Some will remember Paul Harvey who on his radio show would present a story and then add “the rest of the story” in the next segment. This old memory came forward when I read a reaction by a seller to the sale of the seller’s residential property. This seller was aghast when looking at the compensation to the listing agent compared to his subsequent thank you gift.
Background
Before Close of Escrow (COE) happens, the Escrow firm will issue what is called a Real Estate Settlement Statement. This document reflects all credits and debits specific to the real estate transaction. Beyond the sales price, one of the most noticeable debits is the compensation to the listing agent and possibly the buyer’s agent depending upon the actual purchase contract. All parties to the transaction receive this statement.
With reference to the compensation to the real estate agents, the listing agents do not receive the total compensation as noted in the debit column. This debit is assigned not to the listing agent but to the brokerage for the listing agent.
Again, depending upon the employment agreement, licensed real estate agents are independent contractors who work for real estate brokerages. Often there is a split of the compensation between the brokerage and the licensed agent. This split varies between real estate brokerages.
Real estate agents work for real estate brokerages.
The Rest of the Story: Time Costs
Listing agents have numerous “hidden” costs not seen by the sellers. The largest cost is probably time.
YES, TIME IS MONEY $$$ !
For example, from my experience, just listing vacant land into the MLS averages around 3-4 hours depending upon the location of the vacant land parcel as well as the number of photographs to be described. This time does not include visiting the parcel to take on the ground photos or determine best access to the parcel.
As each listing is unique the public remarks must reflect that listing. Directions are also different. My standard of practice is to compute the mileage from one point to another as GPS is often in error especially in rural areas.
Also, there is additional time in writing the listing agreement documents, any addenda as well as advisories for the seller or sellers to sign. By the way, I do not use AI because I have no desire to educate a machine.
Then there are the time costs in writing the purchase contract, updating the shared brokerage files as well as updating the agent's files. If inquiries come in for the MLS listing via email, text or calls more time is devoted to responding to these potential buyers. When offers are received, there may be additional negotiations often called counter offers. All real estate transactions require monitoring from the listing agent and the buyer's agent to ensure that the seller(s) and buyer(s) are fulfilling their contractual obligations.
The Rest of the Story Hard: Costs
Next are the hard direct costs. These direct costs may include professional interior and exterior photographs, staging for residential properties, drone photography, marketing to certain real estate websites beyond the IDX feed from the local MLS, frames for the “For Sale” signs, printing of the “For Sale” signs to even paying for termite or other inspections to help facilitate the sale. For example, to honor Veterans I pay for the termite inspection.
The Rest of the Story: Indirect Costs
Beyond the direct costs, as professional real estate agents are small business owners, agents have indirect costs. These include but are not limited to:
- Technology (computer, notebooks, printer, etc.)
- Software, apps that have a cost such as OnxHunt
- Office expenses such as paper, ink, stationery, pens, fuel, etc.
- Vehicle insurance
- Payment of state fees for the license renewal
- Professional education aka continuing education units (CEU) to maintain the state license
- Travel and lodging to attend CEU classes
- Fingerprinting
- Fees for brick and mortar office space
- Fees for processing paperwork for administrative assistants to transaction coordinators
- Fees for being part of a team
- For real estate agents who are also REALTORS® paying dues to the local, state and national associations.
Yes, home sellers as well as vacant land sellers may be wise to remember that each Real Estate Settlement Statement fails to tell the rest of the story.
P.S. Please consider checking out my Facebook business page, The Grit and Gratitude Agent that will focus on the Dirt Roads in Mohave County as well local real estate, lots of dirt or vacant land parcels as some of the local attractions.
#LetsGetBackToRealConversations #WeDoThingsDifferently #BuyerEducation #RealEstateGuidance #LandOfferPocess #ArizonaRealEstate #TheHelpfulAgent #GoldenValleyAZHomesAndLand #KingmanHomesAndLand
Leanne M Smith, The Grit and Gratitude Agent Who Goes the Extra Mile Because Life Begins Where the Pavement Ends.
Feature Photo Courtesy of Pixabay.com
Any reproduction of Leanne M Smith’s blog for use by any AI or GAI, distribution or reproduction including but not limited to electronic newsletters e.g. PDF’s Internet sites or physical products e.g. newspapers, CDs without prior written permission and consent by me, Leanne M. Smith (Leanne Hoagland-Smith) is strictly prohibited.
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