Ask Dr. Real Estate
What's The Big Deal About Getting Listings?
by Dr. Kenneth W. Edwards GRI
I've been a REALTOR® for about two months and I just got my first commission check. It was for a very substantial amount and was as a result of a sale I made to a nice widow lady the first week I was in the business. She happened to call our office when I was on floor duty and we established excellent rapport. I also have several other really promising leads on potential sales. Frankly, I have decided I would rather concentrate on selling homes than listing them. Although she has not vetoed the idea, my broker doesn't seem to be wildly enthusiastic about that approach. What's the big deal about getting listings, anyhow?
Congratulations on making a sale so soon (I'm assuming it wasn't to your Aunt Martha who knew you were on duty and called your office). Most folks typically spend a lot longer than that before they do something in real estate that actually earns them a payday. Exclusive buyer representation is a viable career option, but don't get carried away too quickly and reach any hasty decisions.
While representing buyers exclusively is an evolving and prospering element of our profession, your broker's attitude is likely the result of her own experience and that of others who have gone before you. Consider these factors.
First: When you secure an exclusive right to sell listing and put it on Multiple, you immediately enlist the efforts of a lot of enthusiastic, hard-working professionals whose survival and prosperity depends in very large measure upon finding buyers for listings such as yours. In effect, you will instantly "hire" a lot of REALTORS® you haven't even met yet.
Considered in that light, it is a very efficient way to invest your own time and effort. Get a lot of realistically priced, attractive listings and you will constantly have a small army of dedicated professionals pounding the streets trying to make money for you (and themselves). From a larger prospective, listings are the real estate profession's inventory. In essence, it's what's on the shelf for sale. No listings, no sales.
Second: When you get an exclusive-right-to-sell listing on a property, the owner has a contractual obligation to your broker (you recognize, of course, that all listings are in the name of your supervising broker). Find a ready, willing, and able buyer and you have earned your commission. Anyhow, that's how it works most of the time. When you work with buyers, on the other hand, they typically have no real obligation to you. You might work with them diligently for several months only to have them buy from someone else! There are ways to cultivate buyer loyalty (mainly by doing a thoroughly professional job and effectively communicating with them), and there are contractual possibilities, such as buyer agency agreements, but these still represent only a comparatively small fraction of total transactions.
Third: What happens when that nice lady to whom you sold the home during your first week on the job wants to sell? If you did things right the first time around and have maintained contact with her, she will likely want to list with you. Sell a lot of homes and you will have a steady stream of potential listings. In my first year in real estate I sold the same little starter home twice. The first buyers planned to be in our community for several years, but the nurse wife got an offer she couldn't refuse in another community. I listed and sold their home. I'm sure it hasn't escaped your attention that the commission split is a lot better on that kind of a transaction.
Having heard all these things, I guess it is still possible that you would prefer to sell homes rather than list them. There are brokerage firms now which work exclusively as buyer agents, and some companies have agents who work only with buyers and others who work only with sellers, but it is clear that your broker prefers to operate in the more traditional business model, which means her agents engage in both listing and selling. My strong recommendation is that you sit down with her for an extended career guidance discussion.
I will say this. If you prove you can sell a home every week or so my guess is that your broker will somehow accommodate to your desires. All things considered, however, you can likely appreciate how this old saying came about: "Old real estate agents never die, they just become listless". And to add my personal bias, real estate wouldn't be nearly as much fun for me if I didn't list homes.