The mis-education of the buying public
Pardon us as we dust off the cobwebs, and begin again in earnest to revisit a subject that has been discussed over and over again for the past 30 years.
First: The public is innocent; we know that, and any fault lies at the feet of our industry. However as much as it pains many agents, we have been politely grinning and bearing customer and client errors for years. The fact that many agents have engaged former clients, friends and their sphere of influence (group organizations, etc.) in talking about real estate, and answering questions about the market, these same people, clients, etc., will never give that agent another thought as they blissfully call a phone number off of a sign to ask another agent questions about a listing. This begins the saga of leaving their agent behind (unknowingly) and engaging another broker to show a property.
If we could just educate people in the fact that their agent of choice, the one who started them on a quest, or the one who showed them property beforehand, or printed out pages from the MLS for them, is also the one to call whenever they are interested in other properties. All NAR licensed agents are eligible for a minimum referral fee from other brokers, and may also act in an advisory capacity for you.
The buying public may think that they do not want to bother their agent, but it is never a bother when someone shows loyalty and dedication to a professional. If you or someone you know wants to buy property, whether it’s a home, piece of land, or commercial property, your agent of choice may still assist you by referring the top agent in another jurisdiction to you (and receiving a referral fee in return), or help you in the showings and writing of an offer.
If our National Association of Realtors does not emphasize this enough, it’s not their fault; as it’s the local community of agents that needs to reinforce what we do for a living. Most agents derive their primary income from closings, and many others are supporting a family on their Realtor income. The majority of independently licensed agents do not make any money unless a closing occurs. They could spend a year showing someone property, and then the person turns around and buys with another broker. Why, it’s not unusual for the first agent to receive a happy phone call that the buyer found the perfect property, and thanks for all your help? What, found it with whom? Oh, another agent, as they did not want to bother you, and besides, it wasn’t in your immediate territory? Classic, but true.
Second: Never believe someone who says that if you call another agent into the equation, it may cost you more money. Not so. Sellers who list their property for sale are paying a flat fee, normally split 50/50 with other brokers, and there is no discount or incentive for the seller to sell for a reduced fee if only the listing broker is involved. The fee remains the same, as it is contractually obligated. All agents are tasked with asking new clients if they are currently working with another agent. Do not fear this question, as it is legal, ethical, and it is not a trap. Seriously, tell the agent that you have someone with whom you’ve been working with and that you would like to stay involved. If it is outside their jurisdiction, it still matters that you tell another agent about your Realtor, as they can still receive a referral. This may be as little as 10 percent of the final purchase price, or up to 25 percent in most cases, depending on how much they stay involved.
Also, Realtors are not paid at the final closing, (a percentage of the final sales price-money which is already specified in a listing agreement), but later, from their broker. Most people see the dollars on the HUD sheet and assume that their agent is making that money in their pocket. In actuality the money does not go to the Realtor (as many are surprised to hear this), as it is legally paid only to the brokerage house where the agent has their license. Then there is a split with the brokerage, the franchisee, desk fees, marketing fees, assistants, etc. (which could average 50 percent or more in fees) all deducted before the agent sees their money.
Thus, the agent needs a closing every month to make a decent living. If they are in commercial sales, many times the closing takes up to a year or more. The agent may receive more money in this field, but needs to make a living in between these closings. That is when commercial leasing comes in handy, as this type of transaction typically closes faster.
THIRD: Please do not take advantage of the real estate agent and enlist them on a free property tour because you want to do something new on your weekend. Agents have nice cars to transport the public in their vehicles, and pay extra for insurance to be allowed to do so. They also willingly take the public out after interviewing them, believing that there may be a possible sale. That is only fair. If you want a tour guide, and have no plans on buying, please remember this. Not saying that the public does this on a regular basis, but I’ve overheard others talk about it and laugh it off as they believe the agents are making wildly large incomes, and do not work hard enough, so why shouldn’t they take advantage of them? Say what? That same agent may have taken you around on their one day off, and have worked tirelessly to pull comps for you. They also would have studied what is available on the market and taken the time to map out a parade of homes that satisfied your requests. They also would have made phone calls in advance to many of the home listings to ensure that you could see the interiors, and also verified that they were still active listings, not under contract.
Agents also are required to take continuing education credits, and stay up to date on legislative issues. They pay errors and omission insurance, local and state dues, licensing fees, MLS fees, and have many more costs to stay in business. If the average agent is making $38,000/year, then remember that 50 percent of the agents are making less than that. The fees are the same for most everyone.
Fourth: Most importantly, Realtors are updating their skills, staying ahead of the learning curve for social media, Internet digital advertising, delving into complex issues in commercial and land development and zoning, and also making themselves available within 24 hours of every lead they receive. So try to remember that the public sees a professional photo with an ad, but many, many things go into that ad in order for that professional to get that far. Experience is tantamount, and some agents that handle the more involved listings, have worked hard and long to win this type of listing, so please try to listen to their advice, as it comes with years of experience. Would you want a dentist to treat your heart problem? Use the agent with the proper skill set for your unique property, and always go back to your agent of choice for advice. At the very least, they will refer you to the best agent in another area, and receive a well-deserved referral fee. That would be an excellent start.