Why Can Real Estate Services Be So Expensive?

March 29, 2024

There are various & substantial risks and moving parts in this industry. Here is a breakdown of the most common ones.

Agents are highly regulated as licensed professionals.

Real Estate brokers are regulated by the State of Oregon’s Real Estate Agency division with required educational hours, fiducial responsibilities, and liabilities that are often blamed on when uncontrolled circumstances prevail.

Agents stand in the middle of potential safety issues.  

It is an increasingly risky business qualifying strangers who have never met, securing and protecting the clients’ properties as people search through the intimate areas of their home.

Agents invest time & money speculating to get paid for their work

There are a lot of uncontrollable factors that determine if an agent gets paid or not.  Agents put up marketing dollars ahead of time hoping to get paid.  Our agents often invest many hours of work and up to $3500 in marketing and staging costs prior to listing a home. Agents also commute various miles serving clients with the understanding that they only get paid if the buyers and sellers agree to close the transaction, often months into the future.

Agents invest time consulting and educating clients

It can take months of consultation and research to work with clients to understand their specific needs and wants to prepare them for a successful position as well as educate them on the processes of the many moving parts of the Real Estate industry only to have some clients transition in another direction. To have a successful business, those times of working for free need to be accounted for in the big picture to continue to stay in business.

Agents are often working outside of normal hours and subject to their clients and customers schedules 

Agents do not clock on and clock off similar to a job that guarantees a paycheck.  Oftentimes schedules require agents to sacrifice their family and personal time to serve their clients. Time is of the essence so work hours often fall outside of a normal working day including evenings and weekends.

Some transactions terminate requiring a restart and oftentimes never pay out

The real estate market can shift often and quickly, which makes it highly speculative.  Some transactions fail, although agents have invested countless hours and dollars into them, causing them to begin the process all over again.

Understanding all state and federal Real Estate laws, Equal & Fair Housing laws

Industry changes continue to shape the landscape quickly and often requiring agents who are vested in their craft to understand how these impact their clients. Working to understand constant legislative changes, Oregon Construction & Contractors Board rules and Real Estate Agency laws requires attention to detail.

Good agents invest in understanding the ever changing intricacies within the lending institutions

Mortgage brokers, bankers, credit union and portfolio lending guidelines can be very different and change often. Agents work hard to understand these rules and restrictions to ensure the proper crafting of offers for buyers, and also to be able to weed out problem areas for sellers that derive from agents who do not understand how these policies affect home purchases.

Agents pay an extra self employment tax or incorporate which requires increased business overhead costs

Most agents have many office hard costs, systems and platforms to fund, association dues, agency and license fees, education costs along with paying an extra IRS tax if they are not incorporated.  If they are incorporated, then there are additional costs involving bookkeeping, corporate taxes, transit taxes, family paid leave tax, unemployment taxes, matching Medicare & Social Security taxes, and additional overhead.

Clients control if agent gets paid or not

The truth is that agents are not making the important decisions based on a successful or unsuccessful transaction.  Oftentimes clients allow their emotions to get involved, which directs their decision making process.  Agents are submissive to those decisions and if clients do not want to consummate a transaction, then agents do not get paid for the countless hours and monies they have invested.

Experienced agents have individually invested tens of thousands of dollars and millions of dollars collectively to create the platforms that help clients and customers navigate one of the most comprehensive decisions of their lives.

Through the MLS systems, automated logistical systems, and other streamlined projects agents have paved the way financially for our communities and large companies to create platforms that the Realtor® communities have led to build a network of systems and services that everyone benefits from.  Agents continue to invest in making these systems better & seamless to support our individual customers and also provide the foundations for private sectors like Zillow, Redfin, Trulia, Realtor.com and others to build their monopolies by tapping into those systems.

Competent & professional agents give great advice and direction to protect their clients from liable claims

We have many testimonies where agents have protected clients and saved them from facing litigation as well as saved them countless dollars through negotiating Real Estate transactions.

Oftentimes we do the other agent’s job

This industry is filled with so many different kinds of people.  There are a fraction that take their career seriously and run it like a business in representing their clients well.  Many others are fly-by-the night opportunists who see the potential to make money in Real Estate, but often fail to gain the knowledge and competence to handle all of the many challenges to a Real Estate transaction.  We are often in the place where we are coaching the other side to help keep our transactions alive and on through closing on time.  This extra managing of the whole transaction process takes an invested and incentivized effort.

Agents fund & advocate for common Real Estate interests for the community

Experienced and knowledgeable agents get involved on the political front fighting for homeownership opportunities, lower property taxes, protecting the Real Estate tax credits & deductions, protecting equal housing rights, and many other issues that are often overlooked by the community.

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Principal Brokers & Brokers Licensed in the State of Oregon