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I Don't Get Paid Until You Close

Brian & Rita Burke's recent post about Can A Staging Company Charge a Success Fee? inspired this blog. I went to think really hard after reading their blog about what other industry/ professions would not charge a fee until success is seen and known?

When I walk into my doctor's office, I see a sign at the check-in window, "Payment is required at time of service rendered". Then, there was one time I remembered my vet fee was over $300 only to hear my vet said that he didn't know what was wrong with Maxx's limping front paw. I paid the electrician and the a/c guy a fee to show up - before any services are rendered. I guess I will continue to pay my painter whether or not my listing is sold and it is only fair to pay the stager his/ her fees for services rendered.

Real estate agents accept the responsibility to market the property the best way he/ she sees fit. Marketing costs and time spent on these efforts are typically monies that are paid by the agents before the property is sold. So, depending on how long it takes the property to receive a successful negotiated contract, agents are continuously marketing. Flyers, website and the most expensive of these are the real estate agent's time (depending on how much this agent earns an hour).

What I had described above is the direct costs associated with the listing. Then, there are other unseen costs such as marketing themselves in order to get the opportunity to list the property.

Buyer's agents also have their own costs such as gas. When gas was over $3.50 per gallon, the business cost suddenly became double what it was just a year ago. With the 2008 real estate conditions like it is this year, many real estate agents report that sales are worse this year compared to last. With the costs of everything headed up, the cost of doing business just increased tremendously.

All real estate agents work on the contingency that a house is sold. No paychecks are received until then. All efforts prior and during the times working with the clients are dependent on that one activity: signing at the closing table. I dont get paid until you CLOSE. Not many professions could make that statement.

If you like to gain more insights to a real estate agent's checkbook, read my previous blog here: Are Real Estate Agents pretty door openers? Insights into an agent's checkbook register. It is a small portion of what goes on behind the scenes.

Would your doctor do that? Would your painter, electrician or plumber do this? I guess this is just the nature of this beast. Less real estate agents would get out of the business if we charge a service fee instead of a success fee.

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I proudly serve and sell real estate in the northern suburb cities of the Dallas metroplex. If you are thinking about purchasing or selling your home in neighborhoods of Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area and other surrounding areas and more importantly, want to work with a local area expert, contact me at your earliest convenience.

It is a competitive market, hence it is important that you choose to work with the realtor who knows these communities like none other. I employ a systematic market approach in selling your home - an intentionally unique proposal that most real estate agents do not use. If you care to be on your way to a successful closing, contact me immediately to see how different my proposition will be.

Contact:
Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

Do Not Copy. Serious actions will be taken. Re-blog is allowed for Active Rain members on the Active Rain platform when the content is taken in its entirety and credit be given to Loreena Yeo and 3:16 team REALTY.

Posted by Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 on 12/18/2008 10:31 PM

Comments (18)

Real Estate Agents Dont Get Paid Until You Close in the Regional (Localism) Channel

realtor success tips, real estate agency

Originally posted at: faithfully frisco tx homes for sale: I Don't Get Paid Until You Close

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18 Comments on I Don't Get Paid Until You Close

DEC

Loreena, We are the only industry I know of that gets paid in the arrears. I don't see that changing though but it is good that our clients understand how it works.

Loreena, Great Blog, I apperciate all your help. Thanks and keep it up!

Doctors and dentists have their offices configured in such a way that you cannot leave without paying.

Agents need to have a healthy wallet when you extrapolate the time, advertising and other related listing costs.

We definitely take on a lot of risk and I don't think people consider that.

I know it's not the point of your post, but it would be a much healthier world if health-care practictioners were paid on successul cures.

Health-care is about the only profession that makes more money for not fixing something.

Almost everyone else gets paid up front -- we work and work and spend money and hope it sells so we can get a paycheck.

Loreena...Could not agree with you more. Perfect case....I'm currently working with a developer on a small townhome project (Was 6, but has been reduced to 4) We have now been working with him for a year, YES, ONE YEAR and we have yet to break ground! We been to numerous meetings with the architect, who you can bet has been paid all along, given our market advise about design ideas, finishes, etc. And we've made HOW much money? ZIP. ZERO. NOTHING. If the developer tanks the project tomorrow, I got nothin! Lesson learned, next time, there WILL be a Marketing Development and Consultant Fee with any project I do.

I read somewhere that this is one part of the real estate equation that needs to, or may change. You work on a closing, and everyone get's paid, except us....we literally are handed the LAST checks! Even the mortgage company collected at least an application fee. Not much, but something.

Will it change? It will be tough, but unless it gets started, it will never get started.

DEC

Your correct that their is many expenses that add up and consider in real estate, great food for thought here.

Thanks,

Tom Davis

This is the exact reason why it is important to explain to our clients how are business works when we 1st meet them. If they understand loyalty can be slightly easier to achieve.

Loreena, what are your thoughts about the fee amount and the fee arrangement?

For instance, if Realtors charged by the hour and had to report the hours they work for a client (like lawyers and accountants and computer consultants), do you think that process would be a benefit or a detriment for the Realtors? We call know Realtors that put in lots of hours for clients and many that put in very few hours but still collect big checks for the successes.

Of course, this has been a raging discussion for years about commissions, commission fees and contingency within the industry and I can make a good case for each side of the argument.

So I wonder if a vet or electrician only charged a success fee would they (1) be more motivated to solve tough problems and (2) would the success fee be greater than the fee they charge now (to cover the loss of fees for the unsuccessful "deals" like Realtors face).

Just wondering. Thanks! G

Thanks for all your comments and support.

Marchel - I agree with you. The more I think about it, the more I dont know who else would charge like we do. Like you, I think it's okay. Hence, our ability to see success becomes even more important. Otherwise, we would have wasted our time, money and efforts.

Leolinda - Isn't that scary - that they make you walk certain paths of their offices without leaving the door. They have made paying an art.

Steven - With better education, I think it's the consumers will know better.

Mike - Some illnesses are in-curable and if so, there would be no success there, unless you consider making the patient as comfortable in his last few days as comfortable as possible as a success. And if we did that, how would we measure that? Especially if the patient was in a coma? I think all doctors are set out to give their best shot at healing. Some do it more effectively than others. However, if payments are collected only at successes, I think it wouldn't be fair. The same argument to our industry. But what I wouldn't be able to stand are those agents who are set out to stick a sign in the yard and play the disappearing act. No communication, no word on statuses. When expirations come close, then they make that call again. I think paying those are not good. Like Marchel, I dont think we can change the industry yet.

Not many professions work on the principle that you get paid AFTER all your work is done.....

A LOT of professions ask for a down payment BEFORE THEY start work...... and the balance AFTER the job is done....

The real estate field would be a VERY different world if that happened.....

The whole ballgame would be changed.....

Its a tough business. You can work hard and be very dedicated... but if the transaction does not happen... no check. I could not imagine the amount of gas you would go through to drive someone around, and at $3.50 a gallon.

DEC

It ain't over till it's over. Some agents believe it is over when the contract is accepted. I say that is when the fun begins :)

DEC

Great clarification of how it all works. I also loved reading your Agents Insights Into a Checkbook Register. I am skeptical that it will ever change...

You are right, we do not get paid until the buyers closed on their property. In New York city, a standard transaction time frame is minimum 90 days to get through the co-op or condominium board, and bank clearance. If buyers buy into a Pre/New construction, it can be 2 years or longer before the agent can see that pay check... Not to mention in this market that the new construction may or may NOT close... If buyers buy into a Co-Op, sometimes the buyer gets rejected from the Co-Op board, and agents do not get pay either...

Agents other states are always amazed how long it takes a transaction to close in New York city.

It is the nature of our business, which is all good. I think knowing this also helps us prioritize our time and be selective with whom we work with and be able to walk away from a listing that may be too overpriced. I have read some other agents contemplating a smaller fee for selling a house if they received something up-front. I would prefer the larger reward and continue to do it how it has been done in the past. I think most consumers recognize the time that realtors put in and sometimes it can all be for naught, but then that is when relationships can be built as well ! Is all good : )

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