When you hire a real estate agent to sell your home, you will pay a commission to the agent once your home sells. If you're buying a home, the buyer's agent will earn a portion of that commission. Without commissions, your agent doesn't get paid. What if the pay structure changed and your agent started charging you by the hour, like a lawyer or an architect?
Let's say you're looking for a house to buy. The housing inventory is low and it takes 2 years to find a home to buy. Initially your agent racks up a lot of hours searching for available homes and showing your houses. Then, depending on how many new houses go up for sale, they show you homes once every 2-4 weeks. The hours really start to accumulate over the 2-year period.
Let's look at it from another angle. Imagine your lawyer getting paid a commission vs. an hourly rate (lawyer cringes). Say the average commission earned from the sale of a home is $7000 (split between the buyer's and seller's agent, the office broker, and other fees). Apply that to the work of a lawyer -- $7000 becomes 14 hours of work at $500/hr or 28 hours at $250/hour. That includes phone time, face-to-face time and research. I don't know about you, but I don't know any lawyer who could fully serve the needs of their client in 14-28 hours. Maybe the same is true for real estate agents.
As an example, here's a short list of some of the tasks your agent performs to help you sell your home (visit this blog for even more insights):
- Researching your home and comparable properties (CMA)
- Hiring an inspector
- Consulting with you
- Coordinating a stager and professional photographer
- Posting your home on the MLS
- Organizing and hosting open houses, then following up with each visitor
- Including your home in a broker's open house, then following up with each agent
- Marketing your home through social media
- Scheduling showings and following up w/ other agent who showed your home
If your real estate agent charged $250/hour, similar to a lawyer, you would be paying more than $1000 just for the duties listed above. Imagine what you'd pay for ALL the work your agent performs behind the scenes and face-to-face. As a seller, if your house was on the market for a long period of time, you'd be paying an astronomical amount of money to your agent if you paid them hourly.
Having been an assistant to one of the top agents in our area, I know the amount of work that goes into helping a client buy or sell a home. Behind the scenes there are hours of prep -- finding a variety of houses to show a client, researching and prepping a CMA for a client who's selling their home, marketing, networking with other agents, etc. Maybe your agent is making enough money through commission.... or maybe they should earn an hourly wage. What do you think? Your comments are important to us and greatly appreciated.