How do you evaluate what your time is worth? By the passage of time? By an accumulation of experience plus hours on the job per client? By what you want to take home?

According to a time value calculator passed along by Bill Wendel founder of one of the original fee-for-service brokerages, Real Estate Cafe, the salary per hour should be enough to cover the full expenses of living. A $100,000 income could reduce to $12.50 an hour after taking in health benefits, cost of living expenses, and family costs.

That's a lot of food for thought, particularly in an era when fee-for-service threatens to trim real estate commissions even more. But fee-for-service could be translated another way, as an opportunity. Wendel explains that zipRealty.com, a new online brokerage that trims costs for buyers and sellers, pays its phone operators between $60,000 to $80,000 per year and up. The reason? The operators are licensed Realtors, and their value is in their expertise as customer service representatives. With those kinds of starting salaries, perhaps fee-for-service doesn't look so bad after all, when the average agent limps by on $36,000 or less a year, according to a NAR report.

The company is able to offer a high wage to its employees, because they have eliminated the aspects of real estate that are time-consuming and unprofitable - namely allowing the consumer to perform the home buying chores that they want to and then choosing the online brokerage to facilitate the transaction and bring it to a close.

"We see lots of real estate emergencies here," says Wendel, "and over time, we've adjusted our prices to reflect that. Our minimum fee is now $500."

When asked to explain what value he brings to the transaction Jim Lee, Knoxville's Realtor of the Year knows exactly what his time is worth. He offers the following chart for Realty Times readers to consider, and has based his conclusions on a $75,000 annual income:

* Based on a $75,000 annual income
**Based on a 16 week listing period.

All estimates of time are typical marketing activities. Lee adds that the chart does not count his "years of experience, expertise, educational courses, contacts, professional reputation, equipment, (computers, cameras, etc.) Multiple Listing Service, support staff, and many other benefits.

"I don't know how to put a price on the value of experience, education, time in the business, etc," says Lee. "I don't believe there is any way to assign a value to that. However, it becomes priceless to me and to a seller that has an appraisal problem or a buyer with a credit glitch that needs smoothing out."

Other brokers have ventured into fee-for-service and have arrived at cost evaluations that work for them. North Virginia Realtor Lee Bowman offers a menu of services to sellers, some of which are marked up at higher values than other services. This is a means of compensating him for his expertise based on the importance of the job at hand.

For listings, he offers a generous co-pay to the buyer's agent (3 percent) while he takes one percent. "When sellers choose this option, they pay the total cost of all the various services they have chosen at the list signing, and the fees are non-refundable," explains Bowman.

Bowman puts a small mark-up on newspaper ads, for example. "I leave "open" the cost of "Luxury" magazine ads, which would be pre-paid by the seller after I determine the cost of the ad," he says.

What about time-consumers such as listing presentations? Should a CMA be included, or should there be a charge for the information? "This could be an instance where a rebate could work nicely," says Bowman.

"I have solved this with my very comprehensive pre-listing package," he explains. "The sellers determine which payment plan they desire before I do my dog-and-pony show. If they choose my "Menu of Services," they would choose the CMA option (with corresponding fee) or they would choose the Rebate option (in which case, the CMA is part of the full service.)

What about the possibility of making a presentation including the CMA, and not get the listing? "I've noticed that serious sellers react much differently when presented with a well thought-out pre-listing package and are more receptive to what I have to say because of it. In other words, the odds are more in my favor when I do my homework more thoroughly and professionally."

An agent is only as valuable as the marketplace perceives him or her to be. Says Lee, "Experience and knowledge that could make the difference between closing or not closing has a value, too."

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Published: January 24, 2000

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