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Agent Says Costs Pare Down Earnings

March 12, 2000

Regarding the item headlined "Seller Reaping Nice Profit Shouldn't Bemoan Realtor's Cut" in the March 5 Real Estate Q&A by Robert J. Bruss:

I have been in the field for 15 years and I feel that I earn every dime.

First, very few sales actually earn an agent 6%. In about 90% of sales, two or more agents are involved and the 6% fee is split two (or more) ways.

Then the agent's portion is further split with his or her office--usually 20% to 30% off the top. Then the agent may have to pay a fee for processing the paperwork--usually about $250 per sale.

When the dust settles, an agent often gets about 2% of the sales price. And that is earned at a cost--either representing the buyer, which requires time-consuming house-hunting trips, or the seller, which involves expensive marketing and prospecting costs.

And then come the other operating costs of being a real estate agent, including office expenses, mailing costs, auto and phone expenses (a cell phone is required nowadays), computer costs (also a requirement today) and numerous other business-related expenses.

I suggest sellers check out the commissions charged in other high-end transactions. Art and estate auction houses typically charge up to 20% of the sales price--combined from both the buyers' and sellers' fees. Automobile auctions typically charge 10%. Coin auctions charge 15% to 20%.

This notion that we are overpaid and thus can work for reduced fees is born of a lack of knowledge on the public's part and perpetuated by some real estate columnists.


Sherman Oaks

Is Bruss being disingenuous when he says that a homeowner has done nothing to earn the profit on the house he is about to sell? How can such a usually sensible person make such a lame statement?

That "nothing" is the same "nothing" that all investors do, that is, put their capital at risk in the hope of a return.

If Bruss really thinks this is nothing, he should have a chat with some of the people who have suffered serious financial reversals while doing this "nothing."

I agree with the homeowner in that common sense tells us that Realtors' incomes must be going up disproportionately at a time when the effort that is put into a sale is, if anything, reduced.



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