38002.com
Amen’s Angels Of Real Estate
theview
theview
April 2014
Page 9
How the Real Estate Profession Works
By Michelle Amen, REALTOR
Today is the first day of Spring. YAY!! But where
is it? It will be here in the next couple of weeks
and the Buyers and Sellers are already getting
busier! It’s already been crazy busy with multiple offers, offers above list price and all of the
things that go along with a returning Seller’s
market. I want to talk today about How the
Real Estate Profession Works.
As all of you already know, from reading my
columns, I talk to hundreds of people on a frequent basis. I am one of the highest ranked
Internet Realtors in this area. My presence is in
the top three. The calls I get come in volume. It’s nothing for me to show
70+ properties a week to 6 different buyers, or talk to 4-5 Sellers. So
here we go; let’s dispel some misconceptions about this business and
answer the most common questions Buyers and Sellers might have.
How Realtors work within the Industry
We are Independent
Contractors, 1099
Labor!
WE PAY the company for
whom we work to be in business---this is our “overhead”
and then we also pay for our
own gas, signs, key boxes,
business cards, flyers, T-shirts,
all marketing materials, all
meals that we buy for any client, extremely high dues to
NAR, TAR, MAAR, etc. OH,
but the 2 highest expenses that
we have are the “Brokerage”
and the IRS. The Brokerage is
what we pay to the company
that holds our license. It can
range from 5% (in rare instances) to 36%. There are
many deviations of this that get
too complex to explain on this
just one page, but the average is
about 20-25%.
We are paid on production;
the more we produce, the lower
our required percentage amount
to the Company is. Now, saying
this, this is an annualized number. We have to start over
EVERY year on the production
scale. Some companies offer a
sliding scale; some have a permanent brokerage fee that is
deducted from every commission check. The biggest myth
about Real Estate Agents and
their commissions is that we
“keep” all of our commission.
Everything we do to make your
home visible to the public and
the world comes out of our
pocket.
(Note, I am not an accountant, so what you are about to
read is from experience. I have
a highly experienced CPA that
I have been using for over 15
before I was in the business.
So if some of the numbers are
a little off, understand that I’m
only pulling from memory, not
my tax return; Trust me the
concept is exactly the same.
We keep very little money that
we make.)
Then comes the IRS. We are
taxed at Income-Expenses and
THEN there is the standard IRS
Self Employment rate of over
15% tha