Monday, June 25, 2012

Clearing up the Real Estate Confusion...

I'm a real estate Broker and for the last eleven years I've owned my own company as well as being the acting Broker-in-Charge.  I recently transferred my real estate license to a much larger company because frankly, they made me an offer I simply couldn't refuse.  My first shock was, once again, realizing how misinformed that the public is on what a real estate agent does, and most assuredly how real estate agents get paid for what they do. Well, first shock was no longer working for moi, but I'm acclimating pretty quickly.  Mainly because I had forgotten what a lovely thing a full time Secretary can be!  Good Secretaries are grossly underpaid and under-appreciated...I digress!

How can the public be so grossly misinformed on the professionals who help them make the largest purchases of their lives?!  How can they not understand what real estate agents do when they trust them to negotiate the sale of their homes?!  So, I'm writing about it because goodness knows someone needs to do so.

1.  Real Estate agents vs REALTORS:

 Real estate agents are people who have gone to school and passed a state certified exam to understand real estate licensing law. Period.  Don't get me wrong, that's not always as easy as it sounds.  The Labor, Licensing and Regulation (LLR) committee oversees all agents, including Realtors, who are licensed by the state to sell or list real property.  The LLR also distributes the license of attorneys, doctors, accountants, they're no joking matter.

A Realtor is a real estate agent who has voluntarily taken classes and agreed to abide by a higher code of ethics called The Realtors Code of Ethics.  Real estate agents cannot advertise as Realtors, nor be a part of the National Association of Realtors, without this designation.  It's an important distinction because Realtors aren't just accountable to their customers and clients, but they have also sworn to uphold that higher ethical conduct when dealing with their clientele. 

2.  Education:

Why would I include education when educating you about real estate agents?  Well, when the general public tends to view us on par with a used car salesmen, there's obviously a disconnect.  A used car salesman walks onto a lot and gets a job.  A real estate agent is licensed and overseen by the State that the license is earned in.  A used car salesman has a job to earn his boss the most money.  YOU are the boss of the real estate agent.  We handle the largest purchase of your life.  Let's get some perspective there. 

I once had someone ask me how to go about becoming a real estate agent as we stopped to chat in the mall.  Her friend, who was with her, pipes up and says, "Oh, my cousin tried to do that.  You just go to school for six weeks down at the Community College and you can be one".

Ummm....not even close.  You can actually go to school for a week and get that first license to be a real estate agent.  Yep.  One week at whatever local real estate school is in your area. And then, of course, there's that pesky little State exam that you must pass with a score of no lower than 75% or fail.  And that first license?  It's good for exactly 12 months and then you're not an agent anymore.  It's a temporary license.  Then, you must go back to school to take another class and yep, another State exam.  You must also work under a licensed Broker during that 12 months or you may not take the class for the permanent license.

THEN, if you'd like to be a Broker or Broker-in-Charge, you must actively practice real estate for 3 years under another Broker.  THEN, you guessed it...another much longer class of no less than six weeks to prepare for the Broker State exam.  In my state, SC, less than 67% of those that take the Broker's exam pass it, even with three opportunities to do so.  Yep, it's THAT tough.  Broker's are required to understand real estate law in the same capacity as practicing attorneys.  Don't get me wrong...that's the ONLY law that I'm that well versed in, but yep, we're that well versed in real estate law.

Finally, we're also required to take eight hours of continuing education every 2 years.  Forever.  Well, OK.  We get to stop doing that when we reach 65, but I received my license when I was 24.  It's a long time.

Actually,  I'm grateful for that because those classes have taught me more than I can say and I think we have some of the best instructors around. That requirement also makes sure that agents are on top of their game!  It's important.  Again, we're handling the largest purchase most people will ever make in their entire lives.  We need to know what we're doing.  We are NOT used car salesmen, people, and if you have an real estate agent who reminds you of one....FIRE THEM!  Anyone who's worked as hard as I have to do what I do shouldn't remind you of a person who gets hired as easily as someone with no education whatsoever in their chosen field.  It's just how it is....

3. ...drum roll please... COMMISSIONS!!!!

We all know this is the biggie, don't we?  Almost all real estate agents work strictly on commission.  What that means is that we don't make one red cent unless we sell a house, or a house that we've listed as the exclusive agent actually sells.  Period.  Nothing else.  Nada.  

You do not pay a real estate agent up front.  The commission is almost always built into the price of the home that is listed for sale.  Sometimes a buyer's agent is paid by the buyer if that's a pre-agreed upon arrangement, but that is not the typical scenario, at least in my state.

Commission are not set in my state( it's actually quite illegal to do so here!), so each company has different policies and different services that they offer for their fee.  You'd do best to check around and understand what services companies offer and what that fee encompasses. 

Real estate agents are not "employed" by their Broker, either.  They are independent contractors who have agreed to represent the Broker-in-Charge and share a fee with them.  We get 1099's, not W-2's, when we file our taxes.  What that means is that we also fund the advertising for our clients and purchase all the materials to practice our profession, as well.  Being a Realtor isn't cheap, but it's certainly rewarding.  There's just something about reaching across a table and knowing...KNOWING...that you negotiated the best deal for your client, whether the buyer or seller, and that you just helped them purchase or sell something that will change their lives.

At the end of the day, that's really what Realtors and real estate agents do...if they're good at what they do, that is.  They bring people together to negotiate a deal that changes their lives and take care of them through that process.  So, I encourage you to hire a real estate agent who represents themselves that way and who carries themselves with the dignity that my job deserves. 

4.  The final and least talked about frontier of real estate....the friend. 

Wondering about that subtitle?  Well, it's from a Realtors perspective.  Every single real estate agent you know has had this scenario happen (ask them if you don't believe me!!):

"ring...ring"  (picture the phone ringing!)

Me:  "Hello".

Friend:  "Hey, Kristi!"

Me:  "Hey.  How are you?"

Friend:  "I'm OK, but I have a real estate question.  Do you have a minute?"

Me:  "Sure."

Friend:  "Well, I've actually got my house listed with....(fill in the blank), but I just wanted to know...(fill in the blank)."   ...or this...  "Well, I've been looking at houses with...(fill in the blank), but I just wanted you to look over my contract or....(fill in the blank)."

Me:  "Well, that's really something that your Realtor should know and I can't help you with that right now".

And, of course, my "friend" gets angry when I can't, or even won't, help them.  There are times that I can't help them.  If you've signed a listing agreement, or a buyer's agreement, with another agent, there's just some things I CAN'T do without violating the Realtor Code of Ethics; my hands are truly tied.  I swore I'd uphold them, and I'm going to do the best I can to do so.'d want that kind of Realtor working for you if it was you, right?!

OR, there are times that I won't help.

If you've hired a Realtor you don't trust enough to even negotiate the contract for you, then you made a bad choice and as we've already discussed this is what I do for a living.  It's how a feed my family.   And we've also already discussed how I get paid...commissions!  Would you call your doctor for a second opinion and expect not to pay him?  What about your painter?  I mean, you just want him to touch up where that other painter didn't do such a good job, right?  Why shouldn't he do it for free?  Frankly, it's rude to call me, email me, or Facebook me and ask me to work for you for free. I get paid for my knowledge and my time...and I use mine wisely!  I know many don't know that's what they're doing, but it is and it's rude. Most agents work hard at their career and it's offensive to make a choice to pay someone else and then expect another agent to pick up their slack just because you know them.

I hope that doesn't sound harsh, but it's one of those things that I think the public just doesn't understand, so I thought I'd take the time to put it on paper.  Your Realtor is important....pick a GREAT one.  Pick one you trust and who you know will guard your best interests as though they were their own!  If they aren't....FIRE THEM!!!   And then we'll talk...grin...  :)

As a side note:  I'm not talking about friends who call and want to interview me to see if they'd like to list their home, even if it's been listed before.  I'm not talking about friends who call to consider me for helping them negotiate the purchase of a home.  That's what I do and what I'm there for.  I actually feel a double duty to my friends who trust me enough to discuss using my professional services...a professional duty to do the best job that I am capable of, which I feel toward all my clients and customers, and a duty to a friend who has placed their trust in me. I think most Realtors that I know feel this way, actually.

I hope this helped some of you out there who genuinely are looking for an agent to help you.  Look for one who is a Realtor,  because it matters.  Find one who has taken the time to educate themselves and who you trust to tell you what you need to know....not what you want to hear!  Find an agent who is knowledgeable, professional and honest.  It matters!

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