Thursday, August 02, 2018 / by Anne Rose
Q: How can I make $1,000,000 in Real Estate?
A: Start with $3,000,000 (and $113,000,000 in sales).
Much of the general public thinks of Realtors as part-time Vanna Whites.
All you need to do is stick a sign in the yard, open a door or two and voila - payday!
We’ve all seen the ads that say “Over $1 Billion Sold!” and even the dueling print ads that claim “On the first and third Tuesday of the month we sell more yellow houses than all of our competitors combined!” I often wonder if the average person looks at a flashy advertisement and thinks to himself, “Wow, 3% of $12 gazillion dollars is a lot of commission to earn for opening a few doors and sticking a couple of signs in the yard.”
This is not a commentary on commission, rather an example of how a typical day in the life of a Realtor is spent and how the dollars are earned.
Let’s do a math problem together.
We’ll use as our example a house that sells for $100 (to make the math easy on me!)
In a previous article we learned that, in most cases, if you represent a buyer in the purchase of a home, it probably took twenty-five consultations with potential buyers to get one to stick.
That’s a lot of “Nos” before we obtained a “Yes”! If you represent a seller, it may have taken on average eleven verbal consultations and two extensive in-home listing presentations to acquire the listing of a home for sale.
If you are a really good Realtor, you might sell those about 70% of the time. In summary, we’ve interviewed 25 potential buyers, 11 potential sellers, written one fully- executed buyer contract and sold 7/10 of a house for a seller. Gross Total Sales for our efforts $170.00 Average commission earned on a transaction 2.65%.
Let’s not forget that I am an independent contractor!
Because houses cost a lot more than $100, we can start adding zeros to our example. If the house cost $170,000, we made $630.00; if it cost $1.7M, we earned $6,300.00; and if it cost $17M, we end up with $63,000.
This might look like a living wage at the higher prices, but consider this: more than 50% of licensed Realtors in the Cape Fear Association of Realtors sell fewer than four homes and many will sell none. We operate under the extreme scrutiny of the North Carolina Real Estate Commission, the Office of the Attorney General, and follow a very strict code of Ethics.
Yet our profession is not highly regarded as a professional services provider.
Have you seen a real estate contract lately? If you call me at 10 pm I will likely answer. Call me just before my kid’s soccer game and normally I’ll miss that soccer game. Call me during my day off... huh, what’s a day off? If I plan a vacation, all of a sudden - the world wants to look at houses!
The next time you’re tempted to text your agent at 11:30 pm to ask about the utility bills on a house that you don’t intend to buy until you retire/downsize/sell your house/win the lottery - remember folks, it is a job just like your dentist’s, your lawyer’s and yours. Too honest?
At KBT Realty Group we work with a servant’s heart and we love to serve. Subservient doesn’t really fit the model of our win-win mentality, but we do whatever it takes. I am sure the professionals across all the top-rated brands, as well as the myriad of local independent firms, thank you for your business, your trust and your loyalty.
I certainly hope we’ve earned it. We continually aspire to create confidence that you can lean on to the point of referring us your friends and family!