4d32ftw

Having spent the last 4 years building my real estate business, I have much more respect for the effort, hours and expense it takes to be a realtor. I can't say its fun having to pay thousands each month just to go to work. Yes some make very good money but the majority don't. Realtors should be more open about what it actually costs to do this job as most people would be shocked. But back to the op. Commissions are not set. Every realtor can charge what they want and agree too with a client. So shop about - and get one that does the things you feel are important and of value to you.

Aviator

Pretty much like everyone in business then. It costs us tens of thousands a day whether we open the door or not (not realtors). That is part of being in business.

Realty is a pretty low risk business.

Tirytory

On what can I ask seeing as you brought it up? Why do you pay 1000's? I had a realtor tell me once her costs were surely equal to my husbands as a doctor....tbh I can't get my head around it.

JonboyE

Realtors work with/for a real estate broker that handles the administration of contracts and holds deposits in trust. Some brokers just charge a percentage of the commission. Others, particularly the ones that market a brokerage "brand" charge realtors a desk fee, and several other charges, regardless of whether or not the realtors earn any commission.

One ex-client, a Brit by chance, spent five years trying to build a business working with a brand name brokerage. He sold a few houses but gave up after 5 years as he had yet to turn a profit.

HGerchikov

Here are the costs, before you start to include costs of marketing a home. These costs are ongoing even if a realtor doesn't sell a single property. Fees to broker, you do actually pay to go to work, these vary from fairly minimal for the small, discount brokerages, to close to $1000 per month for the better known brokerage names. Realtors pay for MLS, total fees to local real estate board for that again varies depending on the board, but say $500 per quarter, if you work in an area that borders several boards then you have to join more than one to be sure you have full access to information. Insurance costs, approx $300 a year, then there are marketing costs so you can get clients, I do that by running a sales centre, I pay rent on that, it doesn't come free, neither does the liability insurance, or the franchise costs.

Then there is car insurance costs, we transport clients so liability costs are greater. Not to mention the cost of gas, just driving around agent open houses getting familiar with the stock on the market. It costs me in excess of $3000 per month just to run the business.

Aviator

A pretty inexpensive way to operate a business then.

HGerchikov

The company I started work for out of University was spending a million pounds a day, so yes it's small compared to that. I am not complaining about it, I was merely responding to the poster who seems to think that the costs are no more than a cell phone plan, which, by the way, I forgot to include in my list!

Aviator

I still find it hard to swallow paying 20-40k, or more to sell a house. When house prices jump by 20% or more, that is a 20%+ pay increase to the realtor, often without a corresponding increase in costs.

HGerchikov

I understand what you are saying, and a few years ago it was common to pay 6% commission. Although there is no fixed amount of commission the 6% is now rare. If an area sees 20% increase over a very short period of time then that is likely caused by a shortage of inventory (supply and demand) so there are basically fewer sales happening, which means less business for the realtors which is likely to result in a drop in income.

Atlantic Xpat

Isn't the case with Realtors that the whole system is designed to maximize cost and revenue? Realtors are essentially part of a pyramid selling scheme with the broker at the top collecting their commissions, fees etc. Add the costs for MLS & the provincial real estate boards etc and I can fully understand that the realtor doesn't trouser the full 4-5% or even their half of it.

Trouble is these business processes and structures are increasingly looking out of date in a world where the internet negates the need for many of the conventional realtor services in terms of finding potential properties. The home buying and selling world simply hasn't moved on imho, although the "discount" 1 or 3% realtors and property guys etc are at least a step in the right direction.

Across the other side of the country we were looking for a new property for various reasons. We're now considering extension reno/additions to our place to provide the single level accommodation our daughter needs. Saving $25k or so in realtor fees is another check box in the reno vs. move calculation!

Tirytory

I appreciate that's not insubstantial but as my realtor was claiming to be equal to my husbands costs, I can point out that it's about a third of the monthly costs to be a dr here....to mention only one thing e.g insurance is about 300 a month let alone a year.

HGerchikov

I run a fairly small business, I like the personal touch so deal with all my clients myself, and therefore limit the number I work with. The big operations will spend a lot more on marketing than I do, so it's possible her costs are at that level.

Tirytory

She was retirement age, the inference that she dealt with the millionaire cottage country set rather than our small fry house was clear. I think part of the costs she meant was the very expensive 4x4 Mercedes she drove around in, we choose to drive around in cars which don't cost us a fortune so I got a bit cross with her costs the same as my husband remark... We clearly didn't get on hence we parted company

Novocastrian

Clearly your prerogative. No need to judge the whole profession by one unpleasant old snob.

Tirytory

Mmmm no! Just interested in the costs involved. I didn't just think it was a cell plan...I don't think I even made reference to that.

HG have you ever thought of setting up more of a British style estate agency and undercutting the competition? Maybe there would be less costs this way if not working for one of the big two..... Just thinking out loud.