I'm on a ranting roll this week and it's only Tuesday.
My friends... let's stop complaining about "working for free." Let's stop proclaiming that we need to better protect ourselves from the home-buying and -selling public who live to abuse our willingness to do work "without any guarantee of compensation."
WE DON'T WORK FOR FREE. WE WORK ON CONTINGENCY.
There's a big difference!
Our willingness to work on a contingent basis - that is - to not be be paid until or unless we perform, is precisely WHY real estate fees are what they are. We are able to charge a lot of money to do what we do, far more than we could charge if we were paid by the working hour or by the job, upfront.
Working by contingency is risky. And when something is risky, it means, by definition, that there's risk involved (duh). In our industry, the risk is that we may not be paid for our efforts. No, we don't much care for that outcome, but it's the chance we're willing to take to be able to charge the hefty fees we do when we're successful.
If you don't want to work on a contingent basis, you're welcome to find a different model that better suits your personality. There ARE other models out there - Mollie Wasserman's ACRE program is a great one, and there are hybrids where you reduce your fee in exchange for a retainer or upfront marketing fee.
But if you, like most of us, enjoy the challenge of shooting for the sweetest possible payday, stop worrying so much about those "wasted" hours! As long as you were doing something that taught you more about your real estate market and/or put you in front of a warm body to impress with your wonderfulness, you weren't working for free. You were just building up credits toward that next sweeeeet payday!
Rant over.
Hi Jennifer.
You nailed this one...
"stop worrying so much about those "wasted" hours! As long as you were doing something that taught you more about your real estate market and/or put you in front of a warm body to impress with your wonderfulness, you weren't working for free. You were just building up credits toward that next sweeeeet payday!"
Most of us just don't get this.
Thanks for writing,
Ken
As a new agent, I seem to be learning by leaps and bounds!
Jennifer,
I like you positive attitude. I learned a long time ago you have to have a thick
skin to be a realtor.
If that's a rant I'll read yours anytime! Working on contingency is what allows me to control my own business and talk with assurance about how I will accomplish a goal. Who can argue that if I'm willing to put my money and experience where my mouth is that I don't deserve my reward when I do what I say I will do!
It's the way it is goning west as a Realtor!
Patricia/Seacoast NH
Good post. Everyone should find a business model that suits them. From my perspective a successful listing agreement means that you did your job in marketing the property, pricing the property, generated buyer traffic, generated an awareness of the property's availability to the real estate community, etc, etc, etc, etc, etc, etc, etc (we all know what the list entails)
However, that the home fails to sell, whether do to seller motivation, market conditions, location, etc, etc, etc does not mean that you did not perform a service (that involved professional skill, financial resources, and a large investment of time) and should not be compensated for it.
Offering buyers and sellers a choice just opens the market for innovation! Viva la difference!
JA, AS usual your comments are spot on. Most salesmen put in a lot of hours that bring no compensation. Sales people that work on salary plus commission usually work on very small salaries plus generous commission. If this type of environment puts a strain on you, then find another career.
This is not a one size fits all business and there is room for what is comfortable and right for every cunsumer.
You are so right- if you don't like it go find another career path. If Realtors think they have it bad they should see how it works in the UK to buy and sell a house!
Jennifer
Totally agree. Experience and confidence help you to weed out the folks who are going to drain you and never step up and list or buy.
Some transactions are long and drawn out and others are simple and fast. You have to step back and look at the big picture...I am in the business for 14.5 years and I learn something new on EVERY transaction...how many careers offer that?
annie
Go big or go home! I hope the Contigency fee model never changes, well said Jennifer.
Jennifer,
I'm not an agent, I'm a lender. However, just like my agent friends, I don't get paid unless and until the purchase closes. The point that Lenn Harley makes about undercapitalization is part of the reason that 175,000 lenders have left the business to go get a job. Thanks for opening up the discussion.
Mike in Tucson
Very true!
Great post. Thanks!
Jennifer,
Very nice rant and rave...
Jennifer,
I tell you what...I LOVE this....I have always felt this way and it is like a breath of fresh air to find others feel that way too...thanks for the rant...it was really very positive for me!
Yes Jennifer, there are many other types of business where you can get paid by the hour. Real Estate is a sales/commission based job. Like it, or leave it.
Excellent point of view, Jennifer. What a way to turn it around.
Great post! I don't get paid unless I bring it to closing. Many times I work hard and that doesn't happen. Oh well. But many times it does. I wouldn't have it any other way.
Jennifer. RANT ON!! Actually, that didn't feel like a rant at all to me. It felt like a peer who understands what we do the same way I do. Yes, we are taking risks but did you ever earn anything really worthwhile without some risk?
The greatest risk I ever took was getting pregnant...Three times. Twice I got incredible baby girls who are now my best friends. Once I had a miscarriage and that was very painful, physically and emotionally but well worth the risk to have two great kids.
So I think of that when the buyer I've worked so hard for winds up buying a FISBO that pays me zip or the seller that I worked so hard for decides to go with a discount brokerage. The next buyer and seller will make up for that one.
good arcticle. Take away from it what you can. You learn something everytime. Feel blessed you had the opportunity to take something away from each opportunity.
We are all "practicing" real estate...learning more and more and as soon as we do, more change, evolution to stay on top of..for a workout. Not everyone is built for real estate. And like love, it wants all of you. Is a jealous master...but a heck of a kick, sport. Work hard to get way more of the market share than you deserve and be grateful. You have a job, are the boss, can make what you are worth.
Jennifer,
Your "rant" has made me stop licking a recent wound! I'll again focus on the payoffs and not the one that got away.
Hi Jennifer,
You make a great point and I do agree.
However, as realtors we do need to realize that Time really IS Money.
We work most effectively when we are able to more accurately measure client motivation. The quicker we are to identify the "Time Wasters", and kick them to the curb, the more time we have to follow up on other more productive leads. So many times, I see agents wasting too much time on leads/clients that are not worth it!
We can't Lose the Dollars because we're chasing after a Dime!
Hi Jennifer,
Well said! I often wonder at agents who I hear complain about showing buyers homes for 2 hours. I look at that as two hours of market research (because I do have other clients), two hours to develop a potential new buisness relationship and many opportunities to leave my card in sellers hands. Talk about multi tasking!
Thanks for your post.
Michael Layton, GRI, e-PRO
And it is up to us to explain how we are paid....explain to sellers and buyers!
This business can make a pauper out of you quickly if you don't work correctly. I tire of agents telling me that they told so and so this and they told so and so that because they don't work for free. Well, maybe you won't work at all if you don't practice discretion, never comment on a client's situation and keep the money conversations to yourself.
I practice service for which I am paid fairly well. It gives me satisfaction to know that I have not only assisted to the best of my ability, but that someone thought I was worth my commission. Fair enough.
Hi Jennifer -
I am also an ACRE, having taken Mollie's course several years ago. Offering a choice to our clients is what it is really about. While several people have started out thinking they might want to pay me by the hour, or task, they don't want to take the risk themselves that the property will sell, so they choose to go with the contingent commission instead.
When I explain the difference to them and show them how they can save money if they take the risk, but they choose not to, they don't complain about what I eventually get paid! (And everyone is happy at the end.)
I just lost a short sale deal after 11 months, 3 buyers, 2 lenders and a lot of conversations regarding mortgage fraud, creative financing, purchase loans and deficiency judgements. I didn't walk away with a commission, but I walked away better educated and I am no longer in the dark about a lot of short sale issues. It stung, but I would do it all again. It still beats having a 9 to 5 job where I had to ask permission to take a day off. Imagine that!
Jennifer, get post and good information for a newbie.
Well said Jennifer! and like Cynthia's situation, the "contingency" period can be a very long time.
Great points! Mortgage brokers and loan officers who don't work on a salary (almost all of us) also do a lot of free work. What amazes me is how some agents (read some of the comments over on Jason Crouch's post about YSP) think it's just fine for loan officers to give their commission back to the borrower at closing. Nobody can work for free forever - just when the deal doesn't happen nobody gets paid. We all work for free sometimes.
Amen Jennifer! Risk/reward.
I have said many times that I wish the rest of the world was paid in some form of commission/bonus way. I bet there would be an entirely different form of customer service everywhere we went, and productivity levels would probably jump as well.
Jennifer, You tell 'em sister! I couldn't agree more. The agents that do the most complaining are more than likely the agents that DO need a new business model.
Jennifer, You tell 'em sister! I couldn't agree more. The agents that do the most complaining are more than likely the agents that DO need a new business model.
Jennifer, great post! Real estate agents have been working on a contingent basis since the beginning of time. It's no big secret. So, I don't understand those agents who get their license and then complain about the fact that they have to work on commission. Hello???!!! Okay, my rant is over, too.
Thanks for pointing out the difference and making the point that commission is an opportunity.
You call it RANT, I call it word of wisdom! Right on! You wonder why some agent say they are not doing well in this industry...maybe because they spent their time and energy on the wrong thing.
I've heard it called a success fee - We only get paid when we succeed in accomplishing our clients goals !!!!!!!!!!!!!!!!!!!!!!!!
Just ask a personal injury lawyer what it is like to work for free. They work on a contingency too, and they also take the risk for the potentially big payoff.
Most real estate agents wouldn't want to be paid hourly once they figured out what their level of education and experience was worth on a hourly basis.
Absolutely! If you choose to do this for a living QUIT WHINING! Working on commission means that the better agents will make more, and the ones who want to just put in their time won't. That's the difference between what we do and hourly wages.
If you're "Working for Free", you need to re-evaluate your profession! It's what we do and how we get paid. period! Thanks for the rant Jennifer.
I totally agree! I'm always learning and working...and when I do get that paycheck, it's extra special. As a very wise woman once said, "I sell real estate for a living, and sometimes I even get paid."
Hyman Roth, played by Lee Strasberg, in The Godfather II:
This is the business we have chosen
No one is forcing anyone to be in this business. I've been in a variety of sales jobs over the last 30+ years. Some have had a base - some have been pure commission (contingency as Jen puts it). I've always earned more money over the long haul in the commission jobs. It is not for everyone. Cash flow is irregular and must be looked at over a long period of time.
Absolutely! We don't get paid until we get results. Its a risk paying upfront for our expenses and a reward when you close a deal.
i don't whine. Yet the proliferation of technology is driving fees downward in many -- if not all -- services.
jennifer,
Some are easy and some are hard and some don't happen. Just the nature of our business.
Jennifer, you are dead on. We do not work for free. Sometimes it is days or weeks between paychecks but we do get paid.
Real Estate agents in some ways are like gamblers we like the thrill and live for the big rush on a big pay day.
Jennifer - Excellent post!!! The more effort placed up front and the greater the risk to actually reaching an end goal, the greater the compensation should be. Let others do what works for them, but the co-op system works pretty darn well for us.
Oops. 51 comments and not a peep from me. So... thanks for all the support! Frankly, I don't have any problem if someone wants to sell real estate under a different compensation model - I've considered it and am still tossing ideas around in my head. But when I hear frustrated agents complain that they're being abused by the public who "expect" them to work for free, I do a little internal ARGHGHGHGHGHG!
We get to decide what consideration we will work for too! Risk vs. reward...we have to assess what sort of risk each client presents in terms of our likelihood to get paid.
Several years ago I was managing broker in a real estate office. The newer agents would come into my office very upset, sometimes crying over the "lost" buyer. When I would take them back over the steps of how to qualify AND indentify the "real" buyers versus the tire kickers, the lightbulb would go on in their eyes. 99 percent of the time they realized that if they just taken a few minutes of time and asked a few very pertinent questions, they would have never spent the time with these buyers. Sometimes the perceived "waste of time" was really just one of those learning curves and as new agents we just had to learn how to navigate that curve. The smart ones caught on quickly, the rest (I hope) went back to their "real" jobs.
Well Said Jennifer! I like your approach on this 'ever so popular' term that is used in the business!
Not really a rant, Jennifer...just the cold hard facts.
It is only a waste of time if you perceive it that way. One reason we charge a rental application fee prior to showing rentals. Those who really want our help don't mind the upfront.
Jennifer, Great post! I worked as a real estate assistant on an hourly basis and while I learned a lot, I realized that I could leverage that knowledge and become a full time agent. I always look at time spent with buyers and seller as a learning experiece (good or bad!) that will help me grow in my practice. Thanks for pointing out all the positives to working on a contingent basis!
I agree - and with experience, I've learned to identify situations where I might be wasting my time! Although we work on contingency, we can still manage our odds of making it to the closing table by spending most of our time with serious clients.
P.S. I read your book and loved it! We chose it as a selection for our local board of Realtors' "Realtor Book Club" last year. Great content, style, and soul! :)
Jennifer, very good post. We get paid as a result of our hard work which is worth way more than an hourly wage - I agree with you totally.
Jennifer
This is one great post! You've really put it in perspective and it's the perfect foil for the seller who questions our fees. Has a cheap seller ever thought about the risks we take in trying to get business accomplished and the fact that not only are there delayed paydays, there are sometimes No Paydays!
You're spot on, Jennifer. One of the greatest satisfactions I have being in real estate is proving people wrong. It use to frustrate me that the general public viewed real estate agents as "unnecessary" and potentially "over-priced" or "wasteful spending". Once a buyer/seller is immersed in the process, we are given the opportunity to demonstrate our value. The thanks and praise I receive at each closing is greater than any paycheck (although I love those too). It's fun to watch the transformation of people's opinion from doubt to gratitude.
I think the problem is that there are sellers and buyers that take advantage ,,,and in all sense ... of the matter you have worked for free .
I've often said that I'd be ashamed to cash my average commission check if it weren't for all of the "free" hours I spend working.
Yeah, sometimes it comes back to bite us in the butt, but the better we get at our business the less this should happen.
One of the difficulties in establishing a new model is that each would undermine the other. What would probably happen is that the consumer would use the "free" full service person for as long as they could, then dump them for a consultant to negotiate the transaction - thus getting full service for much, much less. It wouldn't be big fish, eat small fish, it come down to cannablism in which all would probably be destroyed. At least on the buying side.
I reap the monetary rewards that real estate provides me and to get there I learn my profession in order to earn. My downtime, or our so-called free time, is spent at a seminar or on a webinar, reading real estate related articles, networking, maintaining my web exposure, etc. You get what you put out.
Good comments. I have agents in my office who won't work with renters because of the low/lack of compensation, I look at it as an opportunity to meet someone who will buy in the future
A friend of mine who had been a REALTOR for 25 years discouraged me from going into the business when I first started. She said all of those times one put in hours and effort without getting paid were too frustrating. I thanked her for her input and plowed ahead anyway. It can be frustrating when a deal falls through after a lot of hard work, but I choose to view everything as a learning experience so that such an outcome can be avoided next time. I love this profession!
Nice article, I agree!
Jenifer, It is funny how we start off knowing what and how we are compensated for our services, when things are slow or we invest time with a dead end client all the sudden we should have a salary. I always have way more to do than time. I've enjoyed your posts.
Thank you for your great post,
Nick - EXACTLY. You put it better than I did. That drives me nuts.
Very well put Jennifer, thanks for the post.
Great post. We eat what we kill.....work hard and the benefits will come.
Nice post -- I like the comment above me -- I think it cuts to the heart of the matter -- we eat what we kill -- we make money off the deals we close -- want to make more money close more deals --
JE
We can make as much or as little money as we want. Alot of times on a prayer, but the pay offs are great. Got to spend some money to make some. Takes a select few to be successful working our way but I wouldn't have it any other way.
Agreed!!
I don't work for free, but I also don't work with clients that don't respect me (that would equate me "working" for them for free ;)
I've been at the real estate game for 6 months now, and it sure feels as though I am working my butt off from before sun up to way after sun down. I've closed 1 little lot. I've got 3 that will close any second though, hopefully this week or next. I have 2 buyers that are very hot, and approved for very nice properties. Things are starting to happen. Even though I'm ready for things to start happening, I am having so much fun!!!! This is way better than my past career. I really feel that I my pipeline is starting to get full. You just have to work and have a positive attitude!
You have it right. The model with the co-op fee works.
Well said! I feel privileged to be in a profession I love. It definitely isn't for everyone..... Thankfully!
I walked by the office of another realtor in our office who had been talking about how hard he has been working and at the time i walked by he was so excited because he had just set a personal best for winning 15 games in a row of freecell. Go figure how hard that job is.
It's worth the effort. If it was as easy and closing deals and getting paychecks there would be more competition and the pay would be god awful. I'm fine with working hard for my money. I know I earn it, but I never feel like I'm working for free.
I am truly over the "working for free" mantra that I so often hear.
After awhile in this business you get a feel for people and you learn what to ask and when to ask it. There are a lot of simple ways to cut to the chase BEFORE investing a ton of time on something that isn't worthwhile.
Choose wisely.
Well said Jennifer. I grow weary of the wining I hear in our industry. I happen to love my career and enjoy each day. It brings me down when folks are negative about "time wasters". I like your analogy of calling it a contingency business.
I am on a ranting roll this week also. Just stop complaining about everything. Start sticking together as a professional group and work together to get the job done. Think we are frustrated try looking at your clients. Waiting for phones calls, hoping sales go through, and just crushing their spirits. Sorry challenging week already both on sellers' and buyers' sides. I feel bad when I don't get a home sold or bought for someone. And believe me it is not from a lack of trying.
Thank you :) makes me feel better! I always feel all my work pays off in the end. Even if I don't get a listing- I learn something, and if a buyer doesn't buy, I learn something and it comes in other ways with the next person. Very important truth- thanks!
Wish I could comment on everyone's posts- great topic! I like to think I get paid in experience, so when I'm not rewarded in my bank account, the next time around I know what worked/ didn't work. Thanks!
well said, we get paid for thr risk we take, more that we get paid for the work we do. The way to add to your bottom line is to figure out how to reduce that risk. eg, buyer broker agreements, pre quals, proof of funds and more office meetings, vs property tours.
While this may be extreme, Ive sold 2 houses this year before I met my client and without having seen the home.
I good with the fee structure as it is...I only get paid if the sale happens. And I only work if I see that the prospects of a sale are great. I like also that I have the flexibility to choose who to work with. In a large way, I'm in control and am grateful for it.
I do charge a contingency for buyers under $100K but for buyers above $100K I do not. It may sound inconsistent but I have to hold a certain bottom line!
I just turn and burn until a paycheck comes in. I do BPOs for solid monthly income because nothing is a sure thing anymore!
I must say you hit the nail on the head with one swing of the hammer, good Job, I could have said it better myself, we dont work for FREE! good job KUDOS
Interesting thought threads throughout the blog and comments. Makes me stop and think...
You are so right!
I use this very phrase when a nervous seller asks if I really think that the listing will sell. I say of course it will, because otherwise I won't get paid. That works well.
Jennifer, As a new agent, I find that everytime I read a post (or rant) of your's, I rethink some of the things that concern me about my new choice of career and remember why I got into this in the first place: The reward (not just money) for when the hard work pays off. All the work I have done that hasn't turned into a sale, I've been chalking up to a learning experience. Those will prove to be invaluable. Great post.
Jennifer
All, I can say it Thank You. Someone had to say it. quit your whining and go make it happen!
Not everyone is cut out to work on commissions. There may be a long time between checks ....and complaining never helps.
For all the work we do, we are grossly underpaid.
Hi Jennifer,
Great post..we do not work for free! We are constantly educating ourselves and that knowledge helps us build up a great memory bank to draw on for future clients. You may show property to clients and they don't buy but the next week you are showing another client the homes and guess what you already are familiar with the homes and have knowledge about them to better serve the next client..never wasted time..always learning and gathering information to better serve clients. The pay check always come with with persistence and the right attitude!
Jennifer, I always try to think of what your books tell me when I'm frustrated: I sell real estate every day, and sometimes I even get paid for it.
I've worked for contingency fees much of my life, and find the reward worth it, perhaps because I usually "win."
work smarter to work less! ask the right questions and learn...
Right on Jen!
Rant on too!!
Wow! Jennifer, look like you got everyone "wild" up with this subject. I am a new agent, just started a couple weeks ago. I went into this career with the understanding that we, the real estate agents (some are Realtor), are "self-employed". In other word, I am my own boss. I need to manage my time, manage my capitals, etc. like many business owners manager their business.
And as with every business, real estate agents should have the capital (money), a business, plan (strategic plan and execution of the plan), and most important DEDICATION and COMMITMENT to succeed.
However, I have much more to learn from experienced agents. Hence, how to qualify prospects, turn prospects and leads into life time clients. How to manage and deal with all obstacles within the real estate industry.
I can write more...but I think I should stop and prepare to attend a seminar on foreign investors this afternoon and work on my business plan.
It's ALL or nothing, I guess. It's either we get paid, or we don't for all the time we invested. That's why we feel we work for "nothing" when we don't win.
Well said Jennifer!