Should Realtors and loan officers stop working for free? There are very few people who work for free and even fewer who do so who don't intend to. Realtors and loan officers are in that small group - and are probably the majority of that small group - when they work with people whose deals don't close. The strategy of making all of our money when a deal closed wasn't so bad when the real estate and lending markets were well-oiled machines and many people could qualify for a loan just a few (long) years ago.
The climate has changed and the deals are much smaller on average and much more work is involved navigating the short-sale waters or trying to get people qualified in a much tougher lending environment. Both Realtors and loan officers face challenges today that were practically non-existent back in the hay-day. The major hurdle to changing when and how we are paid is that we have worked for free for so long that the public expects it. Mechanics, doctors, and technicians all charge to diagnose problems and do preliminary work. Why don't Realtors and Loan Officers start breaking down their services into packages that the customer can pay for? If the customer had to pay for things along the way, they would have more skin in the game and be more committed.
What if Realtors charged $500 to show 10 homes to clients (or whatever worked)? What if they chargerd $50 (or $100 or whatever makes sense) for each offer they write? How about if a loan officer charged $250-$500 to take an application, pull the credit and review the income and asset documentation? I'm not saying we should make all of our money up front, but I do think that we should consider alternatives to how we do things now. Working for free does not make good business sense and collecting fair fees as we go through the process could be a way to pay a few bills while we wait for the big check or have money to invest in marketing to generate more leads.
Please feel free to share your thoughts with me - what do you think? Should Realtors and loan officers stop working for free? In the meantime, I still do lots of work for free. I provide fully underwritten approvals BEFORE the buyer has a property under contract. That's a lot of work for nothing if the buyer decides not to buy a home or can't get approved in the end because of job changes or other things the buyer does that adversely affects his or her situation during the process - this is one reason why I think we should change how we do things.