Do you speak Realtor®?

By Nathan Froelich October 28, 2015

Do you want to be the “go-to” partner who real estate agents send their buyers and sellers to? Hopefully you answered yes! And if so, then you should learn as much about their business as possible. Look at it this way; how many times have you wished agents understood what you do, and how you do it? To have meaningful conversations and provide value to real estate professionals it’s important to truly understand the in’s and out’s of their business. Here are some of the key management terms as they relate to agents.

Total Sales Volume: This is the sum total of all the properties that the agent sold. This includes the buyers as well. For example if an agent represented 5 Buyers who each purchased a $200,000 home and 5 Sellers who each purchased a $200,000 home, they would have sold 2 million in Sales Volume for that time period. Usually referred to annually.

Gross Commission Income (GCI): This is the total amount of commission that an agent earned for any given period. It is important to note this is not the take home commission. This is the commission total before they pay a commission split with their broker should one exist. For example, assume the agent had a total sales volume of 2 million and they earned an average commission of 3 percent, their GCI would be $60,000.

Transaction Sides (Sides): This is the number of buyers and sellers that an agent will work with over any given time period. For example, an agent might say they did 20 sides last year and hope to do 30 this year. Or, they may say they did 10 listing sides and 10 buyer sides.

Commission: This is pretty obvious--the amount of money they earn (usually as a percentage) based on the sales price of the property. It’s important to note that some agents don’t mind talking about their commission while others keep their fee’s closely guarded. Whether or not you talk about commission all depends on your relationship with the agent. And if you do, always keep that information to yourself!

Co-op Commission: This may have different names depending on the local terminology. This is the commission the listing agent (via the seller) is agreeing to pay another agent who represents the buyer of the home should it sell. For those who are new in the business this also means that the seller is paying the commission for both the buyers agent and the listing agent whom they hired to represent them. For example, the seller agrees to pay a total of 6 percent commission from the proceeds of their sale. Half or 3 percent may go to the buyer's agent, and half may go to the listing agent.

Dual Agency: Sometimes referred to as double siding a transaction; when the listing agent represents the seller and the buyer on the same home. This is not legal in all states. Be sure to engage with care on this topic as many agents are very passionate about it and the potential moral and/or ethical conflicts this situation presents.

Discount Brokerage: This term means a lot of things to a lot of people but in general this describes a real estate office or company that has lower than average expenses to the agents who are affiliated with that office.

Discount Broker: This may have various interpretations. It often refers to a real estate agent who charges a lower than average commission to their clients, usually the seller but this can also apply should they offer their buyer clients a portion of the commission as a rebate.

Note: Generally speaking agents set their own fees and should never collude to establish any particular pricing structure.

Now that you know some of the metrics and terminology agents use to measure their business you can have an intelligent conversation which will hopefully lead to the agent knowing and trusting you. Don’t be afraid to ask questions and attempt to identify way you may be able to bring your expertise to their business.

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