Wednesday, June 23, 2010

What I Wish More People Knew About My Profession!

As a real estate professional I've experienced some consumers that have no idea what it's like to do my job. In truth utilizing a real estate agent is something most will do at least seven times in their life. Real estate is a pillar of the global economy as our current challenges prove and yet few people understand it.

A home purchase is usually one of the largest financial transactions made for a majority of Americans. Still because they do it infrequently most consumers don't have a clue about the complete process. Impressions of real estate agents are formed more by the media than reality. Most people simply don't interact with agents often enough to gain an informed opinion. Think about this, you see your physician and accountant at least once a year. You see a real estate agent once every seven years on average.

The most important thing real estate agents like me wish you knew about our job is how hard some of you make it on us. Highly rational,intelligent and educated people can seem to lose their minds when it comes to their homes. I've experienced business people whose day job is to look at costs, numbers and inventory that simply can't accept their homes are not worth what they think they should be. It's also amazing to me when people hire an expert, pay them well (6% of a sale)yet then ignore their professional advice!

Fundamentally customers don't pay for agents time. Real estate is one of the last true commission jobs left. Most agents have experienced spending three months and a hundred hours working for a client, showing them house after house, only to have them change their mind at the last minute or actually decide to buy somewhere else. The agent made exactly zero dollars from that work. What about lawyers, many work on contingency don't they? Yes and most lawyers also take 30% of the award verses 6%.

In Real Estate the professional agent owes a fiduciary duty to a client who isn't paying them. Liability, risk and a comparatively small reward are all elements of successful real estate transaction. Like a good investor, smart real estate agents practice portfolio management. Agents expect that 30% of their transactions will fall through and trust that the ones that don't will cover the costs of those that do. Now it's time for the real reason why your real estate commissions are perceived as high: Buyers and sellers who are honest and follow through are subsidizing all of those flaky ones who had a change of heart, couldn't qualify for a mortgage and had unrealistic expectations.

To be fair the industry needs to share some blame too. If agents didn't work for free when the economy was good and home prices always appreciated chances are the industry would have evolved in a different direction.

Yet for now can I ask the next time you're in the market to buy or sell a home and you're thinking about hiring a real estate professional, ask yourself just how serious you are? Try not to think too badly of real estate agents whom accept most of the downside risk yet spends 30% of their time working for nothing.

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