RETAIL AND WHOLESALE REAL ESTATE FOR REALTORS ® & INVESTORS LEX LEVINRAD
Let’s start our discussion with retail real
estate.
According
to
the
National
Association of Realtors ®, there are
over 1.2 million real estate agents in
the U.S. Most real estate buyers
interact with retail real estate and retail
real estate agents. Most buyers and
many real estate agents are not even
aware that there is such a thing as
wholesale real estate.
You see, in retail real estate, the customer
is king. The customer is always right. Just like in any retail business, like a store or restaurant. If you insult or
upset a customer they will simply leave and take their business elsewhere. If a customer wants to look at a
property, then in the customers view, the agent should show it to them. I see customers requesting specific
showing times from real estate agent all the time. For example the customer says “I would like to see this
property at 2 p.m. on Wednesday”.
These customers believe that the real estate agent should show them the property just like the waiter in a
restaurant should bring them their entrée. And therein lays the problem. You see, as a real estate agent, if you
let customers treat you this way then you are simply a commodity to them. In fact, if real estate law allowed
you to, then you could just send your assistant to show them the property. Buyers can afford to be as fussy as
they need to be because they are shopping for the perfect home that they plan on moving into and living in for
many years. So it is understandable that they will be picky. There is a lot of real estate to choose from and
there are many real estate agents willing to show them as many houses as they need to, in order to earn a
commission.
In retail real estate the customer feels like the real estate agent is being adequately compensated via their
commission. So, in the buyers mind, wasting the real estate agent’s time is justified. Now on a million dollar
listing, I would agree that 3% of a million dollars ($30,000) would be a nice chunk of change for most real
estate agents. However, the average listing price in the U.S last year was only $230,000. A 3% commission on
a $200,000 house is only $6,000.
If the real estate agents’ broker takes 30% of their gross commission then the real estate agent is left with
$4,200. And that is before expenses! If you want to make more money as a real estate agent then the real
question is, how hard was it for you to earn that $4,100 commission? Well in most cases, as a buyer’s agent, it
turns out that it is actually very difficult!