Mythbusting Our Industry - Myth #1 - "Real Estate Agents and Brokers are Greedy"
One of my favorite shows for the past several years has been "Mythbusters" on the Discovery Channel, starring Adam Savage and Jamie Hyneman. If you haven't seen it, I would highly recommend checking it out sometime. The premise is simple: the hosts and their crew of helpers test myths to see if they hold true or not. Some of the myths are commonly held, while others are more obscure. A recent example: They spent a day trying to test whether or not an airplane escape slide could be used as a parachute (it really can't, at least not easily).
So, I thought it would be informative and stimulating to turn a mythbusting eye to the real estate world. I may or may not continue this series, depending on the reaction that this post receives, frankly. Hey, I am nothing if I'm not honest with you guys, right?
For this post, I would like to test the myth that real estate brokers and agents are greedy. I know that I will forget to include one argument or another, so please feel free to chime in - my blog is highly interactive (I guess that word still sounds vaguely futuristic).
Personally, I got into this business for several reasons:
- I enjoy looking at houses of all kinds - even ugly and "unique" ones
- I like helping people, and I think of our business as a service
- I like/need flexibility in my schedule in order to thrive
- I wanted to do something with a high enough earning potential that my wife could quit work and stay home with our kids, although we didn't even have kids when I started
- I enjoy the independence and freedom of being self-employed, and I ran another business for a short while before I jumped into real estate
- My other business allowed me to have contact with lots of agents, and, as a whole, they didn't seem like rocket scientists to me (remember the honest part from above?)
I am not making this up: My first year in real estate, I made roughly $12,000. I was running another business and my wife was still working, so it was okay, but a litttle discouraging, too. The next year was better, but still not really enough for my wife to leave her job. The third year, it did make a substantial jump, and every year since, my income increased (with the exception of 2001, largely because of 9/11).
When I started my own company three years ago, my income again took a large jump that first year, and it stayed consistent the second year. This year, I will likely make less, due to the media, and the slowdown in other markets (many of our potential buyers have homes to sell elsewhere that aren't moving yet).
At any rate, I know hundreds of agents, and some of them are probably in this business for the wrong reasons, but most of them just want to make a decent living. I did a bit of research, and the median income for a real estate agent in this country appears to be in the $35,000 - $38,000 range. Greedy? I seriously doubt it. If you throw in expenses, it is amazing that certain agents are even surviving. Now, some of you may not like the median concept, since all it really means is that half of those people are making more, and half are making less, but it's probably a better representation than the average in this particular case.
The median income for brokers is certainly more tolerable, but not terribly exciting either, as the stats I found show it to be in the low-to-mid $60's.
So, with that in mind, why would a greedy person choose real estate as a potential career? Perhaps they hear about "million dollar producers" and they assume that means that those agents make over $1 million annually? I have certainly interviewed some agents who assume that a six-figure income is the norm in the first year or two (keep in mind our prices in Austin as you read this - we aren't in Manhattan). The reality is that most of us aren't greedy; we are decent, hardworking people trying to make a go of it in a challenging and highly competitive industry.
I would submit that many agents are not particularly greedy at all, but they are COMPETITIVE, and since many remain in this business despite difficult months (and years), I feel that as a group we are OPTIMISTIC. Many times, we are banking on potential income rather than tangible commission checks. I guess that doesn't make for great gossip among homeowners, though it is the truth for the most part. Based on my experience and research, I would call this particular myth soundly BUSTED!
I feel thankful and blessed to be in real estate, despite the hits that we have taken from the media, discount brokerages, reports of our dishonesty, etc. My career has enabled my wife to stay at home since early 2001, and I wouldn't have it any other way. I truly look forward to what 2008 will bring.
Thanks for taking time to read this one. I welcome your comments below.