by Neil Jenman
How much do you earn per hour? Forty dollars? Fifty dollars? If you’re a cleaner, your rate is $26.61 per hour. If you’re a lawyer, maybe $300 per hour.
So, how much are you thinking of paying a typical agent to sell your house?
How does $500 an hour sound? Enough?
What about a thousand dollars an hour – is that enough?
Now, if you’re thinking what I think you are thinking, you probably think $500 an hour or, worse, a thousand dollars an hour, is outrageous.
But first let’s consider some facts: Let’s look at what typical agents get paid to sell homes. And then look at what they do. And, finally, look at how long it takes to sell a home – how many hours do agents work for what they get paid?
First, their pay.
Based on the price of an average home in Australia (apx $650,000) and the average commission charged by agents (2.2%), the typical agent gets an average commission of about $14,300. Now, sure, that commission gets ‘split’ in many directions and no one person in a real estate office gets it all. But still, that’s what the home sellers pay to sell their homes.
Second, what do typical agents do?
Some agents create the impression there is mystique to selling homes. The opposite is true. Selling a home – the way typical agents do it – is simple. Most do the same things – they are clones.
First, they spend a couple of hours ‘pitching’ to sellers to sign-up with them (two hours).
Second, they arrange photography and floor plans (one hour maximum).
Third, they put ads on the internet – if they are near-illiterate or they want to run up expenses to increase kickbacks, they may hire a copywriter (maximum time: One hour).
Fourth, they say they contact existing buyers to see if any are interested. In most cases, however, typical agents are lying when they claim to contact existing buyers. Laziness is common in real estate. Why make calls out when they can sit and wait for calls to come in? (Allow two hours but most times, it’s zero).
Fifth, open-inspections. This is where typical agents give sellers 30 minutes out of ten thousand minutes in a week to sit (or stand if they are ‘hard workers’) at sellers’ homes waiting for buyers. Let’s say they do eight open-inspections per home, although it’s likely closer to half that amount. (But allow four hours).
So far, we are up to a total of ten hours – and that’s very generous.
Let’s allow another hour for returning calls from buyers who enquire (Research shows that about 80% of agents ignore prospective buyers – they have this arrogant attitude of: “If the buyers are interested, they’ll turn up at the inspection times.”).
And, finally, let’s allow two hours for what typical agents erroneously call “negotiating”. In effect, they just convey offers and counter-offers between sellers and buyers.
That’s a total of 13 hours – and believe me, as stated, this is conservative.
Seriously, most typical agents would put in two hours to sign-up the sellers, an hour to do on-line ads and no more than six inspections of half an hour, followed by an hour of “stitching up the sale” giving a total working time of seven, eight hours. At most.
For all this, typical agents get paid an average of $14,300. And that’s in cheaper areas.
This means that, when you sell a home, you effectively pay typical agents around $1,787 an hour. Often, it’s more as many agents do less hours. One agent in Melbourne boasts about how fast he sells homes – try less than an hour (he claims).
“But we do lots of work that we don’t get paid for,” is the squeal when typical agents are asked the dreaded question: “What do you actually do in return for your commission?”
Well, here’s a straight-back-at-them question: “Why should the sellers pay for work that has nothing to do with selling their home?”
Many sellers ask agents to “discount commission”. But, imagine if, instead of asking the agent for a discount, you said: “Our lawyer charges three hundred dollars an hour. Our doctor charges $60 for a half-hour visit which is $120 an hour.”
And get this: to become a lawyer or a doctor takes at least five years study at a university. To become a typical agent requires a pulse and the ability to fog a mirror. Is there any record of anyone failing to pass the exam to be a real estate agent?
After discussing hourly rates charged by doctors and lawyers, imagine if you said to the agent: “We’d like to pay you twice as much as our doctor.”
So, you tell the agent you will pay them $240 an hour to sell your home. That means you’d be paying a typical agent somewhere between $1,920 (for eight hours) and $3,120 (for 13 hours) to sell your home – far cry from the $14,300 they expect as a virtual right.
Okay, okay, I know: Typical agents will be hurling insults over this article. But the simple fact is this: Most typical agents are grossly overpaid, as is now proven. Even if they worked 20 hours to sell a home and were paid $500 per hour, they’d still be paid a massive $10,000 – far less than they are extorting now.
And yes, an office is expensive and yes, there are overheads. Just as with doctors – who get less than agents.
A question that must always be answered is one that reveals a truth that can’t be denied: How much are typical agents earning per hour for selling your home?
The answer is: Far too much.
And that, in most cases with most agents, is the powerful truth.
There is a better way – and it’s this: Pay less for a typical agent.
Or find an agent who’s worth their huge fee.
PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted, ignored or well publicised – it depends on our mood.
But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’ll help you too. Thank you.
Did you spot the liberal use of the word “TYPICAL” in this article? I used it twenty times because I want to stress that what I wrote does not apply to all agents. Just most of them. The vast majority (at least 90%) of agents are “typical”; they don’t do much work at all. It’s the “sign-up, turn-up” method. When you’re selling, they sign you up, then wait for a buyer to turn up and, presto, they pocket several thousand dollars.
But what’s worse is that typical agents are poorly skilled. They follow methods common to most agents. Typical methods. Promise enough to win sellers then spend weeks talking sellers down in price. Little focus on getting buyers to pay the highest price they can afford to pay for your property. Little or no skill in negotiation.
What you need, as a seller, is a SKILLED agent. One who can get a far better price than any “typical old agent”. One who has studied NEGOTIATION – read books and taken courses on negotiation. A recent survey of one hundred agents showed that none (that’s right, not even one!) had read a book on how to be a good negotiator.
So, here is the bottom line you should always remember as a seller.
Skill in an agent is more important than hours. SKILL GETS YOU THE BEST PRICE.
But if you can’t have skill and you are forced to select agents based on hours, then, for goodness’ sake, don’t go doing what most sellers do and pay these unskilled typical agents between two and three thousand dollars an hour for doing nothing more than you could almost certainly do yourself.
And, hey, that’s another topic. Selling yourself without a typical agent. We are happy to help you do that too. If you need help to find a skilled agent, please let us know. If you can’t find a skilled agent and you want to give it a shot at going it alone, please let us know again.
Oh – and to agents who accuse us of just trying to direct sellers to “Jenman Approved” agents, wrong again. We choose agents we feel are best for the sellers. We grill the agents properly. But we don’t stop there – once we choose the agent, we make sure the agent gets the best price. When we say “support”, we mean it – from choosing an agent to negotiating the best price, we are with you, the seller (and the chosen agent) all the way.
Thank you for supporting us at Jenman Support.