Earlier this week, Alasdair and I were invited out for coffee with the owner of another Brokerage. He had emailed us the week before saying that he was intrigued by our “Agents of Change” slogan.
Many people don’t know the structure of real estate so I’ll explain it here first:
Real estate agents (realtors) work for real estate brokerages. Alasdair Douglas and I work for Prudential Grand Valley Realty. Other brokerages include Keller Williams, Royal LePage, Peak, Team, Re/Max, Century 21 and a host of other brokerages.
(As an aside, Property Guys and Comfree are not real estate brokerages. I’d define them as marketing companies. Others, who have used their services, would define them differently.)
Anyway, real estate agents hang their license at a brokerage and the brokerage holds the listings, provides an office and all that goes with it (including insurance). As agents we are required not only to follow the guidelines set out by our governing bodies but also those of our Brokerage.
In turn, we pay our brokerages a monthly fee as well as a percentage of commissions. Different brokerages have different formulas – some are front-loaded with high desk fees and smaller commission percentages, some are flat fee per transaction and many are a combination with a “step down” rate.
I chose Prudential Grand Valley Realty as my brokerage because it is a strong and recognizable brand with nice and honest brokers and office managers – basically I just liked the feel of the place.
Before our meeting on Monday with the Broker from another Brokerage, we said we are very happy at Prudential Grand Valley and will not be recruited away. The broker said he that he was intrigued by our marketing efforts and wanted to share ideas. So we met.
And he tried to recruit us.
But we did explain what we are up to with the “Agents of Change” slogan and it is this.
The general public ranks Realtors slightly below lawyers and just ahead of used car salesmen in terms of trustworthiness. We rank low on “truthiness” to use a Stephen Colbert word. Alasdair and I aim to change that.
But why are realtors ranked so poorly?
First of all, clients believe they are paying their realtors too much. They believe realtors do very little to earn their commissions – a myth that is fuelled by the for-sale-by-owner franchise companies.
Just like a tenant sees $1200 a month leaving his bank account and going into that of his landlord, he doesn’t see that the landlord has a mortgage, taxes, maintenance and other expenses, the same is true for real estate agents. Real estate commissions are high, but expenses are high.
Commissions are high because agents have important responsibilities. If agents aren’t earning their commission then I’d agree that commissions are too high.
As “Agents of Change” our goal is to earn our commissions demonstrated through our dedicated service and industry knowledge. The key idea I’m hoping to get across here is “earn”.
Ask yourself:
Are you worth what you’re getting paid?
Are you earning more than you’re worth?
If you are then keep it quiet. A good realtor working for you earns his commission.
The second reason realtor are ranked low in truthiness is because in the old days, before the internet made the access to information readily available, real estate agents held all the information. If you were buying or selling a house, you pretty much had to rely on the information given to you by the agent and some of them were less than perfect. As the truth eventually reveals itself, many people have stories from the old days when a less than ethical agent took advantage of someone for his own personal gain.
I think the best agents are the ones who quietly go about their business helping people buy and sell properties – not one of the several “#1 agent in town” types. My advice would be to find an agent that is not trying to sell you something, but one that is helping you buy something. You’ll find that agent with the “Agents of Change.”
Some of the agents’ bad behavior from the old days continues today. Newspaper ads for real estate are an example of doing business the old way. The other day a client of ours called us looking for information on a house listed in the real estate news. The advertisement said “priced to sell” yet the ad contained no price information and no MLS number – it was just a teaser – so you had to call the agent. How is this helping the agent sell that house? If I were the owner of the house I’d have some questions for that agent.
This post has turned into a bit of a rant. The point is that we think there is a better way to buy and sell real estate and so do our clients. If you’d like to talk about what we stand for as “agents of change”, we’d love to tell you.
Filed under: About me, advice, Buying Real Estate, Industry, investing in real estate, real estate, real estate trends by Keith Marshall
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