Much of the general public is oblivious to all the costs associated with being a real estate agent. They mistakenly believe we all drive BMW’s and are grossly overpaid. Nothing could be further from the truth. Carrying a real estate license comes with many expenses, and agents have to charge our clients accordingly to cover the costs of doing business.
The average yearly income for real estate agents is $40,000/$50,000. Most agents don’t even sell 6/7 homes per year. With that in mind, there’s a myriad of monthly costs that must be covered, whether we sell a home that month or not.
To demonstrate that it’s not all fancy cars and mansions in the lives of agents, I’ve listed 10 things real estate agents blow their commission checks on which the public has no idea about.
10 AGENTS EXPENSES
1. REA Dues:
You have to pay monthly to have access to REA (Realestate.com.au). REA is the source that lists all the homes for sale. Domain don’t have near as much data in most states as REA. The REA charges a hefty monthly fee to list and sell the agents’ homes. It’s very much a necessary tool in the agent toolbox.
An agent can’t sell a home without a sign. Signs aren’t free. When an agent has dozens of signs, they have lots of money invested. The design and shipping can be hundreds of dollars. Agents use yard signs, open house signs, location signs, and sold signs just to name a few. It adds up very quickly.
3. Licensing Fees:
The Agents Licensing Board (ALB) is the Board that has responsibility for the licensing of real estate, business and conveyancing agents and the registration of agent’s representatives in the Northern Territory. And guess what— ALB wants its money every year for renewals. And they don’t take IOUs.
4. Marketing Materials:
The agent’s main job is to market. They market properties and themselves. Between websites, business cards, flyers, and expensive print advertising the average agent will spend almost $1,000/month on marketing materials. Some spend $5,000+ in marketing each month. It’s not cheap to spread the word about a multi hundred thousand dollar asset for sale in innovative ways and promoting yourself.
Paid ads aren’t cheap. If it wan’t for VPA (Vendor Paid Advertising) most agents would be out of business but don’t think for a minute they don’t pay out of there own pocket. Whether it’s in the paper, magazine, or the baby seat in a shopping cart, ads cost a lot of money. They’re the lifeblood of a good agent. That’s how they sell your home—by advertising it.
6. Website Hosting:
If you’re going to sell real estate in this digital age, you need a quality website. You’ve got to have a place for your prospects and clients to come and search for homes. That website has to feed into the REA (another fee to do that), and the website has to be responsive. The average custom website costs $5,000 and comes with monthly charges. You starting to see the pattern here?
7. Open Houses:
You may think that we just sit in your home using up your free wifi, but that’s not the case. Depending on the agent you choose, there’s drinks (water in Darwin is almost essential) rare occasions food involved as well as balloons, signs, ads, and staging—all designed to make the place look and feel like a million bucks. I’ve even paid to have someone mow the yard and trim the bushes before an open house. I didn’t have time to wait on the owner to take action.
8. Settlement Gifts:
In most markets its customary (but not necessary) for agents to give a gift to the clients after doing business with them. What most don’t know is that they usually send one to the conveyancer and the finance person as well. When everyone puts in hard work, the agent wants to reward them so they continue to do so. You may view it as frivolous, but you can never be too nice to conveyancers and banks. When you need a favor, gifts go a long way.
9. Being An Agent:
Most top performing agents not only spend a lot in marketing but can spend thousands of dollars a year in professional development courses, coaches and mentors. Flying around Australia to attend AREC or a Glenn Twiddle event does not come cheap.
10. Office Space (often included in an agent’s commission split)
Most people think that agents have a job with an office. They don’t realise in most cases that the principal charges for the office space in one way or another. Just know this: Nothing is free in the real estate game. Not even a place to do your work. And as you know, commercial office space isn’t cheap.
So next time you’re thinking about hiring an agent, and you think their fees are a little high, think of this list (which is just a fraction of what’s really paid for). They’re all things to facilitate properties getting moved faster and for higher dollar amounts.
It’s not easy, cheap or always fun being a real estate agent, but the smile we see on our clients’ faces when they buy a new home or profit from selling their old one, makes it all worth it.
Why Choose iProperty NT
At iProperty NT we aspire to be innovative. We take pride in our professionalism and integrity, and being an independent boutique agency.
Recognised by industry leaders as one of Australia’s most innovative and forward thinking brands, our dynamic approach toward real estate is breaking the traditional mould to cater for the buyers of today.
“We are social media heavy”
A proud independent agency – we have developed a solid understanding of the ways in which local real estate is conducted.
We like to challenge the status quo of traditional Real Estate, we embrace change and we do things differently to give you the edge by making your property stand out