There are a number of misconceptions about those who work in the real estate industry.
One of them, is that we all make a lot of money. If you turn on HGTV or the DIY Network you’ll see constant examples of folks making money as realtors, flippers, and contractors. Those “made for entertainment” shows do not accurately depict what is reality for most folks who work as real estate agents.
The truth is, that its a very hard business to make it in. There are so many people drawn to it because of the flexibility, tax advantages, and the allure of being your own boss. This results in a lot of mediocre agents all competing for the same business.
The competition aspect of this business drives a lot of newer agents to drop their prices to win business. I will admit, we’ve had to do this in the past to get our business going. However, once you’ve reached a certain level in this business you start to make certain realizations.
People who want a discount on everything tend to be the most difficult clients to work with
People who only shop on price, tend to not stay with you for long, and leave for another cheaper alternative
Since most people work for a company and are paid on a W2 basis, I like to give an analogy that puts it into perspective how real estate agents are often treated by prospective clients.
Let’s say you are asking for a listing commission of 6% to your clients, and they counter and say 4%. Putting aside for the moment that you split this commission with another agent…
Assuming that this person make $60,000 a year at their job, it would be the equivalent of you asking them to take only $40,000 this year. On top of that, they don’t get the $40,000 until they’ve spent their time and money to do their jobs successfully to completion before they get paid.
If your employer came into your office and asked you to take 1/3 less knowing that you may not make a penny, would you accept that kind of risk ?
The vast majority of real estate agents have no salary, 401k, or other benefits. Next time you negotiate with your real estate agent, try to also see it from their perspective as well..