Commission pay is 'the solution'
Letter to the Editor
By Inman News, Thursday, August 20, 2009.Re: 'Throw away the cue cards' (Aug. 7)
Dear Editor:
This opinion was a good thought and insightful until the last paragraph: "If many more agents truly understood and performed their fiduciary duties as a professional, rather than someone who has been juiced up to win the next sales competition, we would be able to actually begin getting paid for our time and expertise, rather than having to get a deal closed. We will never be true professionals in the eyes of the public as long as we get paid by commission."
This tarnished and deflated my opinion of the letter.
The method of compensation seems to be your solution to how agents are viewed in the public opinion. Compensation of my time, knowledge, expertise and my ability to protect my clients is paramount. My ability to control and give my consulting services is not contingent on my method of compensation. It is my mindset and desire to give my best.
I agree with you on throwing away the cue cards in order to garnish improved public perception. This is also the case in many, many industries such as law, insurance, medical, construction, homebuilding and advertising. Scripts and dialogue training is present in all of these industries.
I tremble to think that all real estate-associated industries revert to straight-salaried methods of compensation. This is an entirely new subject that can take on a whole new conversation.
It is not the method of compensation that needs to be modified. I think training and mindset is the key, in all of the above-mentioned industries.
My opinion is that all industries get paid by commission. Better performance and incentive pay would solve plenty of poor performance problems. Think about how public services would improve!
Think of your top five things you hate about calling and receiving lousy service from low-pay hourly employees. Commission seems to be the solution, not the problem.
Alex X. Valadez
Broker
Lakewood, Realtors
Dallas, Texas
***
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Submitted by Jillayne Schlicke on August 20, 2009 - 12:49pm.
Not sure that's what the previous author meant.
What about working for an hourly rate, on retainer, like an attorney.
I spend X number of hours with my agent and his/her hourly fee is Y then as a client, I can figure out how much of my money I'm spending.
This means an experienced agent could arguably be worth more per hour because he/she would work for me in a more efficient way. I would negotiate a lower fee if I hire a new agent.
I have hired experienced, extremely knowledgeable attorneys for $450 per hour. I have also hired newer attorneys for $125 per hour.
I only needed the first attorney for 2 hours but boy did he know his stuff.
Submitted by Greg Salera on August 20, 2009 - 5:57pm.
In sales sellers are responsible for the various marketing costs involved with selling their products. In real estate those marketing costs are usually paid to a Realtor to market and sell someones property. Those costs will vary but they do usually include advertising, buyer’s agent compensation, administrative tasks, lockbox, and brokerage fees. Why should a buyer be responsible for paying the Realtor to take them out looking at homes? That's just asking buyers to pay for the sellers marketing costs? Would you ask a buyer to pay a car dealership a fee for selling them a car? Of course not (the burdon is on the seller.) In real estate buyers are struggling to pay down payments and closing costs. Adding Realtor fees to their side of the deal places an undue burdon on buyers.
As far as the commission based pay structure goes; it is likely the best compensation model ever created. Commissions keep agents motivated, focused, and committed. The weak end up falling out. Try to get an hourly employee to show passion, interest, and drive while working with clients. Try to get an hourly employee to drop their plans after work because a buyer called at 4pm to see a house at 7 when their shift ends at 6. See the response from clients when they are handled by multiple people in an office opposed to their real estate licensee because of varying work schedules. Real estate is a people business and it's a big responsibility to lead buyers and sellers through the process of home sales. Let the agents stay independent contractors and let them get paid for selling homes. This is what our clients hire us to do. Commissions are always negotiable and better agents will yield higher commission percentages than less qualified agents, just as hourly paid fees to seasoned employees would likely be higher if the pay structure was hourly. The public views Realtors as salespeople and changing the structure from commission to hourly will not change this view. We would just be viewed as employees selling homes opposed to agents selling homes.
Greg Salera
Partners Real Estate
9300-A Old Keene Mill Rd
Burke, VA 22015
www.virginiarealtyservices.com
Submitted by Ileri Ogunfiditimi, REALTOR® on August 20, 2009 - 9:51pm.
The method of compensation has nothing to do with an agent's professionalism. In fact, it's my opinion that real estate agents really earn "contingency fees" as opposed to "commission fees." Commissions are for "traditional" or employee salespeople.
But real estate agents are a different type of salespeople; very nontraditional. Agents can be either a small business owner (e.g. independent contractor nonemployee) or employee depending on the type of broker-agent relationship. Usually at the business level, agents act more like consultants or advisors more than as a typical salesperson. An agent's legal fiduciary duty prevents an agent from "selling" to their clients because agents have to perform in the best interest of the client and adhere to local/state laws.
And in many cases, they don't have any company-mandated quotas, sales meetings, territory deployments, pre-selected specialties, or even a sales manager to report to every month. The entire sales management process is completely self-designed and self-managed - just like how it's done in other small businesses.
So, real estate agents who are ICs are on the same level with other professional private practitioners in terms of how they operate their practices. And can be compensated by retainer, flat fee, hourly, or a contingency fee just like consultants and lawyers. But the type of compensation utilized depends on other factors such as, the circumstances of the transaction, polices of the brokerage firm, and business practice of the individual agent.
Maybe referring to the commission fee as a contingency fee is the better option. Tom Hopkins, the real estate trainer/entrepreneur, also suggests doing this in one of his books.
Ileri Ogunfiditimi, REALTOR®
Ileri Ogunfiditimi, LLC/Jobin Realty
7825 Tuckerman Lane, Suite 201
Potomac, MD 20854
Direct Dial (240)403-3400, Ext 742
Direct Fax (866)283-7840 [toll free]
Email: ileri@ileriogunfiditimi.com
www.ileriogunfiditimi.com
www.jobinrealty.com
Submitted by Steve Gillespie on August 23, 2009 - 12:28pm.
I can appreciate maintaining a "mind-set", and always do your very best: But if you do too good of work, and get the property for your client for nothing; you make zero!
The better you do for your client, the less you make? Seems odd: Perhaps happy buyers should start showing more appreciation for your good work.
steveg