Help The Starving Realtors Fund

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Source of Title Blog

Help The Starving Realtors Fund
by Robert Franco | 2007/10/30 |

I recently made a comment that Realtors aren't making too much money, but they are charging too much. Six percent is way too much to charge to sell an average home. In 2006, the median sales price of a home in the United States was $221,900. The six percent sales commission on a $221,900 home is $13,314. It really is no wonder so many try to sell a home on their own. Does it really take any more work to sell a home that costs $221,900 than it does to sell a home that costs $100,000? What about a $400,000 home? Yet, the commission difference between a $100,000 home and a $400,000 home is $18,000!

A recent visitor here posted the following comment in defense of Reatlors' fees:

Please walk in our shoes for just a bit. When was the last time the cost of these items, which significantly affect my profit potential, had a signigicant decrease? Gasoline, cost of a vehicle in general (I mention these because we use them much more than the average wage earner) advertising (for self or listing), office space, utilities, paper, office equipment, furniture, cell service and land lines. Sellers want exposure TO THE MAX, this means franchise fees and buyers want fast websites with pictures and more pictures (bandwidth, bandwidth, bandwidth). I won't even get into the support staff to maintain all this STUFF. We can't begin to put a price on the family functions missed or interrupted. I've worked in several different industries and real estate is, without a doubt, the most demanding on my time.

With fees obviously so high why are Realtors finding it so hard to make a living? Well... the answer seems pretty obvious - there are too many Realtors! Many Realtors I know can't even make a living as a full time Realtor. They have other jobs! From a closing agent's persepective, nothing is more annoying that trying to get a hold of a Realtor and being told that they are working at their other job.

Let's take a quick look at the numbers.

Source of Title Blog ::

In 2006, there were 6.48 million existing home sales and 1.061 million new home sales. That is a total of 7.541 million sales. And, according to the National Association of Realtors (NAR), there are over 1.3 million Realtors! That means that there are only 5.8 homes sold for every Realtor in a year's time.

If there weren't so many Reatlors, they wouldn't have to make two or three month's worth of income off of each sale. The NAR has been very successful in maintaining these high commissions, which entices many more new Realtors into the field. The market is over saturated with Realtors.

With the home sales dropping even further, to an annual pace of 5.04 million in September for existing home sales, the problem will surely become worse for the Realtors. To add to the problem, the median home prices are expected to drop to about $219,800 by the end of the year.

What will the NAR do about that? I suppose they could push for an increase in the six percent commission; that would likely fly like a lead balloon. The NAR recently donated $500,000 to assist California fire victims - perhaps they should start a Help the Starving Realtors Fund.

The best solution would be to drop the commission to about three percent. Dropping the commission on a median priced home by $6,657 may do more good by jump starting the troubled housing market and weeding out the part-time Realtors. If there were fewer Realtors, those who are serious about their profession would be able to sell more homes and still make a good living. And, those homeowners who find themselves without six percent equity in their homes may be able to afford to sell them.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com

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Categories: Realtors

853 words | 4628 views | 1 comments | log in or register to post a comment

	I've thought the whole percentage c...
	I've thought the whole percentage commission thing was pointless since way back when I was a realtor 25 years ago. One thing about the numbers -- the fewer people walking around with the designation "realtor", the fewer there are chumps out there paying NAR dues. It's clearly in the best interest of the NAR lobby to keep those numbers up.
	by Sharon \| 2007/10/31 \| log in or register to post a reply

Source of Title Blog

Robert A. Franco The focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

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