OK, I’ll just say it. Real estate agents are a dime a dozen. Many people believe agents aren’t even necessary in order for them to buy and sell real estate. We’ve all heard it. And I will also say, sadly, that there are also some agents who aren’t worth a fraction of what they get paid to deal with what is often peoples’ most valuable asset: their home.
It does seem like agents get paid a lot. If you take even the statewide median-priced home (in May that was roughly $466,000), a 5% sales commission equates to a little over $23,000. But don’t cash that check yet. Take the $23,000 and split it with the agent representing the other party in the transaction. Subtract the fees that an agent pays his or her brokerage (office), and that, depending on the company, could be anything from zero to 50% of the remaining amount.
Deduct roughly 30% in income and other taxes, the local, state and national professional fees and dues an agent pays, and then, the hard costs of transportation, supplies, advertising, etc. By my count, we are now down to a net commission of around $4000, depending on lots of factors. Even for an agent who closes an average of one escrow a month, and most do not, that’s about $48,000 annual take home pay. To be sure, in a higher priced market such as the Bay Area (median price in May was $769,000), all of those numbers will be higher, but so is the cost of living and the overall stress factor.
I’ll bet that many home-sellers squirm a little when they do the math to see what that “gross commission” is. And yet, I think one of the highest compliments I can ever receive is when a client says, “You were worth every penny of that.” It warms my heart.
But what did I do to deserve that praise, and that check? Let’s say I’m representing a seller on a particular transaction. Here are a few of the things that I did after my initial homework in preparing for, and securing, the listing with the sellers:
• I provided complete “punchlists” (lists of recommended upgrades and repairs) to the sellers to help them prepare the home for sale. In many cases I actually participated in those punchlists either directly or financially.
• I prepared and paid for all of the marketing materials, supervising the photography as well as arranging and overseeing all of the print and online marketing, so that my clients’ property is shown at its absolute best.
• I held open houses and broker tours. I attended showings to buyers, and followed up with other agents about the property. And then, when the offers began arriving, I helped my clients navigate through them, negotiating what was hopefully the fairest deal for everyone.
• I attended property inspections, followed up with the other agents, lenders, and the title company – often several times a day – negotiated contract adjustments, and saw the escrow through to its finality while ensuring my clients were well protected. That assumes we got the escrow closed because, if we didn’t, then I don’t get paid at all.
• Personally, I also make a donation in my clients’ names to local charities, and try to provide my clients with effective follow-up care after the escrow is closed. To me, those are important pieces of the puzzle.
When all is said and done, I want my clients to expect me to be there every step of the way for them. Yes, I want that check at the end of the transaction. But every bit as much, I want my clients to tell me that I’m worth it!
A Bay Area native, Mark Penn has been a REALTOR® with Coldwell Banker since 2004. He is also active in animal welfare, and is a former educator, facilitator, and air traffic controller. Mark can be reached at mark@MyHomeInSonoma.com.