So, you think your local Realtor® is making piles and piles of money? Depending on the market and that broker's actual sphere of influence, he or she just might be doing just that. More than likely however, that agent and/or broker is making far less than you might suspect. The Real Estate business is a tough field in which to operate over the long haul, where the Darwinian notion of "survival of the fittest" is most definitely the name of the game. Unlike what many might believe, Real Estate for the vast majority of professionals is often a world of short periods of feast, followed by brutally long episodes of famine, with no mercy for the weak.
The vast majority of Real Estate professionals are not paid a salary and live purely on commissions generated by sales represented by that agent. This means that a Realtor is paid nothing until a transaction closes. For every day in, and every day out, for every phone call made, every fax or email sent, every hour of research spent compiling information, every mile driven with both real clients and those who just want to kick tires, your local agent is paid nothing until the deal has closed escrow.
Oh and by the way, once that transaction has closed, commissions generated are split up five ways from Sunday to boot. Yikes! That theoretical six percent commission generated by the sale of any given property is split typically between the both the buyer and seller's respective agencies and brokerages 50/50, THEN the broker only gets a percentage of that agency's 50% by in most cases, half again between the actual agent and his/her office. In other words, the six percent that was paid by a seller originally becomes typically only 1.5% paid to the agent procuring the sale in the end. All that work, all that time, all those endless late nights, for just a pinch of the proceeds at the end.
Now that your agent has gotten their money, there's still taxes to be held out, desk fees possibly due to his broker just for the privilege of doing business in that facility, advertising fees for all of his listings, fees paid to the National Association of Realtors, the Oregon Association of Realtors, fees paid for the little gizmo that opens up lock-boxes, gasoline, car insurance, health insurance, signage (For Sale or otherwise,) business cards, flyers, and on and on. In the end, that sliver of the commission pie is stretched beyond imagination, far beyond the imagination of that agent before they got into the business that is, for sure.
Although its true that a small percentage of Real Estate pros survive to a point in time where they're enjoying the fruits of a loyal following of customers who send them business regularly with their own deals in addition to the referrals of all their family and friends. That success came however, at the expense of years of hard fought struggle just getting by while worrying if the mortgage on their own house was going to get paid.
Real Estate is not for everyone. In Oregon especially, just getting a license requires months of intensive and expensive study, a difficult state and national exam process, constant continuing education requirements for renewal, and perhaps more than anything else, courage to even take the leap in the first place.
Real Estate is indeed not for everyone but, for many of us it is a career that is extremely rewarding. Realtors enjoy an opportunity to work with wonderful people, our associates and competitors, our buyers and sellers. Long and fast friendships are often developed along the way and we can enjoy a real sense of satisfaction when a transaction closes and the buyer's and seller's goals are both achieved in a win-win situation that, in the final analysis, isn't always about money.Fred Jaeger is a licensed Oregon Real Estate Broker and e-PRO Certified Realtor® associated with Gilchrist Real Estate Company in La Pine. He can be reached directly at 541 598-5449 or firstname.lastname@example.org .