Understanding how real estate agents spend money marketing their services and listings helps you see that they work hard to earn people’s business
A career in real estate is one of the most rewarding careers one can have. Although there is a lot of flexibility in our schedule and we have control over our time, we also run our own business and are accountable and responsible for our success—and that means there is no direct-deposit paycheck every other Friday as most people enjoy in their workplace.
As real estate agents, we don’t just make sales happen. Whether we are representing a Buyer or a Seller, we are expected to do a lot of work, spend money out of our own pocket and do it without knowing whether a property will sell or when. If you are in the market for a home or are looking to sell your property, you owe it to yourself to understand how real estate agents work and what expenses are incurred in our profession:
- Agents Pay for Fees and Memberships - Real estate agents spend a lot of money before they even have a chance to become licensed, starting with state-required education, fingerprinting, background checks, and test fees. In fact, becoming a real estate agent may seem like a money pit for most people starting in the business because they have to shell out a whole lot of cash in brokerage initiation and monthly fees, annual Realtor board membership, and even renting a desk at a real estate agency.
- Agents Pay for their Marketing Materials - Any real estate agent who is serious and committed to his or her trade knows that image is everything in this industry. Head shots from a professional photographer can be costly and that is something that comes out of the agent’s own pocket. The same goes for business cards, brochures, websites, and just about any piece of digital or print media that needs to be customized to their name and brokerage.
- Agents Pay for Every Home Listed - Promoting a new listing requires Marketing, Advertising and Public Relations efforts. Most people think that an agent simply lists the home on the Multiple Listing Service (MLS) and waits for others to sell their home. The reality is that in the post-recession economy and real estate market, most agents are highly involved in the sale of their properties.
- Agents Pay for Open House Events - To do so, they will hold Open House events on weekends, Brokers’ Open events to get other agents to tour their home (who will in turn generate showings from their Buyers), and lots of flyers being printed along with spending money on branded Open House signs—knowing all to well that that code enforcement officers will probably remove 90 percent of the signs leading up to the neighborhood where it is being held. The best agents also get water bottles, cookies, and marketing materials for that specific Open House property.
- Agents Must Drive a Lot and that Costs Money - Every time a real estate agent goes out to show a home, drives to an Open House or tours a neighborhood to get to know other listings in the market, it all costs money out of their own pocket since no brokerage gives allowances nor covers that basic—and most needed—expense in the real estate profession.
After all of these costs (andy many more not covered here) are paid out of agents’ pocket, you should know that they only get paid at the closing. Now, think about this… On average, a closing may take anywhere from 5-6 weeks to several months after the selling or buying contract has been signed. Would you work for that long for no immediate or periodic compensation?
It should be noted that most real estate agents are independent contractors, with the exception of certain brokerages and developers who pay a salary coupled to a bonus or other kind of commission structure. That means that agents will work incessantly (most work 7 days a week) without any pay until the day of a property’s closing, when he or she receives a check that they must take to their brokerage as required by law and then wait until the check clears to receive their commission minus brokerage commission share and other fees. Agents may sometimes get paid for real estate projects, analysis or assessments but that is the exception, rather than the rule.
So the next time you work with a real estate agent, consider that he or she is working hard to ensure your needs are met. At the same time, do know that we all do it because we love the business, the industry and the neighborhood where we work. Hopefully this article helps you see that and you can gain more appreciation for a career that is very rewarding but requires a lot of work and patience until our payday arrives.