There’s been a lot of talk about real estate agent commissions in U.S. news lately and some really misguided advice circulating in these groups about purchasing property without representation. Let's clarify something, as real estate agents we do what we do because we enjoy helping people but there is a huge misconception regarding what it is that we do exactly and how we get paid.
If you know a realtor or agent, you know this profession goes way beyond a 9-5 job but most people have no idea the hours worked, the amount of people you talk to, the connections that have to be made, the follow up, amount of communication and costs/fees involved.
To clarify payment structure, both buyer’s agent and listing agent fees are paid by the seller. This usually occurs via the listing agent but in Mexico agents can “double end” meaning they can act as both seller and buyer’s agent and earn the full commission. In this case, the agent needs to work very neutrally as they will be made privy to information regarding the bottom line for both parties, deal breakers etc. This is a great example of a reason to work with someone you trust to represent your interests fairly. Double ending aside, both agents will ultimately get paid regardless of who buys which property so the main misconception I’d like to clear up is that it’s not necessary to use an agent to buy a home.
Although there is truth in that statement, it is horrible advice. As a buyer, the service is completely free to you and can potentially save you a lot of legwork in finding suitable options, weeding out bad developers in the case of presales, matching you with the best developers based on your buyer profile, helping you decide whether you better fit into the presale or resale buyer category, checking contracts and advising on lawyers, notaries, residency options and tax strategies to name a few. An agent can also correct any embellishment or inaccurate information that might be given by the sellers or their agents regarding the area, local processes or rental operating costs. It's a lot easier to do it right the first time than to fix it after. I get a lot of buyers coming to me after a bad experience looking for help. Please don't be that person, take your time, do a bit of research and work with a competent professional.
One complaint I see being brought up in some of these threads is a situation where an agent recommends one property over another for self serving reasons or suppresses information on properties that may potentially be a good fit because it would not benefit the agent as much financially. I just have to say if this is happening to you then you did not do your due diligence in selecting a good agent. The correct formula is interview potential candidates once, do your due diligence once and let that professional do all the legwork and due diligence going forward. If you suspect any foul play, have a discussion with your agent immediately. Foul play is grounds for immediate dismissal in any job, this is no different. Mutual trust is crucial to a successful client-realtor relationship.
Let’s move on to the next misconception, earnings. This is a U.S. stat but the average FULL TIME REALTOR’s earnings last year was $31,900 @ 40+ hours a week which is well below a living wage.
We don't have those stats available for Mexico but the point is as real estate agents we do not get paid an hourly wage or salary and we only get paid if we sell a home and it closes. As an agent you could work with someone days, weeks, months, or years with no guarantee of a sale ever.
Essentially we wake up each day unemployed going on job interviews and deal with constant rejection. We dedicate time away from family, use our time, gas, take clients out to lunch, pay for babysitters, miss dinners and weekends and rarely take vacations. We work 24/7 and have to constantly be on call or risk missing an opportunity. Once we do close a home, half often goes to the other party's agent and our own brokerage/agency if one is involved.
As with any business, there are many upfront expenses that must be paid out but for real estate professionals the costs can be significant:
Agency Splits
Referral fees
Office rent and utilities
Professional Association Fees
State Licensing Fees
Advertising/Marketing costs (business cards/flyers/info packets/yard signs/MLS and other platform listing fees)
Website Fees
Assistant's Salaries
Showing partners (30% of the commission is standard)
Transaction coordinator
Photographers
Videographers
Office Supplies
Continued RE Education
Closing related fees (translator services, housewarming gifts etc.)
Gas
Income taxes @ approx 30%
Health insurance, taxes etc. for employees
Now let’s review what listing agents do for their commissions. There’s a lot of work that goes into selling a home:
1. Prepare listing presentation for sellers
2. Explain to seller all documents and property info required to list
3. Research comparable sold properties for sellers
4. Tour the home
5. Advise on repairs and/or upgrades
6. Provide seller to-do checklist
7. Explain current market conditions
8. Discuss seller’s goals
9. Share your value proposition
10. Discuss exclusivity and decide if it’s right for this listing
11. Present your marketing options
12. Explain buyer & seller agency relationships
13. Describe the buyer pre-screening process
14. Create internal file for transaction
15. Get listing agreement signed
16. Verify interior room sizes
17. Obtain any current mortgage loan or property lien info
18. Confirm lot size from tax records
19. Investigate any unrecorded property easements
20. Establish showing instructions for buyers
21. Agree on showing times with sellers
22. Discuss different types of buyer financing and determine what, if any the seller will accept
23. Explain appraisal process
24. Verify home owners association fees
25. Obtain a copy of HOA bylaws
26. Gather transferable warranties
27. Discuss video recording devices & showings
28. Determine property inclusions & exclusions
29. Agree on repairs to be made before listing
30. Schedule staging consultation
31. Schedule house cleaners
32. Arrange for installation of lockbox
33. Place yard/window signs
34. Set up photo/video shoot
35. Attend photography shoot at property
36. Prepare home for photographer
37. Schedule drone & 3D tour shoot if applicable
38. Get seller’s approval of all marketing materials
39. Input property listing into MLS and other platforms
40. Verify listing data on 3rd party websites
41. Have listing proofread
42. Create property flyer
43. Have extra keys made for lockbox
44. Help owners coordinate showings
45. Gather feedback after each showing
46. Keep track of showing activity
47. Update MLS listing as needed
48. Schedule weekly update calls with seller
49. Present all offers to seller
50. Gather all documents required for lender
51. Review and negotiate offers and promissory contracts
52. Coordinate with lawyers and notary to provide all necessary documents
53. Keep track of copies for office file
54. Coordinate inspections with sellers
55. Explain buyer’s inspection objections to seller
56. Determine seller’s inspection resolution
57. Get all repair agreements in writing
58. Refer trustworthy contractors to sellers
59. Meet appraiser at the property
60. Negotiate any unsatisfactory appraisals
61. Confirm clear-to-close
62. Coordinate closing times & location
63. Facilitate transfer of utilities
64. Make sure all parties are notified of closing time
65. Receive and carefully review closing docs
66. Review closing figures
67. Confirm repairs have been made
68. Resolve any last-minute issues
69. Attend closing
70. Pick up sign & lockbox
71. Change status in MLS to “sold”
72. Close out seller’s file with brokerage
As a buyer’s agent there are also many crucial steps in the process:
1. Schedule time to meet buyers
2. Prepare buyers guide & presentation
3. Meet buyers and discuss their investment goals
4. Discuss different types of financing options
5. Help buyers find a lender if necessary
6. Obtain pre-approval letter from their lender
7. Explain what you do for buyers as a realtor
8. Provide overview of current market conditions
9. Explain your professional value to buyers
10. Educate buyers about local neighborhoods
11. Gather needs & wants of their next home
12. Explain recording devices during showings
13. Create internal file for buyers records
14. Search presale databases, insider and public forums for suitable properties
15. Send buyers homes within their criteria
16. Start showing buyers home that they request
17. Schedule & organize all showings
18. Gather showing instructions for each listing
19. Send showing schedule to buyers
20. Show up early and prepare first showing
21. Look for possible repair issues while showing
22. Gather buyer feedback after each showing
23. Update buyers when new homes hit the market
24. Share knowledge & insight about homes
25. Guide buyers through their emotional journey
26. Listen & learn from buyers at each showing
27. Keep records of all showings
28. Update listing agents with buyer’s feedback
29. Discuss home owner’s associations
30. Estimate expected utility usage costs
31. Confirm water source and status
32. Discuss transferable warranties
33. Explain property appraisal process
34. Discuss multiple offer situations
35. Provide updated housing market data to buyers
36. Update buyers on any price drops
37. Find the right home for buyers
38. Determine property inclusions & exclusions
39. Prepare offer letter when buyers are ready
40. Review promissory contracts
41. Negotiate promissory contract with developer
42. Educate buyer’s on the process and timelines
43. Explain clearly payment timelines
44. Explain promissory contracts
45. Educate buyer on fideicomiso
46. Outline estimated closing costs
47. Explain home warranty options
48. Educate investors on rental market and calculate ROI projections
49. Review timeline to closing
50. Collect all required documents for closing
51. Review comps with buyers to determine value
52. Work with lawyer to execute a sales contract
53. Assist client through the international transfer process for deposits
54. Obtain a copy of HOA bylaws
55. Keep track of copies for office file
56. Coordinate inspections with buyers
57. Meet inspector at the property
58. Review home inspection with buyers
59. Negotiate inspection objections
60. Get all agreed upon repair items in writing
61. Verify any existing lease agreements
62. Coordinate closing times & location
63. Make sure all documents are fully signed
64. Assist buyers with transfer of utilities
65. Make sure all parties are notified of closing time
66. Receive and review closing documents
67. Review closing figures with buyers
68. Submit all required documents to listing agency or developer to receive commissions
69. Confirm repairs have been made by sellers
70. Perform final walk-through with buyers
71. Resolve any last minute issues
72. Attend closing with buyers
73. Give keys and accessories to buyers
74. Close out buyer’s file brokerage
This is just a general outline, I can tell you we have to do some crazy things outside of the expected as well. Definitely take advantage of this value and use a reputable agent to buy your next home or investment in Mexico. If this breakdown helped you recognize all the behind the scenes work that goes into buying and selling property and you want to support your real estate agent's business, Here are some ways you can do so even when you’re not buying or selling:
- Share one of their listings.
- Refer a friend or family member to them.
- Allow them to connect you with agents outside their area for a broker-to-broker referral.
- Leave them a positive comment or review.
These small gestures go a long way in helping a real estate agent grow their business and are greatly appreciated.
**I want to acknowledge the fantastic educator and business owner who posted the original list on Facebook. I have modified it to fit my local market here in Mexico but if you're a Realtor or real estate agent, please feel free to copy and paste this information and continue sharing it.