Should Realtors Be Paid for Their Time?

Should Realtors Be Paid for Their Time?

By Glenn Freezman, Nucazza, LLP

You know those TV shows that have the disclaimer at the front saying that the following may not be suitable for all audiences, etc.? Well perhaps today's blog posting should have such a disclaimer.

http://www.nucazza.comIt's not because I plan to do anything offensive for highly controversial. Instead it has to do a little back of the envelope calculating the help assess your value as a Realtor – and that may put you in a bad mood.

According to periodic reports from the National Association of Realtors, the average Realtor in the United States makes just over $40,000 a year. Now granted, these figures include "part-time" realtors as well as people who approach real estate more as a hobby than a job. At the end of the day, however, there are plenty of people who put in a really long hard year and don't walk away with a lot to show for it.

So, how much do you make?

Obviously, the answer is "it depends." Part of the ‘joy’ of being in real estate sales is that you never really know what your salary for the year is until around December 31. Let's factor in a few things we do know:

· The average Realtor in the United States makes just a little over $40,000 a year

· The average Realtor in the United States closes one out of every four home buying or selling agreements they take on

· The average Realtor takes on ALL the risk for a real estate sale even though they can rarely control the outcome

· The average Realtor in the United States works pretty damn hard

Of course we need to consider that the average Realtor is also paying a brokerage part of what they bring in for the support and services provided. Let's say it's an even 50-50 split. That means that in order to average $40,000 in take-home pay, a Realtor needs to close at least $80,000 worth of commission agreements per year. That averages out to about $6,500 a month.

Now let's say that a Realtor can structure home buying agreements so that the home buyers pay them directly for their services on an hourly fee and not based on a commission. To sweeten the deal further, the commission payment that was already ear marked for the Buyer’s Agent commission is given back to the homebuyer (yes, back -- the money for the home buying transaction was theirs to begin with) as a major incentive.

Think of it like any other type of professional arrangement such as working with an attorney, accountant, or even a plumber.

But before you start firing of hate mail claiming that the idea of giving up commission payments is sheer lunacy, take a moment to think about how an alternative model might pay out.

Depending on the market you're in, a Realtor may be able to charge from $60 to $150 an hour for taking on specific home buying tasks on behalf of their clients. For the sake of our calculations, let's work with an average of $100 an hour.

If a Realtor were able to provide task-based services to their home buying clients, working just 20 hours a week would mean they could bring in roughly $8000 a month. If they worked 50 weeks a year (who doesn't want a nice two week vacation every year?) the Realtor would gross around $100,000 in 12 months. Even with a brokerage agreement in place (let's again say a 50-50 split) the Realtor still walks away with $50,000 at the end of it all-and that's just working 20 hours a week!

Now let's say, that during the other 20 hours a week the Realtor focuses on more traditional commission-based agreements. Not a problem! The reality is that some home buyers are going to want a full service Realtor to help them in exchange for a commission payment. Other home buyers may choose to do a lot more of the legwork required to get the house the closing and are willing to pay less for assistance. It’s all good.

The bottom line is that Realtors who offer alternative home buying agreements open up a brand-new stream of revenue. It's not an either or proposition. Some home buyers will want full service some home buyers will want an hourly à la carte option.

The best news for the Realtors is that alternative real estate agreements greatly reduce the risk that they carry on their shoulders during a typical home sale. Because they're being paid directly for their time their paychecks are not contingent upon making sure that the homebuyer makes it all the way to the closing table.

So, Realtors make more money, take on less risk, work less hours, meet the needs of their clients and still get a vacation?

Just where is the downside here?

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Nucazza and Home Buying Evolution,

Nucazza, Inc. Chief Evangelist Glenn Freezman has been an entrepreneur and business owner his entire career. Taking over his family’s candy company right out of college, Glenn quickly opened 4 additional locations and brought their product sales to a national audience.

In 2002, Glenn created a the title company, Family Abstract, and grew it so that it was helping 500 to 750 home buyers per month by offering unparalleled service, quality and commitment to the greater Philadelphia real estate arena.

Today Glenn still heads up that team and has been involved in over a quarter of a million real estate transactions during his tenure. He started Nucazza, Inc. and Home Buying Evolution as a way to give something back to both the Realtors® and home buyers that brought him success by offering a 1 to 1 marketplace that allows Realtors® to make a respectful living while allowing home buyers to pay for just the services they need all the while promoting full transparency and ethical business practices.