I have a new “million dollar listing“.
Before you congratulate me on my pending fortune, consider this, using easy math:
Sales price of $1,000,000
My company’s commission: $30,000
Referral commission: 35% … so now we’re working with $19,500 –
Cut that $19,5 in half = $9,750
Take taxes out – $6,825
Take expenses out – maybe $5,000
If it takes a year to sell … It’s just not that profitable.
Call me a hypocrite, but … it is the second “million dollar listing” I’ve had – furthering one of my goals for 2007 – to work in a higher price range.
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expenses come out before taxes-aloo why did you half the 19500
Jeff –
I halved the 19,500 because that is the split with my Broker on referral commissions.
And you’re right – I flipped the taxes and expenses.
Yeah……but if you pick up a buyer or two in that price range it should cover for the listing side woes. If you do sell this home in $1 mil range you would have a track record to tell potential new clients in $1 mil range – hire me because I can sell a property like this.
Thanks for posting such an informative piece-I think it’ll serve a good purpose to educate the consumer about agent fees and commissions. My experience talking with people about the real estate industry reveals over and over again that the consumer’s perception of agent income is warped and based on little identifiable fact. The same consumer misperception applies to mortgage brokers.
As a marketing professional in this industry, I applaud you and encourage other real estate practitioners to move towards greater disclosure and open conversation with your customers. – a.
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Pavel –
Very true, but that’s also a big “if.” Every listing is also a business-building tool with a fair amount of risk built in. As Athol says, until it’s sold, it’s a loss.
It’s the “ifs” that many don’t see.
What is the point then? Referral fees & broker’s fees are way too much, doesnt seem like taxes are the issue. Interesting, but why does anyone do this?
Jim,
Do clients have any say about whether they want to be involved with your agency? Why can’t someone just say, I chose Jim Duncan, not Century 21 et. al? Just wondering from a client side.
As to the house–I HATE it when the cheap out and use granite tile in the kitchen. Just a pet peeve. Looks nice from the outside though. I’d consider getting the owner to change out the counters at that price point.
One more thing – given the current sales environment and longer DOM, only $1800 for that property is modest.