One of the rallying cries of the real estate industry is "we are professionals", and yet one of the biggest stumbling blocks to the public acceptance of the way we work is how we are paid. Why don't REALTORS® work like other professionals?

As individuals we are often recognized as consummate professionals in our community, although I tend to believe that we are rarely taken as seriously as other professionals such as lawyers, accountants, etc. I think this has a lot to do with our traditional way of working. First we work on a contingency fee basis and second, we drop everything to work on the client's schedule.

In order to affect a positive change, we have to first understand why the majority of Realtors work this way, and then to offer a couple of solutions.

Contingency Fees

Most Realtors will not give a second thought to working on a contingency basis, but that does a lot to undermine our "professionalism". I can't think of another profession that so gladly takes on the equivalent of liability and expenses that Realtors do (and even worse, with a non-contractually-obligated customer), with what is often a minimal chance of getting paid for our efforts.

Why do I say minimal chance? Because all of us have been guilty of taking an overpriced / not-ready-for-the-marketing / just-testing-the-market listing at one time or another, haven't we? Perhaps we were new in the business, and just wanted to sooth our egos by getting a sign out there. Perhaps the listing was in a high-traffic area, and the sign would bring us some good exposure. Perhaps we just didn't have the guts to walk away from the listing. Regardless of our reason, we've "been-there, done-that, got-the-tee-shirt."

And it's no better on the buyer's side. How many of us rush out to show a listing without getting at least a 24-hour exclusive representation agreement signed, with a hold-over clause so that the "buyers" can't buy that same home from cousin Sally the Realtor?

Now, let us turn the tables on the consumers of our services, and see how we can make a change to this issue of contingency fees. What if we were to figure out how much each transaction-side costs us, including a reasonable profit? In calculating this, we would also get an accurate picture of how many hours (14 in my case) we put into a transaction-side. Then, we could arrive at a reasonable hourly fee for our work. In my case, I have done this several times, and have come to the following result:

When I am actually working at real estate, my income is $165 per hour. Notice I say "actually working at real estate." I am honest enough with myself to acknowledge that I only spend about 4 hours per day, 6 days a week working at real estate. The rest of my day is spent on things like writing articles, designing marketing campaigns, technical stuff that I should be either delegating or doing on non-work time. But, one of my loves of real estate is that it gives me the freedom to do these things.

What if I were to go to the average consumer and say "Sure Joe and Jane, I understand that you want to sell your home, and I want to help you. My hourly fee is $165, plus all disbursements. Please sign here, here, and there." How do you think they would react?

Now, what if I were to go to them and say it slightly differently: "Sure Joe and Jane, I understand that you want to sell your home, and I want to help you. Before we go any further, do I have your permission to make sure that we are on the same page here, so we understand the things I'll be doing to help you reach your goals? One of the things I'll be doing is advertising your home on as many web sites as possible. Another thing is marketing your home to my network of high-producing Realtors in our area (fill in the rest of your marketing plan here). Now, I'm sure you must be wondering about my fee.

Well, I can offer you five options:

1. - A contingency fee of 7% 2. - An hourly rate of $165 plus all disbursements (typically $1,000 + profit= $1400), plus contingency fee of 3% to be paid to the selling broker. Requires a $3,000 retainer. 3. - A pre-paid non-refundable retainer of $2,000, and a contingency fee of 5% 4. - A pre-paid non-refundable flat fee of $5,000, plus contingency fee of 3% to be paid to the selling broker. 5. - You choose the services you want from my Fee For Service menu

On the average sale price of $190,000 in my market area, the numbers come out as follows:

#1 - $13,300
#2 - 14 hrs x 165= $2,060 + $1,400 + $5,700 = $9,160
#3 - $2,000 + $9,500 = $11,500
#4 - $5,000 + $5,700 = $10,700
#5 - variable

As a consumer, what does this tell you? I think it tells consumers many things, including:

• This guy is offering me options.
• This guy is a business man, because he has taken the time to figure these things out.
• This is how my lawyer works.
• Well, if we are really serious about selling our home, we can save a substantial chunk of change by choosing one of the lower options.
• We'd better listen to what this guy is saying about price, fix-ups, etc., because now that we're choosing to do this, we can't afford to lose the money we pre-pay / don't want to lose the money we are saving.

Does this work? YES! I've done it, and am continuing to refine the plan to the point where I can get a pre-paid, non-refundable fee on every transaction.

Dropping Everything to Work on the Consumer's Schedule

We're all guilty of this, although I'm getting less and less guilty of it with each passing week. My parents first started in real estate in 1974, so I'd had 19 years of exposure to the business before I got my license. In the time that I was living in their house, I remember so many times when they would leave a dinner party they were hosting / drive 3 hours to meet someone to get a sign-back at 2 a.m. (pre fax machine era), etc. The old-timers will recognize the pattern. Why do we do this? Is it because we just have to have that deal?

I made a conscious decision when I got my license: I would work to my schedule, working the hours that I want to work. Can you say "Quality of Life"? I tell people that I am available at certain times, and give them 2 choices. If neither of those times suit the person, then we can usually work something out. I'm always amazed at how accommodating people are; you just have to ask.

Going back to the comparison to other professionals - does your lawyer / accountant drop everything to do business with you? NO! As the popular saying goes, a home is likely the biggest single investment a person will make. People will take the afternoon off work to go to the dentist, or to their lawyer, etc. Don't you think they would take the afternoon off to look at houses? Have you ever asked them to? Have you spelled out the benefits of doing so?

Some of the benefits to the buyer are:

• Miss the rush-hour traffic
• Sellers are typically at work, so there won't be any kids or adults under-foot
• There's a less-rushed feeling to the viewings (don't have to race to get kids from daycare / into the bath / see all the houses before dark, etc.)
• An offer can be drafted and presented at a civilized hour

Some of the benefits to you, the REALTOR®, are:

• You will be in control of your business
• Sellers aren't under-foot
• Spend quality time in the evening with your family
• You WILL be viewed as a professional who is in control of the situation, and your business in general
• Did I mention that YOU WILL BE IN CONTROL OF YOUR BUSINESS?

Changing the way Realtors have always done things to an economy that works in the 21st century isn't going to be easy but it can be done. All it takes is Realtors taking control of their businesses and slowly but surely shifting the way they work to practices that are more in keeping with their professional stature. When we respect our time and our bank accounts, consumers will also.