Is being a licensed real estate professional easy? Do they all make a bundle of money for little work? What can they do for you that you don’t already know? It’s easy, right? It’s just selling or buying a house; how hard can that be?
Here are just a few reasons why realtors bring value to any transaction and what they can do to make your transaction a smooth one. First and foremost, a realtor is a licensed, educated professional who has gone through schooling and testing in order to carry the designation realtor. They belong to an association that is governed by laws and ethics and they must abide by those ethics. A realtor must attend continuing education classes every year in order to stay licensed. These classes are taught by certified instructors that bring the latest in contract changes, new rules and regulations and general knowledge to the real estate community.
A realtor is likely an objective, third party to the transaction. Many times, they are able to add clarity simply by addressing the needs of their clients and focusing on just what is important to making the transaction successful. Realtors are bound by a Code of Ethics that is in effect to protect the public, and have a fiduciary responsibility to the clients that they serve. By sheer quantity of transactions, a realtor is better equipped to assist with a home purchase or sale than a non-licensed individual attempting to sell or purchase their own personal home.
When a realtor works with clients over a period of time, he/she tends to get to know them pretty well. More often than not, a true connection is formed – a bond, sometimes even a friendship. A home sale or purchase is a large transaction, likely the biggest you’ll ever make in your life. Having a trusted person facilitating that transaction is a necessary thing.
How do realtors earn their commission? Real estate is a profession where realtors incur a large portion of their expense up front and a commission isn’t earned until a transaction closes. There are huge expenses associated with being in real estate that the general public may not be aware of. Just to be associated with a real estate office/brokerage, a realtor must have attended school, passed exams, both at the school and state level, and been interviewed and accepted into a brokerage. The realtor must at that point build his/her business.
Other expenses associated with being an independent contractor are dues paid to a national, state and local board, continuing education, licensing fees, advertising for showcasing the listings and sellers they represent, fuel costs for showing the buyers around, phones, meal expenses, etc. The list goes on and on.
Another huge factor that is often overlooked is the fact that all commissions are always paid to the brokerage. The realtor and the brokerage have an agreement, called the Independent Contractor Agreement, that states at what “split” the realtor will be paid. Brokerages have overhead as well that they need to pay, so many times a brokerage won’t earn money until the realtor is earning money. Once that gross commission comes in and the brokerage pays the realtor and then all other expenses are deducted, Realtors don’t often make the big bucks that many think they do.
It’s a great business. It’s a great profession. Working with people and assisting with such an amazing purchase can have beautiful rewards. Realtors bring an incredible value to the business and work very, very hard for the people that they serve. FBN
By Dylan Kennedy