I got off the phone this morning after talking to a new client. I was really willing to help him and even cut my commission way down to make the sale work for him. I am one of the few brokers who is client centric and do what I can to make the sale work for them and meet their needs. I think fear got the best of him. He had what many hourly workers have, a blind spot where 1099 independent commission only workers are concerned. Which made me think of the following;
Consumers think that Real estate agents make way too much money for what they perceive as the little work they do per hour on selling a property. After all they don’t work more than 20 or 40 hours on any one property to sell it, don’t they? Well, here is the reality that the consumer doesn’t see or think about.
Real Estate Dues $1000 to $2,000 per year
MLS Dues $800 a year and up
Errors and Omissions insurance $800 a year minimum
Broker dues 20% to 30% of gross agent’s income
Alternative minimum tax 14% of everything made.
Advertising to get the client 20% to 25% of gross income per year.
Federal and state income taxes, 30% to 40% of net income.
Time to prepare the average listing presentation 2 to 5 hours-before one meets a client.
Average hours worked to farm and be able to meet a client 100.
Average cost incurred just to be able to meet a client and present the listing presentation $1,000.
Average is a 50% chance of winning the listing presentation and getting the contract.
When you boil it all down the agent is lucky to keep 15% to 20% of what he or she has made each year.
Average income of the average real estate agent is $29,000 a year.
And each year the competition from more and more agents entering the field to make an ever-dwindling commission increases.
So when you take into account all of the unseen costs and expenses, do you really think that Realtors make too much money?
I am one of the few brokers/agents who is a true real estate advocate for all of my clients, but sometimes even I scratch my head. What do you do when a client basically wants you to list their property for below the break even point?
Can you cancel your listing and fire your agent during the listing period if you want to?
The answer to this question will shock you. There is actually no cancellation clause for the seller in the listing contract. There is a clause where the broker/agent can fire you as a client if they so wish, but none for the seller to fire their agent if they desire.
This means that if your sale isn’t going as you think it should or you dont really like the service your present agent is giving you, or not giving you as the case may be, or they are now coming to you every two week to lower the list price so you now suspect they lied to you about the sales price in order to get the listing so you want to cancel over unethical issues, they have no obligation to let you out of the contract until the expiration of the listing term. You can be stuck with a bad agent for the entire listing period!
So what is a seller to do? As a savvy seller the first thing you need to do before you list your property with a broker/agent is to make sure they have or will add an addendum to the listing contract which allows you to cancel the listing for any reason at all without penalty or fees to you. If they are not willing to do that, then you need to find another broker/agent.
I cannot tell you how many times many of my clients came to me after a disagreeable experience with their previous broker/agent and all of these less then optimal experiences could have been eliminated by having a cancellation clause.
This issue is why I always add an Easy Cancellation Guarantee Addendum to all of my listing contracts. In my 26 years of being in real estate I have yet to have a client use it, but it is there to give them peace of mind.
Note: the only time that you may not be able to cancel a listing is if you have accepted a contract from a buyer and your property is in escrow.
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