My brokerage, TheRedPin is always in the news. I love that. The marketing team is doing a great job. They are shaking things up. They are creating news for the news industry, which is always looking for new news. Our marketing team has been very clever. They know how to cast the line, set the hook and reel in the big tuna. A big tuna is of course free media coverage for our brand of real estate. Phil Soper does it for Royal LePage. Rokham Fard does it for us.
In early January, they started a wonderful story about the cheapest day to buy a home. It got great coverage in the news media and though statistically correct, the whole thing was a bunch of hooey. Sure, that one day in January may statistically be the annual low point in prices for real estate sales, but that does not mean you can buy your dream house on that date. Prices don’t really float up and down as the statistic implies. What is at work here is the make up of what is available to buy. It is the inventory of homes for sale that hits a low point (in price) on that day in January.
But real estate statistics are almost always wrong, or misleading, blurry, hooey, or otherwise inaccurate. Truth be told, most reporters aren’t exactly math geniuses, they are wordsmiths and their job is to write stories, create headlines and stimulate debate.
Last week, TheRedPin suggests that Realtors make $1000 an hour. It is another wonderful story and it generated a lot of buzz. Of course, like the best day to buy a home story, there is a modicum of truth in it, but otherwise it’s just more hooey.
Here’s the math
Last year in the GTA 2826 homes were sold in just 24 hours. With an average commission just shy of $14,000 for the sales, it works out to $1,000 an hour.
Of course that is like calculating salary by only counting a university professor’s time lecturing, or only counting a trial lawyer’s time in court or a surgeon’s time in the operating room, a fireman’s time fighting a fire or a policeman’s time roughing up a suspect…
Commissions are too high
The problem with real estate commissions are that they are too high. Unfortunately this does not mean that realtors make too much money. According to most surveys, average income for realtors is just over $40,000/year. That means a lot of realtors make a heck of a lot less than $40,000. There is a high attrition rate for realtors too. Something like 70% don’t make it to five years in the business. A lot of people get into the business thinking that they can make $1,000 an hour only to find out that they make $2,000 in their whole first year.
I like TheRedPin. We are a very unusual brokerage. We are trying to change the real estate business – a business in some real need of a change. We are making news and creating debate and those are good things.