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Why Do Real Estate Agents Make X% When They Only Put Up A For Sale Sign?

By
Real Estate Agent with Calling Boise Home AB45481

For sale signWhy Do Real Estate Agents Make X% When They Only Put Up A For Sale Sign?

I am using x% because commissions are negotiatble and it depends on the area and the type of property that you are selling.

This last week I was again reminded of just how some people think.  Someone wrote a letter to a relative of mine trying to persuade my relative to sell their house to them.  In the letter they said that the real estate agent told my relative the house was worth "X".  But they said it wasn't worth "X" because the agent didn't use the right comparable properties, the carpets needed to be replaced, they didn't like the cabinets, they would have to change out the tile floor, etc.  And then the bomb....and plus the real estate agent is going to be charging you x% for putting a sign in the yard so just sell the house to us!

Of course by this time my blood was boiling.  I said to my relative, "Ok.....I really want to buy the car you have for sale for $10,000 but I don't like the tires, I'm going to have to buy new ones so let's deduct $800 from the price. And, I don't really like the seat color so I am going to need to buy some seat covers, so lets take another $100 off the price of the car.  And, if you have to advertise in the paper that will cost you about $100 so we can deduct that too.  That is what the people are saying to you about the house you have for sale!  It's a house not a car and I don't care what you like or don't like!"

So, what do I do when I put your house on the market:

I spend a couple of hours preparing the paperwork and the CMA for our initial consultation. After I meet with you to present my information and have the listing agreement signed, here is a brief rundown of the activities that are involved with your home being sold:

Take photos of the property
Edit, crop and input the photos into the MLS
Input the listing into the MLS
Install the lock box 
Order the sign to be put up
Create 800# recording for the home (call capture system)
Create the virtual tour
Advertise on Executive Properties website, craigslist, Realtor.com, ActiveRain, Trulia, Oodle, Backpage, etc.
Create flyers
Install flyer box at sign
Attend meetings with local agents and take an agent tour of the property
Hold open houses
Call agents that have showed the home for feedback
Update seller weekly 
Receive offer and present to the seller for negotiation

Once the offer is accepted and we are in contract here are some of the things that I will do:

Open Escrow
Order the Natural Hazard Report
Order the pest inspection
Order the home warranty
Check on the status of the appraisal
Check on the status of the home inspection

Prepare the disclosures for the buyers agent and buyer (below are a few of the important ones):

  • Transfer Disclosure Statement
  • Statewide Buyer and Seller Advisory
  • Mold Disclosure
  • Supplemental Statutory Disclosure
  • 13 Seer Disclosure and Letter
  • Supplemental Tax Disclosure
  • Inspection Waivers
  • Lead Based Paint Disclosure
  • Market Conditions Advisory
  • Earthquake Hazards Disclosure
  • Smoke Detector/Water Heater Disclosure
  • Agency Disclosure
(Did you know that there were so many items needed to complete your file and to protect you?  Missing one item could be very detrimental to a seller if they were to be sued by a buyer.)

Work with the buyers agent to get the disclosures back
Work with the appraiser, lender, title company to assure the transaction closes on time
Accompany seller to the title company to sign paperwork

WHAT?  THERE'S MORE??

I didn't even mention what is involved with a short sale!  If a short sale situation then the fun begins! I will gather paperwork from the seller, compile the documents to fax to the bank.  I then hand write your loan number on the top of each of the approximately 90-100 pages and fax to the bank. Wait 30 minutes for the confirmation only to find out it didn't go through, the receivers fax was busy. Repeat 4-5 times until successful.  Call the bank two days later and wait on hold approximately 1 hour to confirm the fax was received.  AND, yep, you guessed it, they never received my fax! It must have gotten lost somewhere in cyberspace so repeat the entire process again.

Call the bank at least once a week, waiting on hold sometimes as long as two hours for updates until bank issues approval letter.

There's more!  I may not be finished just yet...I must repeat all the above steps if there is a second lien-holder involved. 

When I close a file, it is usually 3-4 inches thick!  I also have hundreds of emails and have spent hours on the phone with all the different parties involved.

Now...this brings us to the x% commission that agents make! Well, did you know that the x%, that goes to the buyers agent, their broker, the sellers agent and their broker.  Yes, four different people split my x%.   I almost forgot to mention the best part!  That I work on a contingency basis.  What's that you ask?  Well that means I do all of the above and hope I get a paycheck in the end.  How would you like to go to work everyday, pay for everything upfront out of your pocket, do your job well, hope and pray everyone else involved does their part, and then hope your boss pays you?  That's what it's like for real estate agents.  

So please, don't ever ask me why I make x% by only putting up a for sale sign in the yard!

 

 

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Comments (82)

Ross Therrien
Prudential Verani Realty, Londonderry,New Hampshire - Londonderry, NH
Realtor, Broker Associate

I love it at closing they look at you doing nothing while they're signing away and they say" Gee, don't you have anything to do?????"  Noooooooooo, my job today is done.

Feb 21, 2010 10:10 AM
Ted Tyndall
Davidson Realty Inc. - Saint Augustine, FL
I will help You find the Home YOU want to Buy

Debbie

good post. It is amazing how many people think all we do is put the sign out fron and wait. Some agents do. But the ones that produce don't.

Feb 21, 2010 10:41 AM
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

The blog post is great, and so are the comments. But the comments that warn about discussing the actual % commissions that people make should be taken very seriously. The commission rates should not be a part of the discussion except in very generic terms, because God forbid, any seller or potential seller reading this would not only know some of the many things that we do, or the things we know (as Lenn and Bryant so eloquently pointed out), they may also have the mistaken impression that commissions are set at a certain rate in the areas where people mentioned specifically what commisions they charge. As Joe and Erica have alluded to in their comments, mentioning commission percentages specifically can be very problematic.

Feb 21, 2010 10:54 AM
Jean Hanley
Coldwell Banker Kivett Teeters - Hemet, CA
Specializing in Folks Who Want To Buy/Sell Homes

Wow, what a great list.  It sure looks good on paper.  However, I agree with Lenn and many others, we get paid for what we know and shouldn't have to defend our efforts.

Feb 21, 2010 11:24 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

I can see why your blood was boiling.  I guess these buyers don't know how difficult it is to get homes to the closing table these days.

Feb 21, 2010 11:40 AM
Maria Marriott
Executive Properties - Roseville, CA
Realtor - DBRealEstateTeam.com

That's why I tell my buyers you're the best and will keep referring them to you Debs! You Rock!!!! You give all of them the same dedication and attention you give your sellers. And I don't need to tell you the results...we keep getting referrals...She's an awesome business partner!

Feb 21, 2010 01:46 PM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

BB's comment is brilliant.  Couldn't help thinking as I read through the list of services performed that the only one that matters is commanding the best price and terms possible for the seller.  The rest, though a nice way to justify fees or make the seller feel better about paying them, is extraneous.  I get paid for a result, the rest are simply errands that attend securing that result and are of no consequence to the client's decision to hire and pay me. 

Not even touching the discussion of what that fee actually is.  Solid post, but you'd do well to edit out the stated percentage.  Can't be too careful about such things.

Feb 21, 2010 02:08 PM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Well said. I bet you have thought of even more things you can add to the list.

Feb 21, 2010 02:12 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

We get paid for getting the job done.  What needs to be done depends upon the situation of the seller.

Feb 21, 2010 02:46 PM
Raj Dhaliwal
Century 21 Coastal Realty Ltd. - Abbotsford, BC
Personal Real Estate Corporation

Reply#24 - Lenn, I agree 100%

Reply#11 - How do you get in trouble in your area? I my area the trouble comes from Competition Bureau

Feb 21, 2010 05:39 PM
Jeff Colby
OmniQuest Media Labs - Obeo Distributor - Omaha, NE
President/CEO

Great post. Very informative. I had to re-blog. Thanks again!

Feb 21, 2010 09:22 PM
Glenn Roberts
Retired - Seattle, WA

Great statement of the facts of what we do and how we're paid. Caught it on the Colby reblog.

Feb 21, 2010 09:33 PM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Debbie,

I know that 6% seems a lot, but really there's a lot of work. Also, as you very carefully point out, there's a big difference in service.

Brian

Feb 21, 2010 11:27 PM
Craig Rutman
Helping people in transition - Cary, NC
Raleigh, Cary, Apex area Realtor

If the public only knew how much time and effort is put into listing a home they'd pay us 10%!!!

Feb 21, 2010 11:34 PM
Lori Mode
The Mode Real Estate Group - Elk Grove, CA
Real Estate Made Simple

Debbie - great post.  We sometimes have to educate our sellers and buyers to what we actually do and you have done a great job of it!  Way to go!

Feb 22, 2010 01:37 AM
Don Wixom
RE/MAX Executives Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

ok, that just makes me mad!  How about comparing whatever product or service is offered through their place of work..   Actually, after you reminded me of all the hard work we do, I'm pretty ticked at only 6%!

Feb 22, 2010 02:24 PM
Jody Lautenbach
Century 21 Premier Associates - Pella, IA

I have a list of all the items that I do for the clients - it's about 4 pages long. That makes them think twice about my commission and what they get for their money.

Feb 25, 2010 03:26 AM
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

Hey Jody, we'd love to see your list, care to share it? :-D

Feb 25, 2010 04:30 AM
Debbie Baldes
Calling Boise Home - Boise, ID
ABR, SFR, e-PRO, CHS

Hey Jody...I would love to see it too!

Thanks again to all the comments.  There has been a little bit of talk about stating a commission being against compliace rules.  The only reason I had 6% originally was because that is what the letter of the family letter stated.  It wasn't that I charge that, I was just making reference to a statement.  As to not be out of compliance I have changed the post and made no reference to commisions!

Feb 26, 2010 04:49 AM
John Taylor
Coldwell Banker Sun Ridge Real Estate - Lincoln, CA
Connecting buyers and sellers

Well put Debbie!  And often we work around the clock doing this.

Apr 13, 2010 08:23 PM