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Make sense? Is there something I am missing? Well, you're way off on your math. Just the communications and scheduling of those 9 prospects (and dealing with

Make sense? Is there something I am missing? Well, you're way off on your math. Just the communications and scheduling of those 9 prospects (and dealing with no-shows, late-shows -- not to mention getting there and back, because it's not like you can get them all to show up in the same time window, back-to-back) involves a very significant multiplier on the 20 minutes per actual showing (1.5 hours per actual, physically appearing prospect) would be a better estimate). And ditto with the overhead on everything else you're mentioning. Plus they have side costs, and (significant) downtime between clients, etc. I'm not saying these are wonderful people that deserve every penny they're paid. But there's no way the "average" broker is taking in around $7k a week (or $350k a year) as your math would seem to imply. My argument is that a better model is to compensate the agent hourly vs. commission. If that was in any way viable it would have happened along time ago. There are reasons the compensation is commission-based; it's because it's basically a sales job, and the same remuneration logic applies: you get paid for closing a sale -- not for posting ads on Craigslist, or for talking up the parquet floors and fireplace and how great the restaurants are.

rabbimarshak 12y ago
The math is right, but agree the estimated time to close a deal may vary. Open houses are designed to cluster the showings back to back. And if the unit is priced right, and in a desirable location, it will probably take less than 9 showings to close the deal. Also, what side costs? Seems to me like the cost of marketing is near $0. A physical store front or location is not required, and other expenses like phone, internet access, metrocard are likely to be incurred whether there is deal flow or not. "(significant) downtime between clients" - Are you saying the agent should be compensated for the down time when not working? I'm not implying that agents are churning out deals every waking minute in the same way that an Uber driver probably doesn't have one customer after another. There is too much competition and too little inventory for that scenario to be realistic. But the time they are working, the amount earned is not proportionate to hours contributed. And I don't doubt that some top tier agents are bringing in 6 figure incomes. This business is a popular profession for part timers, moms, aspiring actors. My argument is that for the time they are working, its disproportionate to other occupations, because they earn a commission on a very high figure. Is there more 'work' or hours involved renting a 2 bedroom for 8k vs. a 1br for 4k? Seems to me like the process is identical. Working at the Apple Store is also a sales job. Why is there no commission then? Because the product sells itself. Manhattan apartments are in the same arena - the virtue of it being on the tiny island sells itself, if priced properly. Even the best salesman could never close the same deal if the identical unit were across the river in NJ.
- anywherenotes 12y ago
  When people go to apple store, they probably already know the product and ready to spend, I am going to argue that Apple sales people are closer to convenience store clerks, than to real estate agents. When someone looks at apartment, that's the first time they've seen it, and they didn't discuss it with their coworkers to death for weeks. I think just asking them for a check at that point is a bit more complicated compared to what Apple sales person has to do. Salesmanship will be important in explaining why the apartment is worth 4k, vs. whatever they think it's worth. Apple price is a one-time price for a few hundred, or at most a few thousand dollars. Each month rent is going to be more than an Apple gadget, coupled that with completely unknown product and the sales skill required becomes unparalleled. There is obviously a difference between renting out 8k apartment vs. 4k apartment. Usually people can squeeze into a smaller apartment, usually in NYC they will be unhappy with tiny apartment as it is, and usually there are a lot of apartments they want to see before committing - it's not like Apple with only a few devices. Two apartments both at same price may be entirely different, and just because one apartment is lower price from another doesn't mean it is inferior, so it's harder to compare than electronic devices (for example apartment maybe higher in price for being next to a subway station, but if another apartment is right within walking distance of a person's job - it would be way more valuable to them, or perhaps it's closer to the correct subway line). Is 1 out of 8 a realistic number for getting someone in NYC? do you have a source for it? Regarding side costs - there are people who work as photographers for real estate. So if you want your listing to look nice, you may want to get one. Take this with a grain of salt, I've never been a realtor. I have rented apartments only in NJ, and bought a house in NJ.

rabbimarshak 12y ago

The math is right, but agree the estimated time to close a deal may vary. Open houses are designed to cluster the showings back to back. And if the unit is priced right, and in a desirable location, it will probably take less than 9 showings to close the deal. Also, what side costs? Seems to me like the cost of marketing is near $0. A physical store front or location is not required, and other expenses like phone, internet access, metrocard are likely to be incurred whether there is deal flow or not. "(significant) downtime between clients" - Are you saying the agent should be compensated for the down time when not working? I'm not implying that agents are churning out deals every waking minute in the same way that an Uber driver probably doesn't have one customer after another. There is too much competition and too little inventory for that scenario to be realistic. But the time they are working, the amount earned is not proportionate to hours contributed. And I don't doubt that some top tier agents are bringing in 6 figure incomes. This business is a popular profession for part timers, moms, aspiring actors. My argument is that for the time they are working, its disproportionate to other occupations, because they earn a commission on a very high figure. Is there more 'work' or hours involved renting a 2 bedroom for 8k vs. a 1br for 4k? Seems to me like the process is identical. Working at the Apple Store is also a sales job. Why is there no commission then? Because the product sells itself. Manhattan apartments are in the same arena - the virtue of it being on the tiny island sells itself, if priced properly. Even the best salesman could never close the same deal if the identical unit were across the river in NJ.

anywherenotes 12y ago
When people go to apple store, they probably already know the product and ready to spend, I am going to argue that Apple sales people are closer to convenience store clerks, than to real estate agents. When someone looks at apartment, that's the first time they've seen it, and they didn't discuss it with their coworkers to death for weeks. I think just asking them for a check at that point is a bit more complicated compared to what Apple sales person has to do. Salesmanship will be important in explaining why the apartment is worth 4k, vs. whatever they think it's worth. Apple price is a one-time price for a few hundred, or at most a few thousand dollars. Each month rent is going to be more than an Apple gadget, coupled that with completely unknown product and the sales skill required becomes unparalleled. There is obviously a difference between renting out 8k apartment vs. 4k apartment. Usually people can squeeze into a smaller apartment, usually in NYC they will be unhappy with tiny apartment as it is, and usually there are a lot of apartments they want to see before committing - it's not like Apple with only a few devices. Two apartments both at same price may be entirely different, and just because one apartment is lower price from another doesn't mean it is inferior, so it's harder to compare than electronic devices (for example apartment maybe higher in price for being next to a subway station, but if another apartment is right within walking distance of a person's job - it would be way more valuable to them, or perhaps it's closer to the correct subway line). Is 1 out of 8 a realistic number for getting someone in NYC? do you have a source for it? Regarding side costs - there are people who work as photographers for real estate. So if you want your listing to look nice, you may want to get one. Take this with a grain of salt, I've never been a realtor. I have rented apartments only in NJ, and bought a house in NJ.