Do real estate agents deserve big commissions ? - Posted by Steve R

import · February 20, 2002, 12:02am

Re: Do real estate agents deserve big comm? - Posted by JohnBoy

Posted by JohnBoy on February 20, 2002 at 01:02:22:

Since you seem to think agents are making to much money for what they do and that all these homes they sell are slam dunk deals…they why don’t you become one yourself and then come back here and tell us all about the big easy bucks you’re making?

If the listing agent procures the buyer then they get a 3% commission after their broker is paid their 3%

If another agent other than the listing agent procures the buyer then the commission is split 4 ways, between both agents and their brokers, leaving each with 1 1/2%.

Yeah, they’re all making the big bucks averaging $750 per hour in pay! Right!

Then they have to cover advertising costs, on going education, annual dues, auto expenses, etc.

Ever notice the ads from their offices where they show the sales of their top producers? Most of them are showing only 1 million in sales. That isn’t squat considering the prices of most homes these days! Then out of that you can bet most of that was sales where they only got 1 1/2% after everyone got their cut! So lets say they averaged 2% after all is said and done. On 1 million in sales that’s only $20k per year in GROSS PAY! Yeak, they’re making a killing!!! LOL

The few that produce $5 million in sales are making about $100k and you can bet they’re busting their buns to get that! Those making that or better are in the top 5% of all agents out there combined!

But if you think it’s all that easy and they’re making about $750 per hour then go for it! Heck, even after splitting that with their broker, $375 per hour is nothing to sneeze at!

Bottom line, if you want to work for tips, then become a real estate agent! But if want to go where the real money is, then scrap being an agent and become the investor!!!

import · February 19, 2002, 11:21pm

Re: Do real estate agents deserve big comm? - Posted by TJ

Posted by TJ on February 20, 2002 at 24:21:01:

I’ve been a commercial broker before. There’s practically no such thing as a slam dunk from where we sit. First, every deal comes with it’s own surprises and complications. There are a lot more nightmare escrows than easy ones. Second, when you’re the buyer you have no idea how much work goes into valuing the property, compiling information and effectively marketing it before the property gets under contract. You don’t see how much time the agent spends talking and FAXing to other buyers or agents, or showing the property without results. Not all properties sell quickly - or at all. All the work can be completely uncompensated. Lastly, there’s the endless parade of wannah-be Buyers. I was always getting e-mails, calls from people who were looking for property or "thinking about investing in real estate. You can do all kinds of research and looking and most of them never act when the time comes, or else they’re working with three other agents. I see a lot of posts that show contempt for agents because of their reluctance or ignorance concerning creative real estate. It’s true, most agents don’t understand CRE. But the other side of the coin is that agents can waste incredible amounts of time with “buyers” who have bad credit, no money, unrealistic expectations, or simply don’t follow through when you find them the deal they were looking for. Having been there, I can tell you most of the work a broker does not produce results: so how ironic it always seemed that when you performed your job spectacularly well by taking a particular listing and wading into your data-base to match it up with the perfect ready, willing and able buyer, one looking for just that type of property, then you secured just the right lender, and followed through with the due diligence and monitered the escrow to ensure that everything went as smoothly and successfully as possible for the parties, and closed the escrow in thirty days - you’re accused of getting paid too much because it was a “slam dunk.”

Even tough I still have a broker’s license I’ve always been primarily an invester. And when I buy or sell now there’s usually a broker involved at least to represent the other party, and I never begrudge them a commission because I know they’re working and hustling for it just like we do for our reward. My two cents anyway.

import · February 25, 2002, 10:43pm

Re: Fat Commissions, Starving Agents - Posted by youngsterz (UT)

Posted by youngsterz (UT) on February 25, 2002 at 23:43:17:

Frank/Evelyn:

Good posts. My two bits: I’m an investor first, and an agent second. I can’t fathom why a huge majority of agents have no interest in true real estate investing. I can only assume that they are like the normal percentage breakdown: 97% of the population are simply security minded sheep who will always work for someone else.

I don’t mean to sound critical, but even in the realtor world, a majority of people still just work for someone else (the broker). Just like working in any other office, factory, or other job.

Fortunately, I have found a brokerage that is 100% commissioned, so I pay $400/mo in broker fees, plus a flat fee of about $150 per transaction, and I keep all my commissions. Even then, I only hope to make $40K-$50K in annual commissions, because that is only my secondary job. First and foremost, I am a real estate investor, and I love having access to the MLS and other insider resources. It’s a great benefit to me personally in my investing.

And I love buying things for myself, and getting a commission to do it! I’m up to my eyeballs in a deal for a 17 unit apartment complex for app. $850K where I’ll get a bank loan for roughly half, and the seller will carry the balance. I’m trying to swing this as a nothing down deal, and still get a 3% buyer’s agent commission, to the tune of $25,000! How sweet would that be! Have my cake and eat it too!

Summary: I think it is worth it, but it wouldn’t be with a traditional brokerage, where I do all the work and the broker makes all the money. More and more brokerages are modifying their commission splits to a flat fee and 80/20 split, or some other such thing.

Final note: When I’m working as an agent, either doing listings on referral (two or three per year), or dealing with buyers, I definitely don’t make $750/hr! I work my butt off! Sure glad I don’t have to do that full time to make a living. . . . .

Final final note: There is opportunity everywhere. The hard part is keeping focused on a few specific things, and not running around chasing everything that comes down the pike.

Happy hunting!

import · February 23, 2002, 11:23pm

Re: Do real estate agents - Posted by Nate(DC)

Posted by Nate(DC) on February 24, 2002 at 24:23:53:

I posted something publicly in response to Sharonda’s message. Just look below.

NT

import · February 23, 2002, 11:22pm

Re: Do real estate agents - Posted by Nate(DC)

Posted by Nate(DC) on February 24, 2002 at 24:22:25:

Sharonda,

Rather than email you offline I think I will post and let everyone see.

I wouldn’t say I “balance” being an agent and an investor. I am an investor first. I have my license so that I have access to the MLS and can get commissions if buying properties off it. I have listed a few properties for friends/relatives and also list properties I have rehabbed when it’s time to sell them. But I do very little “traditional” agent business - i.e. carting around buyers and hustling for listings. I tried a bit of it and found that it’s not something I really want to do. So I don’t.

NT

import · February 20, 2002, 10:42am

Another point - Posted by Rob FL

Posted by Rob FL on February 20, 2002 at 11:42:59:

Most of the high producers. $5 million plus in sales have an assistant or 3 working for them to handle all the grunt work. These assistants are getting paid $8-12 per hour or so. Multiply one assistant $8 x 40 hours x 52 weeks = $16,640 annual salary getting paid per assistant.

import · February 20, 2002, 1:28am

Re: Do real estate agents deserve big comm? - Posted by Steve R.

Posted by Steve R. on February 20, 2002 at 02:28:23:

I contend that the agents are getting screwed, it’s the brokers that are making it. Now I might be biased because I am in a very good market. There are too many agents and not enough inventory in an area that increased in value 20% in 18-24 months with a turnover rate of 1 day this past summer.