What Real Estate Agents Wish You Knew About Their Job, Part 3: What Motivates Them (It's Not Always Money!)
Megan McArdle's recent post on The Atlantic website regarding Wisconsin's $1,000 down payment program, for example, was a critique of the government program. But in the comments, you find sentiments like this:
"I agree that this program doesn't make sense. But why do you end the post by saying that the motivation for it is to buy votes from low-income voters, when you have already recognized that it is surely the realtors* who are behind it. (And that it is not their votes that the politicians want -- it's their money.)
*'Realtors' is a trademark and you are supposed to capitalize it. Screw them."
From the outside, that line of reasoning makes a lot of sense. Real estate agents make more money when they sell more houses at higher prices, given the particularities of how they are compensated, and the National Association of Realtors has a lot of political power. Surely, they're conspiring with politicians in smoky back rooms trying to stick it to the average American to enrich themselves, right?
The thing is, when you're inside the industry, the picture is a bit more complicated.
First, the average Realtor is not exactly a mini-Trump lighting his Cubans with $100 bills. More than 62 percent of Realtors earn below the American median income of $52,000; some 39 percent of Realtors earn less than $25,000 per year. Consumers who rage against the "real estate machine" should at least acknowledge that most Realtors are solidly middle-class people. To earn that money, real estate agents have to deal with: incredibly complex and incredibly annoying local, state, and federal rules and regulations; unrealistic and obstinate sellers; panicked phone calls in the middle of the night; driving people around on weekends; spending vacations glued to the Blackberry; and very often, long, long, long hours. No wonder that when confronted by hostile consumer sentiment, most real estate agents respond, "If you think it's so easy, why don't you try it for a month?"
Second, every single real estate agent is an independent contractor by statute. They have no benefits, no 401(k), and few of the rights that most workers simply take for granted. Which means that every real estate agent is a small business owner -- you know, the "engine of the American economy" that politicians of both parties embrace (at least rhetorically, before they go screw them over) and consumers love over "Big Corporations"?
Finally, and most importantly, because I work in the industry but am not a real estate agent or broker, I'm always curious about why people enter this business at all. Why do they keep doing it? The No. 1 answer that I have gotten over the years is that they love to see the absolute joy that a family experiences walking into a home they own for the first time. "Because I love helping people" is the most cited answer from real estate agents as to why they keep working in this crazy business.
A Realtor friend recently told me about a client family. They had rented for years, scrimped and saved for the down payment, and bought their dream house in the suburbs. Less than a year later, the husband got laid off, and they decided to move out of state to be near the wife's family, where housing happened to be about a fifth of the price. Most of their assets and savings were tied up in their new house, since they had to put down a significant down payment, and they were terrified of losing all their money due to the falling housing market. My Realtor friend got their house sold somehow in 45 days, above the family's asking price. I spoke with her right after the closing, and she was just so happy for her clients, who had become her friends over the course of their ordeal, and she couldn't stop talking about just how relieved they were that they could move on with their lives and start over.
Now, you could be cynical and think that she was just selling a load of horse crap to justify the 2.5 percent commission that she earned on that sale. You could choose to believe that she only cares about the money. And maybe she's just unique among real estate agents for caring about people, about her clients. You could think those things. But you'd be wrong.
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