If someone was to approach you and ask to work for them on an hourly rate - and pay you cash at the end of the day ... what would you charge?

Would you have different rates for showing property vs. negotiations, etc.?

I have done buyer representation on an hourly rate up to a fixed amount for a client that wanted help buying a particular piece of property. It was many years ago for friend and a flexible time line that I could work it in among my other real estate business tasks. Would probably have to charge more now in a similar situation.

The same as with BPO fees, I will decline to discuss specific amounts openly on the forum. I don't want anyone to get the idea that it is a solicitation to match fees (that could be considered price fixing).

Let me list some possible ranges:

a) $25-50
b) $50-75
c) $75-100

I don't get paid at the END of the day. Depends on the problem being encountered; but I take a retainer of at least $250.00 and get paid from the beginning. If they won't pay a retainer, then they will probably argue about paying AFTER the fact too. If we don't like one another, that is discovered during the first couple days; or first few hours of devoted activity.

It should also depend on how much liability comes with the task.

Yes it should... so what does that make your hourly rate?

would they be billed for phone calls as well? i know that i have had clients who like to call and ask lots of what if questions.

Everybody runs there business differently.

I have seen broker over the years you post everything from refferal fees,to NAR theories,discounters,pay for service,etc.

The posts are defintely interesting.

I am just plain old vanilla type of person. I offer them my best service and have one set fee I charge to cover my expenses.It keeps things simple and streamlined and I close sales.

The ones that don't want to conform or use me it's no skin off my back as I do very well working my plan.

You can't be everything to everyone in this business.Luckily you don't have to.If you break it down into per hour I have made thousands of dollars an hour before so I don't like the ala cart stuff.

A hourly consultation fee of $125 p/hr seems realistic to me.
Billing fees for RE services, depending on individuals qualifications and services are from $55 to $200 p/hr. where I am.

That's what I use. It separates those who are serious from those who just want to "pick your brain" for free.

When I take a retainer, I'm also quite conscious that they're expecting a return on that investment, and those first couple of hours have to show that a "real value" was provided. I make sure they are getting their money's worth. And because we're both keeping track for that short period of time, I usually have no argument "selling" more of my Consultative Services at the same rate; provided that it is needed.

These people know that I'm not trying to make a living off these hourly fees; but that they are receiving the benefit "all" of my experience in this Business and this Territory.

For ER . . . . of course Phone Calls are billable . . . . but I certainly don't include any time spent on idle Chit Chat about Politics or the Weather; which has to be chalked up to being a "social lubricant". There's nothing precise about what I do; and when people don't trust you in these dinky calculations or respect what you are doing for them, it's best to move on any way.

If it's based on free market economics then your hourly rate should be a combination of your skill, experience, and reputation. Some people's advice could quite easily be classed as "priceless" and they could charge whatever the market would bear. While others wouldn't be worth minimum wage. So it all depends (like to many things) doesn't it?

One other thing I should have mentioned about "Clients on Retainer". They always get priority treatment. That's not written . . . . it's just the way I handle them. I will drop just about anything else I'm doing to take a call or perform a task for someone who is on retainer; and do so voluntarily.

This has never been abused. I have never received calls in the middle of the night from these Retainer People . . . . or at 5:30 AM as I have from some Customers; nor any on Sundays or Holidays. It just seems that they treat the "Service" more respectfully when they are paying for it.

I've always performed these same activities "For Free" on a contingency basis and in the hope that some associated Transaction would someday Close and I'd maybe receive a Commission . . . . but seldom heard so much as a "Thank You" from the beneficiaries. But that's the way the Real Estate Business has been structured: to provide service to the greatest number for "free" using the compensation that has been (or might be) received from the "few".

Very interesting, Dale. I've given a lot of advice away for free over the years and "enjoyed" the same experience. A "thank you" is a rare privilege and about the best you can expect. That's why I started a blog so that all of the free advice I give away serves a greater purpose, namely, to drive traffic which can be monetized and to build my credibility and stature on the net.

Billable Hours takes be back to a time when all my time was on billable hours plus disbursements and hereby submit my recolledtion for your consideration.

Client memories, when presented with their "Statement of Accounts" can suddenly fade or become very selective in their recollection of events and therefore a copy of your “Fee Schedule” should be made readily available to all potential clients and subsequently acknowledged in the clients retainer agreement.

Fee Schedules:
There are a wide variety of fees, but are generally broken down into two predominant types of fees as follows:

1. Contingency Fees which are normally dependant upon and subsequently payable on the pre-determined fulfilment and success of the retainer.

2. Non-contingent Fees that are payable for the time expended, irregardless of the success or failure of the retainer.


Expenses / Disbursements Normally relate to the out-of-pocket expenses incurred on behalf of the client by their retained professional. Expenses are specifically mentioned in all retainer agreements as being either inclusive or exclusive of the fees described therein. Clients are further advised that in the event of unforeseen developments requiring additional disbursements, a interim retainer will be necessary.

Non-Contingent fees may be either Straight Billable Hours, Capped Billable Hours, or Block (Flat) Fees

Straight billable Hours exclusive of disbursements: This fee arrangement is generally used where the duration and complexity of the matter is not clear and a standard retainer of $$$$$ is payable in advance.

Capped Billable Hours exclusive of disbursements: This fee arrangement is based on the estimated time required to fulfill the retainer in what would normally be viewed as a straight forward matter.
e.g. the hourly rate X the pre-determined required number of hours and a standard retainer of $$$$$ is payable in advance.

Block (Flat) Fee: There two types of flat fee for service arrangement , one being where the disbursements, if any, are included in the quoted fee and generally of a nature that is limited in scope and for which a flat fee can be readily applied such as preparation and/or review of such documents as rental agreements, leases, comparative market analysis, a formal opinion of value, offer to purchase, etc. with a standard retainer of $ full $ payment in advance.

The other type of flat fee arrangement is where all disbursements as may be incurred are in addition to the flat fee for service quoted.

Attendance Fees:
There are also attendance fees in relation to administration tribunals and/or court attendance and pre-hearing or pre-trial conferences with client's counsel or others and the professional’s fees in relation to his or her first attendance and each subsequent attendance in which the professional may be required to give testimony and their per diem minimum to be established, together with consideration for the professional’s required travel time, mileage, parking fees, and if out-of-town their (return) travel expenses, meals and lodgings.

The Hourly Rate: The establishment of an hourly rate must be competitive with your immediate competition, unless you can clearly distinguish yourself from the competition and illustrate that there viable reasons that you should be paid more than your competitors.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information

I would charge $3,500,000/hour.

I would charge $3,500,000/hour.


i would retire after my first hours worth of work. mainly because the chances of getting paid for a second hour are even more slim than teh first hour:-)

In this instance you might consider switching the client to a "daily rate" similar to the following:

(1 day) $500.00 per day or part thereof, plus expenses with a $1,000.00 retainer in advance.

(2 days) $500.00 per day or part thereof, plus expenses with a $1,500.00 retainer in advance.

Whatever day rate you establish add the same amount for expenses as shown above. This may prevents a client, to some degree from using your services for 1 hour per day and stretching the retainer out over a long period of time and have you at his beck and call.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

Hmm.. I've never done hourly work on a sales basis, but I have been an expert witness and I billed $150 per hour, which is reasonable given my experience and what you can make doing sales over consulting. I don't know that I would do sales via hourly rate, but in this market I'd be making more if I did! :)

Joe

From an agent cost perspective I have been doing some research to see what local agents would work for on an hourly basis. Here are my findings:

Full-time agents employed by broker on salary: $14.50/hr. plus beneifts

Full-time agents employed by broker w/o benefits: $18/hr.

Broker - work by hour intermitently - 2 hr. minimum: $25/hr for marketing-type, showing-type services and $50/hr. for negotiation and contract services

Raleigh, NC area

@broker - Not sure how you're doing your survey, but I wouldn't do what I do for that amount of money.

Broker - i think your calculator is broke.

Those pesky zeros dropped off the end of his numbers. Or he was crunching them so hard that one just popped right out!

Seriously. No less than $100/hr. We are a business, not an individual - think about the overhead in each hour (fees, education, insurance - of all sorts!, dues, gas, car, office, electricity, ink, paper, etc.) and you will soon see that those working for $20/hr are losing money. They just don't know it, but will figure it out about the time they decide to let their license go inactive.

Those figures I posted are accurate. I spoke with dozens of agents and brokers. You may not work for those fees but many will.

The broker hourly figure was provided by them not me. In an industry as easy to get into as this there is bound to be competition when markets slow.

some will also rebate commission, we will see what happens when the smoke clears. this is a business. ask your doctor for a rebate to put toward your next bill and see what happens. after paying expenses and being 1099'd what would you make off of 20 bucks an hour? rofl!

Broker:

You may have got those rates from some agents who should be asking "You want fries with that?" We operate a business and the business has lots of expenses that need to be covered before it will break even; what is paid the agent is only a part of the equation.

Let me use a comparison to an automotive repair shop where you take your car and get charged maybe $60/hr for service work. The mechanic that did the work might get $15/hr and he doesn't have to deal with licensing, C.E., E&O or many of the other expenses that real estate agents pay as part of their cost of being in the business.

To make money at this on an hourly rate basis you have to factor in the business costs, not just the personal compensation.

Mr. Foreclosure

does anyone have a figure for all dues licensing fees and everyting worked up with approx vehicle cost(maint., gas, etc...) broken down into what your expenses are per hour? people would be shocked, i should know, but dont have the time to find those numbers because finding them does not make me money!

I can go to prior year tax returns to find my costs, the hard part is knowing how many hours to calculate a rate.

I know some question if these are real figures or not but I can ensure you they are. The fact is there are far more agents then business and some will work for a steady paycheck... and some don't need to do it full-time or make 100K because they have a spouse that supports them.

The experience range was from 2 years to 22 years... and one broker currently has their own firm with 3 agents and will chuck that to work for $18.50/hr.

Reality.

18.50------- w-2'd or 1099'd?

I'm just going to repeat what I said above about this industry having evolved to provide service to the greatest number for "free" using the compensation that has been (or might be) received from the "few".

There is no way that any of us would hustle as we do, or work sometimes 75 hours, or more, per week if we were routinely paid on an hourly basis. Wage and Hour Laws would prevent it; the personalities of the people who fill these ranks would be far less aggressive; and the Public would go wanting for the quality and quantity of service it now receives gratis.

When Eric originally asked this question, I thought he was discussing how a rate is established for some occasional consulting activity; not a ccomplete revision of the way our business is structured, and its particpants are motivated.

Hourly compensation would just turn us all into a bunch of lazy bureaucrats.

I guess if I wanted to be an employee it would appeal to me. If I wanted to be an employee again though, I would go back to my cubicle life in the IT field and make more money with no expense.

It could just be burn out and lack of desire to pursue Real Estate anymore....maybe even if they were going to get 100/hour they just didn't want to do it anymore.

That may be YOUR reality but it certainly isn't mine.

I go around doing commercial deals. I LOVE it and get paid very well for it.

There is no way I would work for the peanuts you are quoting.Sure 20 percent of brokers/agents make 80 percent of the money.So sure you will get 80 percent of the people GETTING BY to work for nothing or say they will.

The broker wanting to quit his company is no suprise as brokerages have a higher fail rate than agents do.The big reasons being mismanagement,lack of experience,and the big one they are undercapitalized.

I don't have agents and average 50k or higher commission on each deal I do. I don't want the headache and I am happy making lots of money and doing my own investments. If someone had fire in there belly I might take them in for commercial training if they truly loved it but that's about it.

funny thing is that i know plenty of brokers who were never great agents so they decided to start a brokerage as they thought it would be better money than being an agent. before they first became an agent they were doing something else and thought being an agent would be easy.

i met an agent tonight at a class at the office. he is coming to my office soon from one of the large national franchises. funny thing is that he came in and introduced himself then stated how he has been in the business for over 20 years. he even pulled out some of his marketing material (it was ok, but gimmicky) any material is good if you get it in front of your target and get noticed. the funny thing is that when i got home i looked him up because i was quorious. he did talk a good game. when i looked him up i noticed that he only sold one listing this year and did not one thing else.....he talks a good game. time in the businesswether agent or broker means nothing. it comes down to how much business an agnet does. if thye dont do much business they will work for an hourly wage. i know that i can make better money any day of the week working on commissions and that is why i would not work for an hourly wage ever again!

broker,

Why don't you work for those wages since you are the one that wants to change our business around.

Like someone already stated, you must calculate our business expenses and daily expenses in order to see how much we are really making. I would never work this business for $20/hour! I think I would be losing money.

Agent 007

I won't work for those wages, but others will.

The point to take away from this is that the barrier to entry into the real estate profession is very low and as such it dilutes the percieved value of an agent in the eyes of the consumer. This is reflected back into the profession in reduced earnings, rebates, etc. We have put ourselves in this position.

Consumers are getting more savvy and agents are going to have to step up their value proposition to buyers and sellers if they want to maintain their current earnings rate.

Consumers pay agents for one reason and one reason only: to get the job done. They really don't care how it gets done... just that it gets done. If someone can do the same job as you just as effectively, for considerably less, that is who the consumer is going to gravitate to. The more real value added by the agent the higher justified earnings can be.

I think you guys need to lighten up on broker a bit - he's posting some thought provoking threads, really.

He's voicing a lot of the opinions of the consumer - whether they are correct or not, that's what they perceive. I think he's playing devil's advocate a bit.

Many realtors are lazy in their thinking, and we need to be able to tell consumers WHY they need us - beyond the typical NAR dictated blather that is mainly meaningless.

Good point, Perky. Someone wrote to me the other day asking how to convince a seller to pay (illustrative only)6%. I responded, perhaps not terribly helpfully - "Well, how DO you justify it? Are you worth 6%? Why or why not?"

It's not really a matter of arguing your way to a certain percentage or hourly fee - if you offer service that's worth the money and you believe with all your heart that it's worth the money (NOT simply that you NEED that amount), then you have your answer. If you can't convince yourself of it, well, then, there's your answer.

My situation is different in that I am a specialist.I charge 10 percent for commercial and land deals BUT I also spend alot to get my clients the best response. For instance just one thing I do is send a hot sheet in an e-mail to over 400,000 investors,developers,and pricipals looking for projects or to hold land (Landbank) for a future date.

That one item alone costs 500.00 to 600.00 bucks.My commercial signs run about 300.00 apiece. So paychecks are bigger but commercial is on a bigger scale then residential.

When you work a niche people pay more for specialized services.I have worked on projects upwards of 150 million in after build value.When you go in for a presentation to list land for regular folks cashing in on there once in a lifetime dream of selling to a developer not many can say that.

My advice is to not accept being AVERAGE.You want your goal when you go into the listing appointment to blow the potential clients away as to what you offer and your depth of knowledge.Will you sign everybody NO of course not.

I just have a constant unquenched thirst for knowledge and then I apply it.If you don't have that hunger it will be hard to stay at the top of your game and be successfull.

I agree that the entry into real estate is easier than it should be. By no means is this business easy though. I also think there are skills that some agents use in their business that are obvious to the consumer.

For example, I specialize in short sales in this current market. That is my niche. I am great at what I do. The hardest job in a short sale is negotiating with the banks. I am very successful doing that. Not many agents can say the same thing. Actually, most agents don't even want to deal with these types of transactions. They are the most complicated residential real estate transaction that exists. So I believe my skills are definitely worth the money I charge. To be honest, I truly believe that I am underpaid on these deals. The consumer should definitely see my value.

On a side note, I work with all types of consumers, investors, primary home buyers, 2nd home buyers, first time home buyers, relocation buyers, foreclosures, REO, short sales and all sorts of sellers. I have skills with each of these clients and their situations. I work extremely hard to protect my client and to accomplish their goal the best way possible. So I definitely know I am worth what I charge, sometimes I feel I am underpaid.

I received this e-mail today. It's easy to figure out at 2,000 hrs p/yr (depending on productivity), that an agent can comfortably make $30+ an hour as an employee where I am:

"40-Hour Work Week
Real Estate Career
Earn $100,000 and Up
For 1 licensed or unlicensed agent with experience and success: an inside sales position, following up on qualified leads (NO cold calls). Join a top producing team, work a 40-hour week, 2 weeks vacation, NO open houses, NO buyer babysitting, TURN OFF YOUR CELL PHONE. Opportunity to earn $50,000.00 to $70,000.00 1st year, as much as twice that 2nd year in stress-free real estate career.

This is NOT for the brand new agent nor is it for the failed agent unable to make a living. Instead, the agents who do well in this position have been successful, have good communication/organization skills, and could still earn a living in "regular" real estate if they had to, but prefer set hours, with their free time really free to enjoy with family/other interests. They're eager to work with qualified leads. They enjoy freedom from cold prospecting, expensive ads, intense competition and uncertain income. If you left real estate because of the 80-hour a week, on-call-all-day-all-night-all-weekends rat race and uncertain income, but like working with clients, the sense of accomplishment and 6-figure income opportunity, we have a great place on our team for you.

To begin the process, simply call toll free 1-800-xxx-xxx, ID#ABCD. Your inquiry will be held in strict confidence. (Note: the last time we advertised an opening, we were flooded with applicants and immediately filled the position. Do NOT procrastinate.)"

p.s. I know the agent who is advertising personally, he used to be a very successful loan officer, now a RE team leader who is doing well in this market.

Yep I think that is Craig Proctors stuff because one of his high producers Todd Walters uses that same spiel in our area.

can you tell me who it is, Interesting....