If The Numbers Don't Work Do You Say "No"...This IS A Business!!

By
Managing Real Estate Broker with RE/MAX Executive Realty
http://actvra.in/G9f

As I continue to read posts from agents throughout the country, I can’t but wonder how many of these agents can afford to stay in business.  Many of the costs of working in our industry are universal. 

There are dues and fees that are fairly standard throughout the system; there are advertising costs that are standard; there are the standard expenses of communicating like cell phones and computers.  Yet, I see listings that are under $20,000. 

If an agent is on a split with an office, that commission is sinful.  If an agent has no split, there are still taxes to be paid on that commission and then other expenses to be deducted.  What’s the net?  Is there anything left?

At what point do you decline to take that business?  Does an agent in that marketplace ever refuse business?  If the numbers don’t work, why spin your wheels? 

Is it unethical for an agent to turn down a listing that nets pennies?  Are we encouraged and should we feel obligated to say “yes” to everything and everyone, even if it means spending our own money and making nothing to get to the closing table?  How often can be in the "red?"

This is a business and if we can’t make money, we’re out of business!! 

****************************************** 

About the Author:

Barbara Todaro is an award winning real estate agent with 35 years of experience and is the marketing agent for the Kuney-Todaro Team.The Kuney-Todaro Team is continually recognized every month as a top producing team in New England, since its inception over 10 years ago.

For information about our new construction, visit our website at www.newhomesinfranklinma.com.This site is focused on new homes in Franklin MA.

If you are interested in purchasing a Franklin MA property, visit our buyer’s website at www.barbaratodaro.com.Email or call to make an appointment to view our listings.

If you are considering selling your home in Franklin or one of the surrounding towns, visit our seller’s website at www.frankinmanewhomes.com for a Free Market Analysis of your property.

The Kuney-Todaro Team is the “#1 Team in Franklin’s #1 Office.”Call now to work with the best!!

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. C. Lloyd McKenzie 08/11/2012 07:02 AM
Topic:
Real Estate Sales and Marketing
Location:
Massachusetts Norfolk County Franklin Top Listing Real Estate Office Re/max Executive Realty
Groups:
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Tags:
declining a listing

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Rainmaker
639,124
Liz Wallace
Century 21 Sherlock Homes - Rockville Centre, NY
Broker C21 Sherlock Homes, Rockville Centre, LI, N

This is a great post and a lot of good discussion.  We have co-ops as low as 70,000 and then can go up to a million plus homes.  I will take a motivated seller at a fair price.  I will go a little high on a really motivated seller.  That said I will walk on a torturous seller.  No amount of money is acceptable to allow someone to abuse my Agents.

Aug 11, 2012 09:14 AM #91
Rainmaker
59,889
Sharon Sanchez
Ace Home Realty - Carson, CA
Your Number "1" Source For Real Estate.

Hi Barbara.  This is a business.  So we should treat it like a busines.  There's positives and negatives to accepting a listing that's not worth much.  I don't have that problem, but I would suggest that one should take into consideration referrals and future business along with charging a higher commission or a flat fee.  I worked on a short sale with Bank of America for 2 years because of the previous business and referrals I got from the seller.  I wanted to Quit...Give-up...but I couldn't.  It was a business decision to keep going. 

Have a wonderful weekend Barbara.

Aug 11, 2012 09:58 AM #92
Rainmaker
396,713
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.
Sometimes, the answer is no.
Aug 11, 2012 11:00 AM #93
Rainmaker
814,173
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

Barbara - I had to laugh, thinking of how many parcels of land I've sold over the years that went for a whopping $5,000. Of course, 15 or 20 years ago, money was worth more and gasoline cost less.

When I first started in real estate there were MANY homes in our town that sold for under $30,000. Now those same homes are over $100,000 (with no visible upgrades!)

Anyway... I agree with your point. However, I read a post recently by a gentleman who took one of those low priced listings, sold it, and as a reward went on to sell several high-end properties for the same client. So, you just never know if saying "no" to one low-end listing might be killing the goose that lays the golden egg.

Aug 11, 2012 11:01 AM #94
Rainer
239,473
Justin Dibbs
United Real Estate - Ashburn, VA
REALTOR® - Ashburn Virginia Homes for Sale

So very true.  And often, the low end deal require 2-3x the amount of work.

Aug 11, 2012 11:03 AM #95
Rainmaker
359,685
Nina Hollander
RE/MAX Executive Realty/Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

The beauty of this business is that we can pick and choose our clients as much as they pick and choose us. We are in business; the numbers have to work. We have no obligation to represent anyone whose business doesn't provide us the bottom line we need, unless you have a personal reason for working with someone whose business doesn't give you your desired bottom line. But that's a totally different analysis. Every other profession looks at their bottom line before taking on clients, why shouldn't we Realtors do the same?

Aug 11, 2012 11:22 AM #96
Ambassador
1,238,561
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

To echo what Roger said above, you can also charge different ways. I have a consulting model that I offer people as well, so there are many ways to get paid.

Aug 11, 2012 11:45 AM #97
Rainmaker
256,851
Sue Ellett
Coldwell Banker United, REALTORS (Paragon Property Group) - Marble Falls, TX
Marble Falls, & Austin, TX, Lake Travis, Lake LBJ

So right, but we do work relocation and USAA generated referrals which we can't really say "no" to as members of the Relocation Team, so those transactions can be rather ugly in terms of time spent versus commission earned.  However, the one positive we do find is that they often lead to other transactions and other direct referrals that help to soften the "blow" and ultimately make it worthwhile in the end.    

Aug 11, 2012 11:45 AM #98
Rainmaker
109,055
Carolyn Shipp
Source 1 Real Estate - Mineral Wells, TX
Mineral Wells Texas Real Estate

I will list a property under $40,000 if the seller will agree to my flat rate fee.  Anything above that is a % of the sale price.  We do have a lot of properties in our area that are low end and a majority of the time the seller is willing to pay the flat fee.

Aug 11, 2012 12:22 PM #99
Rainmaker
582,897
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker
Hi Barbara - very true in most cases. Of course there are occasional times when taking a not-so-profitable transaction is an excellent investment. I took a short sale listing that took 2 years to close and I figured that I earned about 26 cents an hour for the work I did on it, but I knew their hardship would be shortlived, and they would remain clients. Not only have I subsequently sold them another more expensive home, but they have become close friends and they have referred more clients to me. But in most cases I might not have taken such a listing where the return potential was so slight. Do your homework.
Aug 11, 2012 02:34 PM #100
Rainmaker
673,711
Pamela Seley, REALTOR®
REALTY EXECUTIVES OTF - Temecula, CA
Menifee Lakes California Real Estate

Listings in my market area that are under $20K are usually flat fee commissions and standard sales. It can work out. An agent has to decide if it's worth it for them, or not. When it comes to short sales, the amount of time that goes in to them has to be calculated, so for me, on short sale listings, I have a price point and it's got to be close to $150K, or it's not for me. Thanks for your post today, Barbara, you are insightful as always,

Aug 11, 2012 02:36 PM #101
Rainmaker
150,076
Dana Basiliere
Coldwell Banker Hickok & Boardman Realty - Burlington, VT
Making deals "Happen"

 

Barbara,

Yes, as business people we need to evaluate effort to $ to some degree but also need to remember someone needs sell the mobile homes. We all like the big sales but everyone needs our service.

Now the short answer; yes, if for any reason, any reason be it money or the condition of the house we can just say no.

 

Aug 11, 2012 05:49 PM #102
Rainmaker
1,259,055
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I do not live in that kind of any area.  The cheapest I ever helped someone buy was 50K and it was questionable.  

Aug 11, 2012 09:29 PM #103
Rainmaker
634,106
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Barbara, we target expired listings.  We rarely go after one that is less than $100k because we cannot make money on them.  AND they attract buyers who lowball offers.

Aug 12, 2012 05:52 AM #104
Anonymous
Anonymous
Jay R

Of course we have the right to chose who we work with, but if you sign a broker agreement with your client to represent them as an AGENT.  You MUST represent THEIR best interests.  Even if your commission will be ZERO you are obligated to represent the best interest of your client, not yours! 

Aug 12, 2012 08:28 AM #105
Ambassador
559,973
Gayle Rich-Boxman Fishhawk Lake Realtor (503)755-2905
Vernonia Realty - Vernonia, OR
"Your Gateway to the Lake" Birkenfeld Oregon

Barbara~Thank you! Thank you for giving some of us the "it's okay" to say NO. I have a fella who just called again TODAY and has copious amounts of questions about vacant lots and he never ever follows through. It turns out that he lives with his mother--that was the last thing I learned when I left a message for him months ago, which he never returned by the way.

He NOW has interest in a lot that is not my listing, for a piddling 8,900.00. Lots more questions. I am not going to call and go through this again. I was vascillating up til reading this post.

SO, THANK YOU!!!

Congrats on the feature.

Aug 12, 2012 02:48 PM #106
Rainmaker
323,964
John DL Arendsen
ON THE LEVEL General Contractor, Crest Homes Factory Built Housing Dealer & Developer & TAG Real Estate Sales & Inves... - Leucadia, CA
Contractor, RE Brk, Factory Built Home Dealer/Devl

Love it Barbara as usual. Here's a little something to jump start your day. Not that you need much.

 

Never giving up is a life sentence  

 

 

Never giving up is a life sentence for which there is no escape.


for which there is no escape.

Aug 12, 2012 06:18 PM #107
Rainmaker
261,530
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Not much for that price around here. Maybe a beat-up trailer. If I can't cover my expense,s much less make money,why bother.

Aug 13, 2012 02:41 PM #108
Rainmaker
346,212
Karen Feltman
Cedar Rapids/Iowa City, IA Skogman Realty - Cedar Rapids, IA
Relocation Specialist
It is a scary business when agents out there do not calculate what it costs to truly be in business. Sometimes a listing like that can bring more business at a higher value. Often times, it can bring more headaches than what it is worth in the end. Great discussion!
Aug 13, 2012 10:23 PM #109
Rainmaker
278,362
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

I'm late on this conversation and haven't read any of the comments but I think you also have to be careful.  I sold a couple of really low ones this year - $37,500 most recently.  That one I might have broken even off after all the time and gas, but it was still worth it.  My husband sold a $50,000 short sale a couple of years ago and now she remarried and they are looking at $500k-$800k houses right now.  You just never know. -Kasey

Jan 04, 2013 08:50 PM #110
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Rainmaker
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Barbara Todaro

"New Franklin MA Homes"
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