how this works

by Apr 22, 2014ModMarket1 comment


the wyler house by carl strauss + ray roush. coming soon in clifton!


It came to our attention recently during a conversation with our millennial offspring that people really don’t know how the real estate business works or how we get paid.  So I thought I would use this opportunity to explain one of the strangest – and most misunderstood – professions!

We don’t get paid to list houses or to show houses.  I don’t get paid to make all of those visual tours that get thousands of viewings each month.  The fancy custom brochures and web pages dedicated to each listing?  The cincinnatimodern website? Nope!

We don’t make a dime until we are with our clients at the closing table.  We (Realtors) are independent contractors.  We are not employees.  Local real estate brokers hold our licenses so we can sell properties through their brokerage.  We have to pay dues to our local, state and national Realtor associations, as well as our local MLS (so we can cooperate with other brokerages and have access to listings).  We also pay an annual fee to Supra so we can have the technology to access lockboxes.  We have to participate in 30 hours of continuing education – that we pay for – every 3 years to keep our licenses (which we also pay for) in the state of Ohio.  This is over and above the cost of the classes to become licensed in the first place (120 hrs of pre licensing classroom hours, licensing exam plus post licensing classes).

Commissions are paid to the BROKERS at closing and are paid by the SELLER.  It is up to the individual broker and the arrangement that they have with their agents (Realtors), what kind of split that agent receives.  So the commission that is collected at closing is actually split 4 ways (listing broker, selling broker, listing agent and selling agent).  Confusing, isn’t it?!

Basically the BUYER for the most part is the only party without obvious skin in the game (at least as far as agents getting paid).  But not really….the buyer holds all the cards to make sure their agent gets paid!  The buyer’s responsibility is actually twofold:

  1. To choose an agent who will work for them, who understands what they are looking for, who has their best interest in mind (see the Ohio Consumer Guide to Agency Relationships for a quick overview of agency),  who is knowledgeable of the market and the housing stock AND
  2. To show that agent the utmost loyalty.  Don’t just call the listing agent on a property because you don’t want to ‘bother’ your agent.  Or worse yet, go on a midnight bender and use the ‘contact agent’  or ‘schedule a showing’ link on Zillow or Trulia.  These leads don’t go to the listing agent OR your agent.  They go to agents who pay for the leads.   If your agent is working for you, stick with them!   But do feel free to go to Open Houses, because at open houses, other agents will honor agency relationships.  Just let the agent know that you are working with someone!

Since the SELLER is basically paying all of the commissions, it is their responsibility to choose a listing agent who can represent their house the best way possible and give it the best possible web presence, and who is a skilled negotiator.  Over 90% of buyers search online for properties (2010 statistic from NAR – probably higher now!).  In our opinion, there is no excuse for choosing an agent who does not post photos with a new listing, post the maximum number of photos allowed (25 in the Cincy MLS), and take great quality photos.  It is your choice who you list with.  A top performing agent who knows how to properly market properties will always charge a market rate commission and will likely get you more for your listing than a cut rate agent.  Compare and choose the best!  It will pay off in the end!

We LOVE what we do!  We love the clients, and the houses and our city.  We love the fact there is nothing routine about this business and that no two days are alike!  For us, it is worth the lack of job security and benefits because we are successful at what we do.  Occasionally a client will get confused about how this works and will not be loyal.   I hope this helps to clear the air, and educate those who just don’t know.  And as always, we love feedback and referrals!  Thanks to all past, current, and future clients for a great 10 years of cincinnatimodern! 

1 Comment

  1. Susan Rissover

    Thanks for posting this, Susan! It did shed some light on a murky subject. I’ve bought and sold three houses over the years with the help of realtors but never truly understood your end of the process. Love your blog! (I’ve spent many happy Sunday afternoons pouring over your listing photos. Yum!)

    May 2, 2014 | Unregistered CommenterJenny A. ([email protected])

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