My real objection is to how opinion is too often represented as fact, in todays media, and that when "facts" are used to support opinions, the "facts" are often misinformed, and in some cases (not neccessarily in Mr Pummers article) fabricated for greater impact.

Blake -- add to those: 10 Jobs that Cause People to Lose Sleep

Like the people who write these articles and report these stories (60 minutes/CBS) aren't overpaid?!

You mentioned that the article Ten most overpaid jobs in the U.S. was a highly read article. Real estate agents were probably the ones reading the article.

We know how hard we work to make the income we do. Not to mention the long hours and 7 days a week.

I think most people who need our services are willing to pay for a good professional to get the job done.

CQ -- I believe that most commenters did read the article. In fact some even quoted parts of the article that I did not incorporate into the post. I acknowledged that he attempted to soften his rant, but even in doing that, he misrepresented facts, making it sound as though most agents make about $60K, when in fact 50% of agents earn less than $40,600 (see the BLS chart, above) and 75% make less than $65,040. Only 10% make more than $106,790. I can't even be certain how many of those make more than the $200K Mr. Pummer referenced, but I think I can say with some degree of certainty that not all agents working luzury markets make that much, and not all agents making that much are working luxury markets. To answer your question about expenses in marketing a $1M home vs. a $500K home...I wish I could answer with the voice of experience, but I can only give you my observations:

The cost to advertise in luxury market publications is much higher.
The cost of quality printed marketing materials is much higher.
The cost to hire a professional photographer will be much higher.
The cost of catering open houses and broker tours will be significantly higher, and may require hiring a valet, a bartender, and possibly private security.
Clients selling a luxury home may even demand exclusive representation -- meaning you cannot concurrently represent other buyers or sellers -- this puts all your eggs in one basket, so to speak, and eliminates the ability to spread your risk over multiple transactions in a given period.

I respect your willingness to give Mr Pummer the benefit of the doubt, by simply referring to his commentary as "lazy." But lazy journalism is exactly what I am campaigning against here. The value of an agent is not determined by the amount of money they put in their own pocket, but in the amount they prevent from coming out of their clients' pockets.

Penny -- Like I told Jason, above -- I am not holding my breath.

How much does the "News" person make? Lets have him work on commission for a while!

Terri J -- If you explain up front how you get paid, and what expenses you lay out on your client's behalf, you may find fewer and fewer of them "running off" as you describe. Additionally, you may want to consider an exclusive buyer agency contract with your buyers, if your state permits exclusive agency. This will help ensure that your clients will come to you if they see a FSBO they like, since your commission will be considered to be earned if they purchase a property during the term of your contract. My next "Core Skills" article will be on the use of agency contracts, so stay tuned to the blogosphere for more tips in that regard.

Marjorie & Doug -- I agree. When I worked as a paralegal, my rate for billable hours was $90 per hour. In addition, all expenses were billed to the client. That was back in 1996. If I billed my clients by the hour today, and could charge for expenses, I would be much better off. I dont think the public wants that sort of arrangement, though it might prevent unfair treatment by the media.

Antoinette -- I do agree that when people need our services, they in large part know the value that a full service agent brings. I believe that is why 2 thirds of my listings have been listed at a 7% marketing fee. They understand that the bottom line improves for them when they get their home sold quickly, efficiently, and without snags. Like in so many other professions, the saying, "You get what you pay for" certainly applies.

Rich- I am so glad that you posted this. We need to stand up for our worth as individual agents. To blanket all agents in the same boat is irresponsible reporting to say the least. I love the letter pointing out that he is getting paid $2,000 less and has no where near the liability that agents have. I am so sick of others dicating how much we can be paid and judging whether we get paid too much or not. Do we go around judging other professions. Are attorneys then overpaid? Are entreprenuers overpaid? Who is the media to dictate wages and commissions?

Mirela- sorry that you concur- I guess you and I would not get along then. We make in the upper #s you were stating. We have earned that spot just as someone working in corporate america earns their spot and gets their increase in salary for time on the job and ability to increase the company's profits. I have been an agent for 25+ years, Nestor 13+ years; working and improving our ability to negotiate and understand the markets. I am worth an average of $250 per hour and Nestor $350 per hour.

Agents who work to improve their skills and talent they bring to the workplace deserve to be paid more than those who don't.

I can not begin to tell you how much money we have generated for developers, builders investors and homeowners through advisement of purchases and sales. If I show you how to make a $2,000,000 profit on a transaction I certainly am entitled to a small portion of that profit. If I showed you how to make 2 million dollars, I don't think a fee of $125,000 is too much by a long shot.

The high end home sellers in fact pay us way more than the market average of commissions. That is because they are professional business owners, most of them, who appreciate the fact they know that we will take care of their investments and details. That is worth a lot to a busy person who is making millions of dollars in their own businesses.

We commanded the highest rate of commission that some of the largest developers in our country paid us because they knew that Nestor's pulse on the market was far superior to any other brokers in our area. They would comment at closings and commission signings that they had not ever paid our rates but that they were happy to do so. Their increase in profits in our area proved that point.

Susan -- I think the amount Mr Pummer makes is actually not relevant to the issue, except perhaps as a point of irony. Regardless of his salary, he should be heldto a higher standard, or his editors should make it clear that his column is purely an expression of opinion, and not a representation of fact.

Nestor & Katerina -- Thank you. You have answered the questions raised based on your direct experience, where I could only offer my observations as an agent at the the other end of the income spectrum. The point you really illustrate is that market knowledge and professional advice can be, (and by rights ought to be) considered priceless by those that receive the advice.

Most sellers don't see what we do behind the scenes and only see the commission check we get at closing. I agree the average agent does a great job for the money they make especially in moderately priced areas like Michigan.

JUL

2008

Good post! Interesting comments....I will say that ignorance about what we do is part of the problem.

THe media:) I don't know many people that like them. I think they are making themselves known as a bad profession. They try it with realtors, police, sales....the list goes on and on. They are scum and write garbage most of the time. I don't subscribe to one newspaper and there was a time we took two major Chicago papers and the Wall Street Journal. Now I think most of it is garbage. The media smears lies to rattle the public's cage. I wont' be rattled. I choose to ignore.

I think the majority of the public simply has no idea what goes into the work we do and don't understand why it's important.

First, admittedly I have not read all the previous posts. I know my view will be unpopular here, but I have to agree at least somewhat with Mr. Plummer.

I have watched during my 10 years in this business as incompetence and ethical lapses became the accepted norm. Few agents I have ever worked with were worthy of their pay. I know, I know, we wish to believe that our industry is full of deserving professionals but the facts simply don't bear this out. We refuse to police ourselves and fight efforts to raise our standards voluntarily. And when faced with criticism, we feel we're being picked on. I believe this is exactly why our industry will never truly be seen as professionals. We would rather shoot the messenger than hear the message.

In my state, a high school diploma, a few hundred dollars and 3-6 on-line classes is all it takes to become a "professional" agent. And when I work with agents who don't even know what specific contract provisions mean, have never thoroughly read the Code of Ethics or our Real Estate Rules and Regulations, and can't begin to explain with any authority the transaction process from beginning to end, I too question the validity of their earnings.

I also know many agents who are students of this business and continually strive to learn more about every aspect of a transaction thereby earning their pay, but admittedly they are few. Many industries suffer from the same lethargic reaction to criticism, but until we strive to put ourselves in the shoes of the naysayers, we'll simply be forcing ourselves to slap each other on the butt and pronounce to a very captive audience on A/R how professional we (as an industry) are while reality continues to pass us by.

As an industry, we are not unlike GM and Ford, touting our value when in fact the consumers are saying otherwise. If we refuse to change, we will suffer the same fate as these once mighty giants.

All I can say is WOW in reading all these posts. It is very interesting to see how people have responded. Personally, I think many of you are reading way too much into the article. In any profession you are going to have people who are overpaid relative to their level of skill and ability to produce results. I would agree with the author there is a relatively low barrier to entry to getting a real estate license when you take into consideration the complexity of the business. Someone cutting hair in the state of California goes though a qualification process that is a 100 times more difficult than getting a real estate license. My experience clearly shows there is a large group of people in this business who do NOT possess the necessary education, skill, ability, or experience to provide real value to a buyer or seller. These are the people I would call overpaid, if they are paid at all. How many times have you been in a deal with an agent where you are doing all or most of the work? How many times have you seen another agent get in the way of putting a deal together or makes the closing process difficult or impossible because they really don't know what they are doing? And if we are being really honest… a lot of agents made a good living being nothing more than order takers over the bull market of the last five years or so. And where are these agents now when the market has turned?? GONE…. and rightfully so as they had no business being in real estate to begin with!!

Now before you start throwing things at me...

Please know I am married to a Realtor, I coach Realtors, and I am part owner of a real estate company. I know how hard and difficult your job is. I am one of the biggest defenders of real estate commissions. I work very intensely with agents on how they can get a full commission on each transaction. I do not believe in discounting fees as I know the effort involved in generating a successful sale and closing. If you need great dialogues on getting a full commission, please email me at steve@performancecoaching.com or click here. I have had tremendous success at helping agents with this part of their business.

For me the bottom line is this...

Real estate is truly a blue sky business. No one can put any limits on you. The reason your profession is on this “overpaid” list is because you have unlimited earnings potential. It is simply the risk-reward equation at work. No one who works for a salary will ever be able to understand what you go through. It is a simple fact that most people could never do what you do. And please don't ever hope the majority of your clients will understand or appreciate your value. They won't. Real estate looks easy from the outside looking in. There is no escaping this perception. Your primary thank you for a job well done is a paycheck and always will be. I would think this is a fair trade off - UNLIMIMTED EARNINGS POTENTIAL VS. LOTS OF HUGS. Which do you prefer?

Despite any article that is written....

If you are NOT getting what you want as an agent... it is because YOU are getting in your own way, not because of articles like the one everyone is commenting on. I don't think you are going to see any entertainers or pro athletes worrying about being on the overpaid list. Besides, I think there is some truth to what he says. Can you really argue with the fact that many agents make more than their level of skill or ability would warrant? Most of my clients are in the high-end markets. When someone can sell 2 homes in a year and make $100,000... are you going to tell me that person is highly skilled and a committed professional? I would definitely say there are more than a handful of agents who fit this description and fall into the category of being overpaid for what they do. Last year an agent in our market made $1,250,000 on one transaction that closed within 30 days. Call it overpaid or not… it was a great paycheck for the work and time involved. If you were cashing that check would you mind if someone said you were overpaid for what you did?

In my opinion, getting defensive because someone says you are overpaid is unnecessary. The reality is you are probably making more money than the author of the article in question and you almost certainly have as much or more opportunity to earn 10 times what he makes for a living. Instead of being mad, just go sell another home or ten!! Real estate is an amazing business and you get to choose your own destiny despite what anyone who is informed or uninformed wants to say, write, or think!!

I’ll duck now….

I hope I stirred the pot a little!!

Steve

seems that chris pummer has a bit of a jones about us and what we do. the last time we had a run-in w/ him was over his "soloution" for our industry, which was all homeowners sell themselves, and pass on a savings back to the buyer. was obvious he didn't know what he was talking about.

best

Rich - well done. Factually inaccurate reporting always needs to be corrected. If not, the public think it IS accurate. We should all be on the look out for when this occurs, and if someone spots an article that is as misleading as this one and is not comfortable writing a rebuttable, such as you did, ASK FOR HELP! Thank you!

Great post ! It is absurd... the media is just looking for someone to blame. I have had several professions - auditor, cpa, stockbroker and realtor. Being a realtor is the hardest and most rewarding !

Thanks for the post and of course the media always does whatever it takes to grab people's attention - of course, we know we are not overpaid - thanks for sticking up for us!!

Seems to me that folks can't really be a creditable judge of who is "overpaid" for what they do until they have walked in the shoes of the person they are judging.

Being a "most read" article doesn't recommend it. Porn is highly read too.

WOW, Like we aren't fighting the uphill battle anyway. I've been in the business 28 years. I'm always amazed at the people that want to tell you how easy you have it and how easy it is to make money in this business and they are sitting in the cheap seats.

The numbers of people that think that way, get their license (not easy) and then last maybe a year and make $0 and never figure out how difficult it really is. Our huge turn over in Realtors is because this is a very demanding occupation and taken seriously. We are intrusted with folks most valuable possession. I can't imagine going to court without an attorney. I wounldn't go into surgery without a doctor, I wouldn't go sky diving without instruction, Why would anyone think they can do this job?

It is hard and extremely rewarding to help people with their real estate needs! The information I have learned over the years is invaluable to my clients. But, it isn't free.

Rich - thanks for bringing up an important issue. Mr.Pummer is citing real estate agents among many others he perceives as overpaid. Media outlets are payed by advertisers who in turn pay for the traffic/eyeballs the site generates. He includes Orthodontists in his "overpaid" list ( that one was new for me:). To bring traffic Internet authors tap into highly emotional topics, such as bashing people perceived by the general public to be overpaid. I am not sure Mr. Pummers opinions are his alone, rather they are an expression of the widely held beliefs by many. Go on any public forum (except AR), but very much on the WSJ blog and others, and you find people bashing RE agents. Is it rational? Would it be different, if Mr. Pummer sighted the correct figures? I am not sure, because the issue is emotional rather then rational.

You are absolutely right to demand accurate reporting. The way to change public perception of RE agents would require more then that IMO.

They just don't understand the whole picture, expenses, commission fees, time and work involved. Most don't even understand that there are two sides, selling agent and listing agent and then the agency takes their fees from that. I have heard the comment that we do a couple hours of work for 6% of the selling price. Sounds great, but we know how far from the truth that is.

Hi Rich, You seem to understand the dynamics of the media very well ! Remember, they have a lot of space/time to fill and the standards used seem to get lower every year.

Hi Rich- I'd like to respond to your question about how the media portrayal of us affects our reputation.
Most of the media does not portray us in a favorable light. However, as of late CAR has tried to boost the confidence level of the consumer with commercials on TV. “Advertising the benefits of hiring a Realtor.”
In my opinion, I think with the widespread of the Computer, the very tool that we the AR community uses to promote ourselves to the public with our "On-line presence" could be partially to blame with our profession being viewed as less valuable.
With more information readily available at the consumers finger tips, some internet sites make it sound so easy to sell or buy real estate yourself (like all the do-it-yourself shows) to save$$. Most people start to think they can do it themselves...who needs a Realtor? Therefore since it sounds so easy, the Realtors don’t deserve that much commission.
My question: Is there just too much information out there on the information highway?

Wonder how much they get paid?? lol

First of all I loved your response. Personally it is IRRESPONSIBLE JOURNALISM, his writing was more an editorial, an opinion not based on FACT. This type of journalism only misinforms the public. It is a shame that sentsationalism, and knocking a person or group is what sells.

If Realtors are over paid then so are movie actors and sports stars. I sincerely recent any negative commentaries and stories about Realtors being overpaid. Sometimes I feel that I am overworked and underpaid. Working my SOI, cold calling, soft calling alone requires 1-4 hours a day to get my weeks filled in and not have any gaps between weeks without seeing any commission checks.

Between Real estate licensing requirements, continuing education, staying on top of real estate trends, market conditions, advertising, marketing, car expenses, etc., would not surprise me if some agents are averaging $10 an hour at the end of the year.

You are right, maybe this commentator should live the life of a Realtor for a while so he can bite his tongue about us. I eat, breathe, live, love, real estate. It is my passion and even if my financial situation would obligate me to leave the profession to make ends meet somewhere else, I would always come back to what I like to do best, sell and real estate

Rich,

Thank you so much for your thoughtful reply to this arrogant "journalist." I get so sick of the media's approach to EVERYTHING! Instead of focusing their attention on positive and uplifting issues and stories, or singing the praises of various types of professionals, the media has built an empire on negativity. Perhaps I'm stupid, but I'm failing to see how that is beneficial, overall, to anyone - even journalists!

Again, thank you for pointing out the gross flaws of his claims. Best of luck to you!

Just found the Realtor Stats from July that I would like to input regarding our salaries.

This is what I would like to do to Mr. Plummer: Take out a doller bill and then split it in half. Say to Mr. Plummer "Okay, my company gets this half." Then, take my half of the dollar and rip it again. "Okay, this is what Uncle Sam gets." Rip it again "Okay, this is what it cost for me to advertise and market my business, drive buyers around, etc." Then I would like to take the remenance and say "Now divide this over the hours and hours that I spend with my clients." Seriously, some transactions have real estate agents working like $2.50/hour.

JUL

2008

Something else he left out of his article is the fact that 2% of agents do about 90% of the business. It therefore makes sense that those 2% would be more highly compensated then average. Also, averages are misleading. If you have three agents and two make 10K a year and the remaining one makes 250K a year, on average they make 90K a year. When you extrapolate that out to the percentages I first quoted there are very few agents making his 'average'. They are actually a few very highly paid ones and lot of starving ones

JUL

2008

If we, as an industry, were so "over paid" woudln't there be flocks of new agents everyday clammering to the local real estate office to sign up? Last I checked, the national numbers of active real estate agents were on the decline. You nailed it in your post and comment to Mr. Plummer when you said, "I realize your article was meant to be more entertaining than informational, because purely accurate information doesn't sell many newspapers"

JUL

2008

Newspapers and reporters are in business to sell newspapers which sell ads in those newspapers.

I'm staring to wonder if they're looking for more sensational stories now to generate interest in falling circulation which will translate into falling ad rates.

As a commission only real estate licensee I have to find my own business and start all over again each time a transaction closes.

Rich, great post! It makes me want to run right out and jump into my Porsche and speak with this fellow! Well, ok... I don't own a Porsche and I wouldn't drive that far to give someone a piece of my mind... heaven knows I don't have that much to spare! The article doesn't take into account the number of agents who earn their licenses actually make it in this business. A rather large number fall by the wayside each year. As you mentioned, it fails to take into account the "cost of doing business" either. Those figures represent "gross revenue" when an agents real earnings are reflected in their "net revenue." Besides, did anyone every comment that when we represent buyers we work for free... ok, ok. we do earn an income when we find our buyers a home... and usually after many miles of driving and paying high gas prices. Did anyone mention that when we list a home we don't get paid unless it sells?

Now when you want to speak of overpaid professions... how about including members of the media including news anchors and journalists!

JUL

2008

There has been a veritable firestorm of great commentary, and I regret that I am too busy earning my living to respond to all each comment individually, as I had initially tried to do.

Let me summarize my key points for everyone here:

Consumers listen to what those in the media say, the message automatically gains a level of credibility simply because the source is deemed to be trustworthy.
Journalists, reporters, commentators, pundits, and all news media types owe the public a certain degree of professionalism that must include accurate facts, and balanced analysis.
When those factors are missing - when journalists represent opinion as if it were fact -- the public has little chance to make educated decisions and formulate their own opinions.
It is my opinion that as professionals serving the needs of the public, we need to speak out against this sort of irresponsible journalism and encourage the press to provide the public with accurate information.
A well-informed public is one of the cornerstones of our democracy, which is why the freedom of the press is guaranteed by the 1st Ammendment. When irresponsible journalism improperly sways (or creates) public opinion, it can snowball into a dynamic that can affect elections, which can have a lasting impact on public policy and even world affairs -- like the "butterfly effect" (a butterfly flaps its wings, and the subtle change in air flow creates a ripple effect that gets amplified to the point that a tornado eventually forms on the other side of the globe)
The world deserves better than a "butterfly effect". Economies thrive and crash in large part due to consumer opinion. The people that have a venue which can sway public opinion must use that venue responsibly.

Yeah, I hear that all the time. What a misconception the public has. Why is it we never hear how expensive it is to be a Real Estate Agent.

JUL

2008

Rich - you have done a great job defending our position! Yes, we make more money selling a more expensive home. I could close 2 $200k deals and make a lot less money on 1 than the other because of gas prices, marketing costs, time on the market, etc.

I think I'll take control of showing my value as a Realtor!!!

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