| Real Estate Information, The Process and How REALTORS® Do Business . By Lisa Hill, "THE SMART CHOICE!" |
As a REALTOR®, it's easy to forget that the public doesn't always know how we get paid and/or how the real estate business works. They don't see what happens behind the curtain. So I'm pulling back the curtain. I believe the consumer might enjoy learning about the hidden part of the real estate transaction, and at times, just how much can be hanging by a thread. Hopefully, you'll enjoy learning about the process behind the process. To keep this as simple as possible, I'll start by stating that REALTORS® are not employees. We're Independent Contractors. We don't get a W-2, with our taxes partially paid by an employer. We get a 1099 and are responsible for ALL of our own taxes and expenses. Think of every REALTOR® as an individual small business owner. Therefore, we have to itemize our taxes, and write off whatever is eligible for claim as a business expense. But those small tax breaks don't add up to much when each and every expense is our own to pay! Now for some specifics... REALTORS® work strictly on a commission basis. We do not get paid until we actually close on a property. And out of each commission, we have to pay for...
- All gas and vehicle mileage incurred by that transaction
- Any "extras" we may have donated to help facilitate the transaction
- The cost of postcards or paper, ink, envelopes, and postage that was needed to promote a listing, or send notification of a sale
- Paper, ink, color copier, (or we can pay someone else for this service) and yard boxes for flyers, if we've provided this service for a real estate seller
- Costs of all advertising for the duration of a listing, which in our current market, could take 2 years. (That's how much inventory we have in our MLS)
- Lockbox, if the brokerage doesn't pay for it, or a different kind of lockbox, as is sometimes needed
- Name riders or personalized signs, if for a listing
- MANY hours of our time
In addition to the costs incurred for an individual sale, there are the things that are needed just to keep our business running smoothly and professionally (some of these are only what I personally consider necessary)...
- REALTORS'® Personal Web Site
- Multiple Blogs
- Errors and Omissions Insurance
- Computers: Desktop and Laptop
- Portable Hard Drive/Memory Stick/Jump Drive
- Cell/Smart Phone with Contact Manager, plenty of minutes, text messaging, and internet capability, so we can provide full-service for our clients
- High Speed Internet Connection
- Additional Phone Lines for fax or DSL
- Cable Modem if DSL is not used
- High Quality Camera for taking quality listing photos, or to take extra photos for buyers and insurance companies
- Video Camera for filming listings
- Photo Editing Software
- Video Editing Software
- Word Processing Software
- Contact Management Software
- Power Point Software for miscellaneous presentations
- Personal Printer/Scanner/Copier/Fax
- Personal Brochure, Business Cards, and other miscellaneous handouts
- Extra Vehicle Insurance, since we use our vehicles for business
- More Gas and Vehicle usage, as we travel to each appointment, even if we don't get the business!
- Personalized Open House signs
- Office Supplies
- (We have to replace these items on our own, as they break or become outdated)
- And let's not forget, a true real estate professional is going to be knowledgeable of any recent changes in real estate laws, and is proficient in the Social Networking of Web 2.0
In addition to all this, REALTORS® pay to be members of their local REALTOR® Association, and for access to the Multiple Listing Service (MLS). Then they have to pay for ALL their own taxes, which are higher due to non-employee status. We also pay for our own health insurance and medical costs. And there are always additional marketing materials that are needed, to keep new business coming in. Let's also not forget that with everything I've listed, there are many, many, many hours of work that is done... all without knowing if the work we're currently doing is going to lead to an eventual sale. And some clients may take years before they buy. I recently sold a house to someone I've been working with for 3 years. In order to bring these types of clients to a successful closing, we have to maintain contact with them, and meet their needs for the entire time, until they buy.
With all that being said, I'll finish this post by stating what I thought would be obvious, but apparently is not. And I'll preface 
this by saying, the next section is not meant to be rude or offensive. It's just the reality of the situation. So here it is... When a REALTOR® works with a real estate buyer, the REALTOR® expects that buyer to be loyal, and not call other real estate agents. Many times, a buyer can unintentionally, with one phone call, or by stopping by one open house, land in the cross-hairs of another agent who is not ethical enough to ask if that buyer is working with another REALTOR®, and end up negating all of the costs, and hours, and dedication they've been given by the REALTOR® who has been working diligently to help them find that perfect home. Actually, when this happens, their former REALTOR® ends up with less than zero... it's worse than ending up with nothing. It's a deficit of the worst kind. That loss of time, income, and expenses paid, not only amounts to bad business, it also means that all this was taken away from our families who depend on us. It's a loss of our time and expenses that could have been better spent on a client who is loyal. This is why many REALTORS® will require a real estate buyer to sign a buyer/broker real estate agreement.
To elaborate just a bit more, if a real estate buyer is going to call other agents, that buyer's agent is not going to be able to do their best work. If we (REALTORS'®) know our real estate buyer(s) are working only with us to find their next property, we'll go out of our way to find the perfect property; we'll set aside extra time for that buyer; we'll always have the needs of that particular buyer in the back of our minds, even when we're on a non-related appointment. Also, with the Multiple Listing System (MLS), all REALTORS® have access to each others' listings. The agent who is working for a loyal real estate buyer, can setup a customized MLS search for that buyer, and keep them apprised of new listings as they come on the market. It's about going the extra mile for that loyal buyer, and doing what is necessary to meet their needs. It's a win/win relationship.
One last note: With all this information, I didn't even touch on all the details of the individual real estate transactions. I guess that will be a future post.
If you'd like to buy or sell real estate in the Daytona Beach, Port Orange, Ormond Beach and encompassing areas, make a Smart Choice and contact Lisa Hill with Adams Cameron & Co., REALTORS® for all your real estate needs.
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