Do We Deserve What We Earn?

Do we deserve what we earn? This question is in regards to full time REALTOR'S that do their best to excel in their field of expertise and have integrity when it comes to customer service. REALTOR'S and licensed real estate agents are NOT created equally. REALTOR'S adhere to a strict Code of Ethics set forth by the National Association of REALTOR'S, there are many other differences, however, that topic will have to wait for another blog post.

Below you will find a scenario with a basic commission split. After reviewing the scenario and commission split and based on your personal experiences with a REALTOR or licensed real estate agent, please comment on the question "Do we deserve what we earn?".

Scenario- A property listed with ABC Realty sold for $150,000. This property was sold by XYZ Realty. The Exclusive Listing Agreement stated that the total commission would be 6% (this percentage is not set and is negotiable, it is being used for example purposes only). The Exclusive Listing Agreement also states that should another real estate company procure a ready, willing, and able buyer the total commission would then be split between the listing real estate company (ABC Realty) and the selling real estate company (XYZ Realty). In this scenario we will split the total commission equally between the two companies...3% to ABC Realty and 3% to XYZ Realty.

$150,000. Sales Price
x 6% Total Commission
__________________
$9,000. Total Commission (in dollars)

$9,000 Total Commission (in dollars)
x 50% Commission split between the real estate companies
___________________________________________
$4,500 of Total Commission to ABC Realty
$4,500 of Total Commission to XYZ Realty

After the commission is split between the real estate companies the commission continues to be split between each real estate company and the agent involved in the transaction. Each real estate company and agent have different agreements with one another. In our example we will split the commission equally between the real estate company and the agent involved in the transaction.

$4,500. Total Commission to ABC Realty
x 50% Split between real estate company and agent
______________________________________
$2,250. To the real estate company
$2,250. To the real estate agent involved with the transaction

(in our example XYZ Realty has the same commission split with it's agent as ABC Realty does, therefore the above commission breakdown between company and agent would be identical.)

Now that we have an actual dollar amount of $2,250. the agent must subtract a portion of that commission for state and federal taxes, vehicle payments, vehicle insurance, health insurance, errors and omissions insurance, vehicle maintenance, phone and Internet service, MLS board dues, advertising, and gas just to name a few...now the agents time can be taken into consideration...the time it takes to show the property (usually multiple times), writing up the contract, handling negotiations, making phone calls to and taking calls from lenders, attorneys, home inspectors, pest control vendors, appraisers, and surveyors. These are just some of the items that must be deducted from the commission.

In the above scenario I did not break down the company dollar as this post is geared to get your comments, based on your personal experience, of the real estate professional that you dealt with. Please take just a moment and comment yes, you do agree or no, you do not agree...you can make your comment as long or as short as you'd like. We really appreciate your feedback good or bad helps us to better serve our customers.

Thank you,