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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Sunshine who wrote (14573)	10/27/2003 7:00:10 PM
From: Tradelite	Respond to of 306849

Steve, you did a great job on those numbers. I wouldn't even have attempted that, because the number of hours spent to make the dollars on a specific sale is too hard to generalize and quantify. You did sort of cover this by noting that some effort on some potential transactions goes for naught in the end. The subject of vacations was a good one. Hard to make anyone understand how much a vacation will cost the typical agent, and how reluctant one can be to even dare take one. Always missed a few calls from prospective clients while out of town and lost them altogether to someone else who was available. Meanwhile had to pay other agents to take care of my existing clients. The real estate market doesn't go to sleep just because an agent wants to leave town for a while, and the clients certainly do not approve. Also, on the subject of advertising, it a standard guideline that to be successful in real estate, approximately 10 percent of one's income needs to be spent on self-marketing--communicating with past and future clients, newspaper and direct mail ads, etc. At the end of every year, I often had spent that amount or more without trying to measure or budget it monthly. THIS DID NOT INCLUDE PROPERTY ADVERTISING. Some people would be surprised at the Schedule C and net income figures that agents file with the IRS every year.

To: Mr. Sunshine who wrote (14573)	10/27/2003 7:04:26 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

Steve, i think you need to change your calcs a bit. your assumptions only work if this is the yearly salary of these agents. instead it is more like a monthly or weekly salary. an agent who sells one $1.6mil house probably sells many other properties as well. instead of 48K gross, they might have 1 mil gross or more. once you get to that kind of gross, the other assumptions you make totally fall apart. Social Security, aka FICA, applies only to the first 80 or 90K of income. and people who make a mil a year don't need to spend 200,000 a year to have a decent vacation. you might as well say that a $300/hour lawyer will need food stamps to survive because the 12 grand they make one week is not a lot to retire on.

To: Mr. Sunshine who wrote (14573)	10/27/2003 7:38:00 PM
From: Wyätt Gwyön	Respond to of 306849

For every hour spent on making a successful sale there are several hours wasted on potential sales that do not work out. this is true, and is the reason agents are overpaid on the jobs that work out smoothly. the agent then has to average out all the time spent unprofitably on jobs that did not work out (or worked out but were a huge PITA) to find their true hourly wage. if there is a lot of variation from year to year, it may make sense to average over a period of multiple years. this obviously would make sense for you based on your first six months. you would not have been able to justify staying in the job if you thought of your long-term hourly rate as zero! so i understand why agents are overpaid for some work, and perhaps in some years. in fact, with the current housing bubble, it seems likely that many agents in bubbble parts of the country are all being overpaid. they should make hay while the sun shines. it will eventually end and then there will be a huge overhang of people who think of themselves as making 250K a year or whatever, but find they do not have other marketable skills which would pay more than 25K (McDonalds manager, perhaps). i don't think the current compensation system is a good one. the people who make the most are the best at "churning" and self promotion. it would be better to have a national RE registry. people should also just pay an hourly wage to agents. this would do away with a lot of conflicts of interest. this would change the nature of the service. RE agents would not feel like they need to be available 24 hours a day, at least not for higher wages (like calling a plumber at midnight). OTOH, the ultimate fees paid by customers would be lower. surprisingly, the average agent would probably make more money and have a better quality of life, since they would be paid by the hour. this better QoL would be available because fewer gross hours would be spent on low-return peripheral activities (such as self-promotion and client handholding), and fewer agents would be employed in total. clients would, in exchange for lower rates, need to lower their expectations of what agents do. no more 24/7 handholding. just get the dang transation done. most likely, thanks to the Internet, this type of system will be implemented gradually as new generations of buyers take advantage of this medium. agencies offering an MLS listing and limited service will eventually become commonplace. i believe in a couple decades, the current 24/7 agent handholder system will seem as antiquated as having a live-in butler.