Oh. My. Gosh. How crass can she possibly be?

I know, right?

I hate doing it, but I think that a lot people are confused about how real estate agents get paid.

We are, by and large, independent contractors, associated with our brokerages. We are not “employed” by the brokerage. I am not a RE/MAX employee. I’m not even a RE/MAX Select (the franchise) employee. I’m an IC.

I Do Not have a salary or hourly pay.

We get paid on commission. That means that only when a house is SOLD, papers signed, keys turned over, deed recorded – only then, do we get paid.

Here in Oregon, the real estate fee is usually paid by the seller. For example, the agent and seller agree that the agent will receive 6% of the sales price as compensation. Normally, the selling agent shares half of the 6% with the buyer’s agent, called the BAC (Buyer’s Agent Commission).

Consider the following hypothetical:

www.rebac.net/Teach/CIPS/Business/CIPS_BUSRE_Chapt… Page 66.

Breaking it down a little further:

Assume a $1 fee is charged to list/sell a home:

50 cents (half) might go to the agency selling the home leaving 50 cents for the listing company;

Take off franchise fees (if any they vary so take 6%) of 3 cents leaving 47;

Assume the agent is on a 75/25 split with their Broker that would leave the agent with 35 cents.

That $0.35 is essentially the agents “gross” income out of the $1.

Pay IRS estimated 25% leaving $0.26; (will be different based on itemized expenses);

Pay self-employment tax since you have to pay both sides of social security contributions of 15% leaving $0.22 to start paying expenses with!

“Idaho Broker”, http://www.city-data.com/forum/real-estate-profess…

A very non-exhaustive list of what I do to earn my commission includes:


What Does a REALTOR® Do To Earn Their Commission?, by Andrew Fortune http://lightersideofrealestate.com/community/cafe/…

Before I get to take my check (that my broker writes, minus all of my office fees) home, I have to write a bunch of business checks, first, because practicing real estate and helping people find the perfect home is really expensive.

What Does a REALTOR® Do To Earn Their Commission?, by Andrew Fortune http://lightersideofrealestate.com/community/cafe/…

All that time researching prospective homes, advertising your house to sell, gasoline, driving you around to see houses, our professional fees like the lockbox key, personal advertising, assistant payroll fees, access to the forms program, the forms signature program, and the time and expertise for all of those emails, phone calls, questions answered and solution mining, contract forms written, etc. comes out of our own pockets until you actually buy or sell a house and that’s after our commission split, mothership fees, office fees, insurance, and transaction fees are deducted.

The point: we get our feelings a little bent when we work hard with a client, showing houses, giving real estate 101 lessons, providing moral support, staying in contstant communication with both client and lender, and building a clear idea of what the buyer is seeking, and then they decide to work with someone else to write their contract. Does it happen? To everyone? Heck yes. It’s just a part of doing business for us, but, please, be kind because we are giving you our time and energy for free and the hope that your sale closes.

By the way, here’s the Law:

Commission and fees are always negotiable.

We cannot and do not discuss the commission we charge our clients with other agents due to the Sherman Anti-Trust Act.

Only licensees may receive commissions or referral fees.

REMEMBER: I don’t get paid until your house closes.

References:

“How much do Real Estate Agents really make?” Andrew Edwards, June 20, 2015 http://tieronerents.com/how-much-do-real-estate-ag…

CALCULATING COMMISSIONS BASED UPON “NET SALE PRICE” Michigan Realtors® December 2009 http://www.mirealtors.com/Portals/0/Documents/Calc…

“Eight Ways to Justify Your Commission”, Michael Soon Lee, RISMedia, Dec 29, 2007 rismedia.com/2007-09-19/eight-ways-to-justify-your-commission-2/

“How Do Real Estate Agents Get Paid?” by Tom Davidson, September 28, 2015 https://www.realestateexpress.com/blog/index.php/h…

www.rebac.net/Teach/CIPS/Business/CIPS_BUSRE_Chapt… Page 66.

“Idaho Broker”, http://www.city-data.com/forum/real-estate-profess…

What Does a REALTOR® Do To Earn Their Commission?, by Andrew Fortune http://lightersideofrealestate.com/community/cafe/…