A reader of these articles recently came into our office with a technical real estate question. Fortunately, we were able to answer the question to her satisfaction. We then engaged in a lengthy conversation. She told us that she and her husband had worked hard all of their lives to reach the financial position they are in today. Then she shared with us her impression of Realtors. She felt that they seemed to make a lot of money and didn’t appear to work especially hard for it. She also voiced her opinion that real estate prices are just too high. Both of these thoughts have been prevalent about the real estate industry for as long as we can remember. As we continued to talk we attempted to shed some light on these common misconceptions.
Everyone is aware of the high property prices and rents in the Bay Area, and especially on the Peninsula. We explained that the high cost of real estate is a function of the free market place and that Realtors have nothing to do with the ever-increasing values. Real Estate, like any other product, is subject to the laws of supply and demand.
People often get the wrong impression and think that most Realtors are rich. They must be looking at the prices of property and assuming that Realtors own a lot of it. We explained that contrary to this assumption, most Realtors often work six or seven days a week, eight to twelve hours a day, just to make a living.
Realtors deal with high real estate prices day in and day out. Perhaps our familiarity with the subject matter portrays an attitude of nonchalant indifference to the huge investments we deal with. Sometimes we discuss big dollar amounts as if we were discussing the weather because we deal with such large sums of money on a regular basis in our profession. We explained that Real Estate is the largest purchase an average person makes in a lifetime, and it is a Realtor’s job to know all of the ins and outs of the real estate transaction in order to provide a professional level of service to the buyer or seller during this important, and often stressful, ordeal.
Today many people in various professions are making what once was considered as an unbelievable amount of money. We would estimate that somewhere between 10% - 20% of Realtors might fit into this category. They are professionals that have risen to the top of their field. After all, real estate is a business involving very large transactions and the potential to earn big money is there. But most Realtors earn a living at best. In any profession, there are those who succeed more than others.
Many people are drawn to the real estate business because of the possibility of a high level of financial success; however, fewer than you might think ever achieve it.
The nice lady indicated that through years of hard work she and her husband had paid off the mortgage on their home. She estimated its value to be in the $1,800,000 range and they also had other considerable financial investments. She and her husband probably had net assets in the $4,000,000 range; they have done very well for themselves. We wonder if the Realtor who sold them their home so many years ago has done as well.