Episode 6: How Do Atlanta Realtors Get Paid?
Atlanta Quick Fact
The Big Chicken is a well known Marietta landmark that rises above a Kentucky Fried Chicken at the intersection of Cobb Parkway and Roswell Road. The 56 foot ft tall bird was originally built in 1963 as Johnny Reb’s Chick-Chuck-’N’-Shake. The owner and creator, Stanley R. Davis wanted something high as possible to attract customers. For measures of practicality and economy, the chicken was designed as an abstraction – a huge corrugated steel flange, painted red. In 1974 KFC took over and in 1994 engineers gave the chicken a moving beak and eyeballs. It is the home to many birds that sit perched upon its head giving it a comb appearance.
Atlanta real estate agents are salespeople who work on full commission only. Realtors are required to have a license by the state of Georgia. There is a professional organization called the National Association of Realtors (NAR) in which many agents, 1.2 million of them, belong to. This organization provides networking, professional development, research, and a world of information to its members. REALTOR® should only be used to denote membership in the NATIONAL ASSOCIATION OF Realtors. For more information on the REALTOR designation from the National Association of Realtors click here https://www.nar.realtor/.
Why would you want to work with a realtor opposed to an agent?
The biggest thing is, as a consumer you want someone who has a professional network, someone who is held to a code of ethics. Agents do not have to follow a code of ethics. Realtors pay fees for training to stay up to date on the current market. Realtors pay dues to be members of the NAR to receive the benefits for their clients. Most realtors work full time versus doing it as a side job.
What the public needs to know about how real estate professionals are paid:
- Realtors do not receive allowances for cell phone, gas, car, licenses or taxes
- Realtors pay all expenses until closing
- Real estate agents are servant leaders and often put their client’s interest ahead of their own
- They are very loyal
- If a buyer or seller doesn’t close, the agent doesn’t get paid or reimbursed for their time
What do agents think when meeting potential clients for the first time
- Safety is a primary concern when agents meet prospective clients for the first time.
- It’s always smart to meet at agent’s office or other public area.
- It’s important that the consumer and the realtor feel like each are a good fit.
Referrals to Atlanta listing agents
Scenario I: If realtor A shows a buyer homes over a two month period and that buyer sees a home and calls realtor B whose is the listing agent on the sign. The buyer then goes to look at the home with realtor B, walks the home and writes a contract with realtor B. Does realtor A make any money off this sale? No. The public needs to know how valuable our time is. It is time away from our family when we are working with clients, showing homes etc. Commission has not gone down. Our income is a risk!
Scenario II: If you’ve been working with a buyer six months, 40-50 hours and the buyer gets relocated to Chicago. Does the realtor make any money? No.
How a $9,000 Real Estate Commission is split. The Real Truth
The standard real estate commission is 3% per transaction side. (Buyer and Seller) Let’s take a $300,000 sales price, which equals a $9,000 gross commission. This is paid to the broker/company, not the agent.
Fees agent pay from the commission:
Marketing (photography, MLS fees, advertising, just listed/sold cards) = 10% of commission = $900
Company/broker share of commission (10% to 30%) $900 – $2,700
Contract to closing coordinator: approx: $300
Agent expenses (Gasoline, cell phone, insurance, car) $250-$300 per transaction
Total expenses: $2,400 – $4,200
Agent share: $4,800 to $6,600
Less IRS & state taxes: 30%
Agent take home pay after taxes: $3,300 to $4,600
In essence, a real estate agent takes home 35% to 50% of the actual commission. Think about this; the agent doesn’t get paid unless there is a closing. So if an agent works with 5 clients, and only 3 of them close, they are getting paid to work with 3, and the two that never closed for a myriad of reasons are leveraged against the 3 closings.
There are people who will look four months for a home and not purchase, and others that will look for two years. Some buys are simply not in a hurry and are in pursuit of the perfect property. However, an agent can sell a property by showing a motivated buyer/seller in just a few days.
What about experience?
Hiring experience doesn’t cost any more money than someone who just got their license. An inexperienced agent can cost a buyer/seller a lot of money due to lack of market knowledge.
How do Realtors find their business?
Realtors have servant hearts – they want to serve people in such a way they would gladly refer us to friends, family and coworkers. It’s a huge part of our business.
60-70% of our business is referral based. Adding in all the experience in our office we have 50-60 years of real estate.
More information can be found in these articles:
Wrap it up
If you have any questions please visit us at www.atlantarealestatepodcast.com. You can search every property for sale in Atlanta at http://www.cobbcountyrealestate.com/. If we can serve you we are in the North Atlanta Market Place but if we can’t use our agent finder service here http://atlantarealestatepodcast.com/agent-finder/ and we will help you find someone who thinks like we do.
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