How Do Realtors Get Paid?

First of all, in Florida, there are two general types of real estate licenses: sales associate’s license and broker’s license.  There are further divisions (active, inactive), but for now, those are the two general types.  In order to get a broker’s license, an individual must have had a sales associate’s license for at least two years (it used to be only one).  A person with a sales associate’s license must operate under the license of a broker, or as we say, “hang” their license with a brokerage.  A person with a broker’s license can continue to work under another broker’s license, and in this instance, they are a Broker Associate.  Alternatively, a person with a broker’s license can operate their own office.  All real estate offices must have a designated broker.  There can be co-owners of an office, with at least one owner being a licensed broker – not all owners have to be brokers (they can be a licensed sales associate), but the office must have a designated broker.  In most instances, a Realtor who is working under a broker is acting as an independent contractor, not as a salaried employee or hourly wage earner.  This means that there are no 401k’s, no paid vacation, no sick leave, and no assistance with health insurance, etc. that many people associate with being employed.

When you contact a Realtor to sell your property, which means a market analysis, determination of price, recommendations on presenting the home, marketing, showings, signage and lockbox, open houses, going through offers, home inspections, dealing with appraisals, lenders, etc., a process that often takes months, they do NOT get paid during that process.  And if your house doesn’t sell during that listing period with that Realtor, they get nothing.  Not one thin dime.  They do not get reimbursed for any of their expenses unless you have agreed in the listing contract otherwise.  Thus why Realtors, in most cases, will not take overpriced listings.  Why invest all the time and work into a property that won’t sell with a list price like that?  If your property does sell, if your Realtor is a broker, they are paid at closing when the checks are distributed.  If your Realtor is a sales associate or broker associate, their broker is getting paid at closing; they are paid afterwards by their broker.

If you contact a Realtor to show you property, they do not get paid for researching available properties and comparable properties, making appointments, driving around to and showing multiple properties, drafting offers, presenting offers, determining when a reputable home inspector is available, dealing with the mortgage lender, appraiser, surveyor, etc.  They will get paid at closing if the Realtor is a broker.  If the Realtor is an associate, they get paid by their broker after the closing.  Therefore, if you decide you need to switch agents after enlisting the help of a Realtor who has done more than show you a property, be sure it is for a really good, valid reason.  After all, that agent has been working for free.

The commission split between broker and associate is widely variable.  In both cases, out of whatever the Realtor gets paid, they are paying for office expenses, income taxes, gas, advertising, etc. out of their pay and have to find a way to put something aside for retirement and lulls in the real estate market (if they are thinking ahead).  Remember, until the closing is done, your Realtor is operating strictly on good faith.  They work for free until the closing is done, and that is basically how Realtors are paid.

Prep Your Home to Sell, Part 1

Part 1:  The Outside of your home and the always important curb appeal factor.

When a prospective buyer sees a picture of your home on the internet (most buyers first see their eventual homes on the internet these days) or drives by your home, what they see on the outside will often determine whether they make that phone call to their Realtor saying “Tell me more and when can I see it?” or not.  If you would like to sell, of course you want to be in the category of houses that buyers want to see, right?  So let’s get the outside looking good.

Put away recreational and yard equipment and make sure there is a clear path to the front door.  Left out hoses, bicycles, etc. give a disheveled, unkempt appearance right off the bat and obstructions in getting to the front door do not say “welcome”.

Trim back shrubbery and tree branches.  Shrubs should be no higher than the lowest point of the front windows (Crimewatch suggests this as well) and greenery should not be up against siding.  You want them to be able to see the house and let in natural light, as well as giving your property that neat and well-kept appearance.

Pull the weeds and lay a fresh layer of mulch – fresh pine straw or bark mulch defines the landscaping beds and helps keep the weeds at bay.

Check trim and siding, if applicable, for rot and have any repaired and repainted.

Put a fresh coat of paint on the front door and if any hardware is monogrammed, engraved, or in poor condition, remove it and replace it with something new.

Have the exterior washed.  Don’t forget a soft wash of the roof if there are mildew stains, the driveway, and walkway.

A colorful potted plant or two by the front door are a nice touch.

Keep the grass mowed.  This sounds very simple, but I am amazed by how frequently I show properties on the market where the lawn is forlorn and neglected looking!  If you are not at your property that is on the market, be sure you hire someone to maintain the yard.  Not doing so will cost you money in the form of a lower selling price or no sale at all!

Prep right, price right, and you will sell right.  Cheers, n.