Monday, January 28, 2008

Real Estate Agents Make Too Much Money

house-shaped-50s.jpgI'm starting an ongoing feature of this blog, which is basically just a recounting of my daily schedule. It will always be called "Real Estate Agents Make Too Much Money" and it'll always start with this little house made of 50's.

Why? Because I'm tired of defending myself to people who think I earn tons of bucks for very little work. This? Is a myth. I work a few more hours than the average US white collar worker, and I make a few more bucks than the norm.

Case in point: I'm about to launch a listing program with a home seller. The project outline includes repairs, staging, marketing, coordinating showing feedback, negotiating the eventual purchase offer, negotiating all over again when the buyer's inspections are done, shuttling paperwork back and forth between the seller, buyer, lender, title company, inspectors and appraiser, and finally! helping my seller move out of his old home.

The project timeline is 3 months from start to finish and I'll be putting in an hour to four or six hours every day, on this home alone. Monday through Friday and weekends too. Holidays too, while we're at it.

My expected gross pay for this deal? $7,800. That's before taxes and expenses. I'm estimating 3 hours a day, 6 days a week, for 12 weeks. That's 216 hours of work to get that home sold. Do the math - I'm making $36 an hour, gross. Is it a lot? Probably sounds like it. But wait, there's more!

That $7,800 is mine only if the home sells. If it doesn't, I get bupkis. Nada. Nothing. I spend my money marketing the home whether it sells or not (flyers, yard signs, MLS membership, ads sent to other Realtors, postcards sent to the neighbors, open houses & parties hosted in the home, etc., ad naseum). Then add in the typical overhead of cellphone, printers, toner, fax, Internet connection, website maintenance, car expenses & insurance. Then add in the IRS's cut of my take home pay because on top of my regular income taxes, I pay 12.5% in to the Social Security system where regular employees only pay 6.25%. Don't forget to add my insurance & liability expenses.

My expected take home pay on this deal is about $3,800. That pays my mortgage, food, pet care, and all the daily expenses of life. Compare that to 3 months worth of your own paychecks and get back to me on whether I make too much money. While you're comparing, remember that you get paid for sick days and have a vacation package and a 401k too. I have none of those.

I've traded all that security for the luxury of arranging my schedule to suit me, and the fact that my potential for earnings is only limited by my own hard work. I don't get up until 7am and don't usually start "real" work until 10am. I deal with emergencies, emails and my little-used gym membership until about 10. But I work until 12:00 midnight or later. Some days I get a 3 hour lunch to eat & run errands. But some days are 13 hour marathons and I eat in the car on the run, out of my little cooler stocked with apples, trail mix, water and hand sanitizer. My first summer in the home selling biz was 2005, the year of our real estate boom. I survived on apples & trailmix for 6 weeks straight because I never put in fewer than 13 hours a day, 7 days a week in that time. That was the bad news. The good news? I lost 15 pounds in 6 weeks and helped 3 families realize the American Dream of home ownership.

Next installment of Real Estate Agents Make Too Much Money will have an actual schedule from my dayplanner for this deal. I'll keep posting from time to time, and let readers decide whether Real Estate Agents Make Too Much Money or not.