Many people will tend to look at the success of others by their status, title, label or how financially stable they are. The career choice of an individual just starting out in the work force most likely is an employee who works for a monthly salary or paid by the hour.
During the course of our lives we settle in to a ‘job' (career) that we enjoy...or at the very least one that we make a good living so as to support ourselves and families. We may change paths frequently or we remain on the ladder of success or just a routine to pay the bills.
I'm getting to the story....bear with me.
The CEO of a company most likely makes a lot of money (right?) He/She has worked their way up the ladder and became so successful that they are head of the company and have many others working underneath them; therefore, they most likely have a BIG income.
On the other hand, there are the Independent Contractors who are Small Business Owners. Bob's Pizza's owner is Bob. Bob is well respected in the community for his deep dish pizza with homemade sausage on it. His status is OWNER so he of course he makes a bunch of money. Right?
I changed career paths a few times during the course of my life. I was Administrative Assistant for a Family Law Attorney for many years and did the same for a non-profit program for structured living. I've waitressed in fine dining and volunteered for youth centers.
And then I chose the path of Real Estate.
I remember often the five second conversation I had with a client's 10 year old boy a few years ago. He asked, "You're rich because you sell houses, right?" I politely said, "No, I'm not rich but I do get my bills paid." What else do I say to a young boy who ‘heard' that all real estate agents are rich?
Well, here's a bit of info for all:
- The market is slow, prices are up and down and there aren't as many closed sales as previous years. (I really wish I were "rich" like in those days lol)
I live in Hawaii where cost of living is a bit higher than many other states. (But I go to Costco just like anyone else to ‘get a deal') - Homes for sale or rent are higher than many states. Therefore, my morgage is higher than most too; so I'm not exempt from payments either.
- I have to pay federal, state and Hawaii General Excise Tax every quarter on all money I make. (So contrary to popular believe I am not exempt to taxes)
- I do not get that whole % commission you believe I get..... because both the buyer/seller brokerage get their cut (on top of franchise fees, Errors and Omissions Insurance and so on and so forth...not to mention if it's a short sale and the bank hacks the commission ....or else)
- ALL expenses come out of MY pocket and I do not get a salary or hourly rate to cover ANY of these expenses. (I've had a couple clients flat out tell me that I can stop and buy them lunch because I can deduct it)
- I can't really ‘afford' to hand out money, time and incur a lot of expenses (lunch, gas, gifts) to be your tour guide because you're bored that day. (or so you can get all the info you can to list your house FSBO...Good luck!)
So, in the end what am I left with?
Taking care of my client's needs and respected for a job well done.
I'll remember to tell that 10 year old boy the next time we meet.....
That yes..... I am rich.
Celeste "Sally" Cheeseman is a Realtor-Associate® and Certified Residential Specialist (CRS) with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocations, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents, Home Buyers and Sellers.
© 2007-2011 Celeste "Sally" Cheeseman's Hawaii Real Estate and Relocation Blog.
All rights reserved.
Hi Sally, you 'put it' so well! Thanks for the excellent post!
Sally,
great post, Kids say the darndest things sometimes, but they always make us think. Have a great weekend.
Lisa aka @allstarmom3
Sally, well said. And the same goes for loan officers - for some strange reason, consumers and agents alike think we make a killing on every deal. If only!
Very nicely done Sally.............great post and excellent information.
Well said Sally - it is always interesting to hear the perception of our industry. ~ Susan
Sally, nice comments. they are well put and clients should but usually are not well versed on them. We have to be careful and tell them about these issues in a diplomatic way. nice post.
Hi, Sally, love the rainbow picture. Yes we agents are not all millionaires. Not in our wallets yet anyway. Great post.
I get the same response. So many think because I am a Realtor, I am getting rich. They fail to recognize I have a wife, 2 kids and a mortgage.
Hi Sally - I am often amazed that folks who are a lot older and more sophisticated than that 10 year old boy have no idea how little of the commission we actually net. I spell it all out to each of my clients and almost all of them are astounded that I do all that work for so little pay (beats having them try to cut my commission!).
Rich is a state of mind! Eventually my pocketbook will catch up with my head! :)
Yes I agree, well said! :) Great post!
Shelley...the MIND is a powerful thing :) :)
Excellent analogy, Sally. We are rich in many ways. I think one of the biggest is having our independence and freedom. I could not imagine having to work 9-5 in an office any more.
I am usually happier living a state of blissful ignorance about my expenses, but every quarter I am forced to have these moments of reality. But as Jane says, I work with who I want and when I want (all the time these days, but hey, it's my choice!) Great post, great title, I've Suggested it.
Amen, I know so many during my yrs as a Realtor that think we are all quite wealthy.
Good "real"ity check.
There are so many more ways to measure 'rich' besides money. Great outlook, Sally!
Sally, being rich is more of a state of mind than the balance in one's bank account. The freedom to work 24 hours a day if you want to, the pleasure of helping so many people through major life changes - we are truly blessed.
Sally...
I don't think that I have ever worked harder for less money. You have to love doing this job for it to really pay off!
Not everyone attaches a dollar amount to that word. We all have vague notions and ideas as to what "rich" means. For some it equates to security, stability. For others it can indicate the flexibility to be able to do what they want. Nonetheless, it's apparent you are indeed, "rich", at least in spirit and integrity!
I'm a third generation landlord/rental property owner which started me on the path to a career in property management VERY EARLY in life. I am very comfortable NOW because I have worked hard, built my business and invested my money wisely. Yes, I drive a nice car (2); yes, I live in a nice house that I can afford; yes, I have STILL WORK HARD! I can work as much or as little as I want BECAUSE I have planned and organized my business that way...If I am RICH * it is in preparation and vision to see the path for my future
Sally I think that is an excellent way to look at it. We aren't any different than people in any other profession, 80% are just normal "Joes", 10% are spectacular, 10% are bums.
Thank you
I'm with Jane (#13)! I love the independence and freedom (to work 24/7!). I would rather stick needles in my eyes than go back to a 9-5 job. To me that's like reporting to prison every day! With the technology today I can "work" while I sit on the beach! (and I think that will be my office of choice for today!)
The general public (and friends and family) truly have no idea of what we actually take away from each transaction. When someone makes a comment about a commission check while at the closing table, I will comment that the next time I see this check, I won't recognize it.
You forgot to mention how we get to pay for our own health care, social security, etc.! Oh, we're rich, for sure!
We are stereotyped by some. Several decades ago, our profession was filled with many empty nesters needing something to do. It may have come from the typical vehicle we owned, a large comfortable car for driving clients around in.
Well, someone has to do it.
Most consumers have not the foggiest idea how complicated it is to "be in business". The differences between having a job and operating a business are so numerous, it's impossible to even try to explain to consumers.
Well said Sally. You know what they say about assume? My former boss owns a plumbing business. He's been in business for over 30 years. Some of his mechanics make more than him!
Sally:
A few years ago we may have been able to say that. People with advanced degrees were marketing themselves as real estate agents just to get into the game (including a number of attorneys.)
But I still consider myself "rich" - Rich in independence and flexibility to plan my own time and rich in the experiences I have with the people I help.
Sally - great post indeed! People have NO clue as to what we really do and what the costs involved are. And as far as that lunch thing, I don't take clients to lunch unless we are celebrating their closing and I have become especially close to them (and the closing ends in time for lunch).
Ain't it amazing, Sally! Our costs-of-living and geographics may be very different but we all hear this. And in some ways, we ARE all rich.
You have your priorities right. Whenever I get needled about all that money I supposedly make, I remind them that they don't want my overhead.
One of the biggest filers of bankruptcies in 2008-2009 were real estate agents.
Woo Hoo: Spot on post. It's funny how many peeps think we're "rich" because we sell R.E. Some even think we sit behind a desk all day and just wait for a big, fat commission check to roll in. Oh are they wrong... thanks for educating them. :-)
I think the public looks at the gross check and thinks we get it all for doing nothing. When someone personally knows one of us, they realize instead how hard we work for just a fraction of the check.
I like the overhead comment a couple of posts above. That is good verbiage to remember.
Good morning Sally,
I ditto Michael's (#31) comment. You have self respect, sleep at night, good health, are able to smile and I might add make a good living, get your bills paid and enjoy life..yes you are rich!
Unfortunately that is the perception and we allow it to continue...oh well...don't people want to do business with successful people.
And all because the few that were shouted it from the rooftops. Me I am a Walmart girl. Even if I was loaded with money I would still shop at Walmart.
And there's that expired listing that I spent money on a home stager, professional photographer and miscellaneous marketing - for which I was never reimbursed.
But yes, I feel rich and blessed. Well written post, indeed!
Sally, most buyers and sellers don't realize what is involved in running a business. They just see the total commission amount going directly into our pocket. Good Post!
Amen Sista! Also we do like to dress nice when out in the public.(nicely dressed but not dripping in jewelry) First appearances are important and people like to deal with those that look successful compared to some that look like they can't afford to rub 2 nickles together. We have to do a lot to appear we are doing well even when times are lean.
Great post Sally, and hopefully puts things into their proper perspective for those who believe we ae "rich" because we sell houses.
Like any other professional we work hard for our money, and we also have bills to pay as you mentioned...broker fees, education courses, health insuranc, desk fees, advertising, etc. but people just don't get it...
Sally - Yes many consumers (and young children) just do not understand the intricacies of our industry and that the agent may not get the whole 3 percent and on top of that, there are numerous expenses and tax consequences ! Still love our industry as it makes us all "rich" to a degree : )
Oh Sally, I am always amazed at the concept that we are just "rolling in the dough". Great post and good comments too!
Sally, Great post, I saw Lori's reblog.
If people only understood what it took to run a successful real estate business they would be very surprised indeed. The responsibility of running your own business is so much greater than most 9 to 5ers can even begin to undersand. If they knew they'd never complain about how much we earn.
Aloha....Sally...I love this business........and your post....thank you
Hi Sally, Seems like that 10 year old has the same level of understanding as do most of our clients. Good selling to you !
Great post Sally, these days the kids should be saying, "You're broke becuase you sell houses"...LOL....If only people knew that actually less than 10% of us actually make money in this business!!
Nice post today, thanks for getting it out to us.
Patricia/Seacoast NH
Nice post Celeste. At the end of the day it's all about educating our clients, friends, family and colleagues of the value that we bring to the table - right?
Excellent!! Good points. I've been to the Costco in Maui before :)
Very nicely put. It spells out what buyers and sellers need to know but we don't offer up front. Of coarse, when there is that question/demand to take some of my commission I let them know.
All agents being rich? Now that's rich allright.
The problem with that concept is the fact that there are so many agents who enter the business because they think just like the ten-year old boy.
It's unfortunate that the perception out there is that we are rich. Everybody wants a piece of the pie. Here in Washington our B&O tax was just increased to help fill a budget shortfall.
This really is a great post and very, very well put. I think we will always be faced with the challenge of helping our customers understand things aren't necessarily as rosey and easy in the life of a realtor as they perceive them to be.
Amen Sally... I do get a salary, yet what's similar is like the many above who chimed in to say: In today's world I work a lot more than 40 hours a week, with 2 daily 15 minute breaks and an hour for lunch. Lunch? What's that?
I think people see agents collecting a $30K commission on a single house and say "wow, they must be rich". If an agent collections 8-10 of those sales in a year, they're doing OK. But as you so rightly point out, the public doesn't understand splits, expenses, taxes, etc that eat into all that. We're lucky to walk away with 50% after all is taken out. Rich, yeah right! :)
Sally, This is the difference between the employee mentality (yes, even the CEO of a Fortune 500 company is an employee) and the business owner mentality. Most employees have absolutely no idea about the overhead, expenses and tax consequences of running a business...So when the buyer/seller, AKA employee, sees us walk out of closing with a check for $15000 they have no clue what is about to happen to what they see as your money...IT'S GOING TO SHRINK & SHRIVEL...
Sometimes it's nice to have others think we are rich or have a job of high status. It just would be really nice if the financially independent part were always true! Yet, as you do a wonderful job of pointing out, helping others own their own home is a very rich and rewarding profession.
Thanks for sharing!
No only that, as small biz owners we take on all the liability. If you are the broker, you take on even more liability. Only about 3% of agents are considered rich financially.
Actually, if you look at NAR's last year stats- the average realtor only closed 7 deals and average income was about 40K. Certainly not rich according to US standards but still mega rich compared to the rest of the world. We are blessed here in this country even if you make 20K annually. You would be considered rich by those who live in Cuba or many parts of the world.
On the other hand, rich is relative. While we spend our time defending the fact that we are not that "rich' raking it in with real estate closings- there are agents who are rich even by our own standards.
I know many agents who gross over $300,000 in commissions each year but after all their expenses they only bring home $100K. Again, by our standards here, that is not rich. That in most cities, is just getting by.
You are rich in spirit Sally. There is certainly nothing wrong with being rich because there are amazing things we can do for others when we have money.
I remember the perception of real estate agents before I got in the business... Drivng fancy cars, vacations at a whim, golfing during the day. Just kind of living the life of luxury. While i'm sure that some get to do this, most of us don't. It's a whole lot tougher than most "normal" people think.
If only we lived like clients think we do!
Sally
Excellent post, most don't understand the real estate business and how we are compensated.
Good luck and success.
Lou Ludwig
Excellent comments! It also allowed me and others to see the perception of everyone's idea of what they believe "Rich" is. We all have our own ideas...and none are wrong.... I may live in Hawaii where home prices are higher..but I have to pay a big mortgage for a small townhouse too.
Sally, So spot on for any of us who work on commission or self employed. I really appreciate your post and the comments.
Sally, So spot on for any of us who work on commission or self employed. I really appreciate your post and the comments.
It's amazing that so many think we are RICH because we sell Real Estate and that we make so much $$$ on every sale. If they only knew and understood the break down of the commissions :) Great post and great answer to the boy.
Sally - Very nicely put. There are times when I realize that I am being stigmatized as a Realtor and it makes my blood boil. Is it because we dress professionally and drive newer and dependable cars? Yes, we are professionals who might look and act the part. Our shiny newer cars are needed to taxi buyers all over town. I have mine washed and vacuumed prior to meeting with every buyer because usually it's full of dog hair and dirty yard signs. It's only newer because I can't afford for it to be breaking down when I have clients in my car. I'm dressed up today in a suit because I was being interviewed by sellers who want a "professional" to market their home ...my appearance might come across rich, but I work FREE for each client for several weeks or months before I ever see a paycheck for my efforts. And, you're right when that commission check is cut it's divided into 4 portions and then it has to last me until the next commission check. because I'm working for FREE again for somebody else and it will be weeks or months before I see a dime from my efforts. Rich? I wish I had a penny for every time somebody might have thought that! Or, for every time somebody utilized my services and decided not to buy or sell.
Great point Sally in letting others know about the EXPENSE side of the REALTOR life!!
Gee I've never been so RICH as I've been since I got on Active Rain! Rich is a state of mind - and thankfully my mind says ok - bring it on in. So many people think we're rich - and they have no idea of the expense side.
I think this perception is fed by some in the profession that feel the need to impress with their vehicle or clothes so they look successful.
Success is not cheap. Some agents really have gotten rich in this field.
Woo Hoo, Congrats on the feature. You are Rich in many ways, all the important ways . As I was reading this post, a question kept passing through my head, so I am going to see if you know the answer to this.
How do you make a small fortune in real estate?
Woo Hoo, I am guessing you know the answer but in case any one else doesn't , here is the question again and the answer.
How do you make a small fortune in real estate?
Start out with a large fortune. hehehe My broker told me this when I expressed an interest in buying a franchise.
Woo Hoo Sally...
Now that the tax credit is behind us, I suspect we'll be seeing a higher failure rate over the next few years. When folks get into this biz they think it will make them rich. That's not true and most of us know that. When you get into real estate for the money, you've already failed the first test :)
TLW...ROAR!
Great blog, I have never had people assume I am rich, not sure what they are thinking and have not had the pleasure of a 10 year old telling me! But you are correct, we are rich in our independence and the self confidence that comes from slaying dragons for a living.
TLW...I know you're correct on that. It's when one realizes that ...is when they succeed in not only business..but life as well.
Hey william! In a way that is true too....I had to have some money in savings to get started...and continue to budget and keep money aside for 'expenses'.
Sally ... LOVE Costco but I think any money you save you spend on all the "great deals". Fabulous Featured Article here!!! pippa
Well put Sally It's amazing once you break it down... You could see that the Commission paid out maybe less that what you could be getting from a full time Salary position.
We have to put alot of expenses. But seeing the look on a buyer's and Seller's face once you have completed the DEAL for them.... if PRICELESS..
Sally, While I don't live in a high cost state, many of your points are still very valid here. Thanks!
Great post Sally, My wife and partner have worked different careers while raising our children and now that we are in Real Estate together we feel that although this can be difficult at times our lives are much less complicated since we're not in the "Rat Race" anymore. We can live the life we want while helping others and put all of our effort towards our success, not our former bosses. I think that is one of the riches we agents have that not everyone is willing to work for.
Thanks!
Great post Sally! It's funny back in the "boom" I loved stating that I was a Realtor now a days I kinda wonder if working at Burger King sounds better...lol! J/K I love my job just not so much the pay check but the benefits and long time friends that I have gotten over the years are PRICELESS!!
There are other types of riches and wealth beside money which is good because as you point out, selling real estate doesn't necessarily make one rich.
This is SO on-point! And so worthy of a feature. Congrats! And I may have to re-blog this. I love it!
Great post with excellent information. The grass is always greener, and all realtors don't work hard but make tons of money.
I missed this one....Thanks to LIsa Hill's repost I can say... really shatters the stereotypical real estate career image others have!
There are many 'perks' and downfalls..bottom line is that we have to love what we do to be happy. And loving what we do allows us to take care of our clients needs.
Sally - I have to echo Gary Waters' comment. So many great comments and our works is not done - we still have to educate the consumers about our profession.
Excellent post! You definitely deserved this Gold Star on behalf of all real estate agents.
Hi Sally! WOW! I can't believe I competely missed this one! EXCELLENT post and oh, so true! I recently had a buyer say to me, "Well, you're making like 90 g's on this sale--I guess you're going to take a few weeks off after this, right?!" WHAT? He's talking about BOTH sides of the transaction, no fees taken from 'The Firm,' no fees paid to all of the organizations that we MUST belong to, no gas in my car--not to mention the maintenance, none of the cost for the required classes that we must take to maintain our licenses, and what about the wining and dining that we did just for his particular transaction...the list goes on and on!
I only WISH all of it was CLEAR money--BOTH sides! Then I just might take a vacation--I'd come to see YOU!
Not rich, but living in Paradise. My family is flying to Hawaii (Kauai) in September. My brother-in-law is getting married and has his own home restoration company and his fiancee' does vacation property cleaning and runs a babysitting service specializing in providind babysitters for vacationers. Can't wait to go! Had our honeymoon in Kauai and we want to retire there one day. Have to sell a lot of houses to do it, though.
Only a bit higher in Hawaii, Sally? Living in a tropical paradise, isn't cheap. Nicely stated post.