Issue Date: June 6, 2005

Misconceptions of Real Estate Agents

By Jody Zink
Licensed Realtor in Ohio & Michigan

As a relatively new agent in the real estate business, I never thought I'd have to work so hard. After all, what do agents actually DO?!

A good friend of mine recently said she would never use a REALTOR again to list and sell her home. She insisted the agent did nothing to help her house sell. Aside of putting a sign in the yard, my friend said the agent had not shown the house once. When the home did finally sell, the agent then pocketed $5,000.00. What a scam!

Misconception #1. Obtaining a real estate license is a license to print money.

Contrary to popular belief, the real estate agent didn't pocket a $5,000 commission. That money is split 4 ways. Half went to the buyer's agent. Then, each agent must split his half with their broker. If the transaction was a referral, a referral fee must be paid; typically 20 to 30 percent of the co-broke. In that case, the commission is split 5 ways instead of four. After that, whatever is left over goes to the agent as taxable income. That $5,000.00 has easily turned into less than $1,000 before taxes, time, advertising expenses and gas. The agent hasn't earned as much as what you might have thought.

Misconception #2. Real estate agents don't really work for their commission.

As in any profession, while this unfortunately may be true about some, many real estate agents I know work crazy hours to accommodate their clients, driving all over town to show properties, coordinating transactions and making sure everyone is on the same page—all while trying not to step on toes. Mediating between groups of people who may or may not be passionate or cooperative can be exhausting. Most days my office is inside my car. See, as a real estate agent, as in other professions, I do a lot of work for free. If the transaction falls apart before closing, I make nothing. My good friend was sure that I made at least a base salary from my broker just for my efforts. Nope. No successful closing means no payday.

Misconception #3. The going-rate for real estate agent commissions is 7 percent of the sales price.

The agent's commission is set at whatever the client and agent agree to. Between 5 and 7 is typical for a full-service brokerage. Other a la carte agencies will charge less for certain services. State and federal anti-trust laws prohibit brokerages from establishing set commission fees to promote competition.

Misconception #4. As a seller, I'm doing most of the work.

Keep in mind, it's a team effort. Clients and agents need to work as a team. More than 146 large and small tasks must be managed for a successful real estate transaction to close. While you’re at work, your real estate agent is taking calls, screening prospects and answering questions about your property—sometimes late into the night. Advertising costs are also covered by your agent. The Multiple Listing Service and other local outlets aren’t free. Those resources give your home more exposure than just a sign in the yard ever would. Who knew a real estate agent could be so valuable?

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.