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“The Work of a Real Estate Agent” 


by J. C. Calhoun


“These agents make way too much with these high Real Estate commissions. I can sell my place myself and save all that money.” When markets get tough and prices go down we tend to hear those types of comments more often. Unless you have been in the business you really don’t know what it entails. If you have a few minutes and are interested, I’d like to walk you through a typical Real Estate transaction.  This is based on the procedures followed at Coldwell Banker Cayman Islands Realty and is representative of CIREBA policies.


A. When competing for a listing, first an Agent has to:


  1. Inspect the Property.
  2. Determine the Motivation of Seller.
  3. Search MLS & LIS databases for comparable sales (exact comps are RARE).
  4. Convert non-exact comps to comps (ie evaluate the differences) between what has sold and the subject property.
  5. Anticipate market trends which will effect pricing.
  6. Suggest a listing price which, based on real data and experience, will get market attention and yet provide the best chance of a sale at the highest levels based on the motivation of the Seller.
  7. Make suggestions for the presentation of the property, ie, how to make it more attractive without going to great expense.
  8. Provide a marketing plan to the owner.
  9. Provide a listing agreement in which the responsibility of the Owner and Realtor are easy to understand and go over said agreement with the Seller. (Each clause in the agreement is in there for a purpose based on previously encountered circumstances.)


Note: Intense competition for listings encourages agents to push CMAs to upper limits while current market conditions continue to prove it is the lower limits which should be used. This leads to people listing with the less savvy Realtor because he is willing to take the listing at the higher – likely unsalable – price. – As a result marketing time increases and frustrations of the Sellers mount.


B. Once the listing is signed the Agent must:


  1. Take complimentary photos and input those plus all relevant info on property into the MLS system.
  2. Put a tasteful sign on the property if appropriate.
  3. Create web and newspaper ads to showcase and expose the property
  4. Advertise and hold an open house if appropriate.
  5. Show the property to customers and other agents customers over & over & over (especially in this type of market).
  6. If there is no market response, then advise Seller of options re pricing or marketing – this process continues throughout listing. Current average marketing time will give hints as to the market situation, and is generally the basis for the length of listing agreements.


C. Marketing 


Depending on the target market, marketing can become quite expensive. For example, “Previews” quality properties generally require more sophisticated marketing. Glossy magazine ads carry a huge price tag. In market conditions like the present, with properties remaining on the market for much longer, the marketing costs are often higher, at the same time that the prices being realized are lower. And if there is no sale, these costs cannot be recouped by the company. But the most effective marketing tool is our MLS system wherein as of this writing there are some 2,000 active listings with a value of US$1.7 Billion in the MLS! All 30 Companies and 180 agents share in the sales effort on these properties.  The CIREBA/MLS website generates consistently huge traffic volume, and is only available for CIREBA members listings.


D. The Sales Process:


Then into the mix we add the buyers who are coming from more depressed markets and often make “low ball” offers on the property with completely one-sided conditions. The Agent now has to try to bring 2 sides together who have diametrically opposed expectations. Add to this a lawyer or two who think their job is to get the best of every deal for their client, but often forget there is no “best deal” if there is no deal at all.  And also possibly a Banker, another professional with a presumed knowledge of the Real Estate market.  The deal itself, while difficult in it’s own right, can often become even more difficult due to the other Professional “help”.


It is entirely possible the Buyer has been found through efforts of another agent. In a market full of falling prices, that agent has to try to ensure that the low offer his customer wants to make is not so low that it aggravates the Seller so much that he will not continue to negotiate in good faith. He has to know the market data as well as the Listing Agent so that he can properly advise the buyer as to the real value of the property. Both will have the same data, but each wants to push the envelope in their favor.


The more unrealistic each side is (relative to market data), the wider the gulf between the principals, and the harder it is for the agent to find common ground between them. In circumstances like these often just having an agent buffering the comments of the principals can be the difference between a deal and no deal because otherwise it is too easy for the negotiation to get personal.  Besides just pricing differences, the conditions of the deal are just as important and the same tug of war goes on with these. e.g. – long closing vs quick closing; normal 10% deposit vs smaller deposit; financing or survey conditions vs no conditions, etc. And if by skill and force of will, the Sales Agent gets the 2 parties within striking distance, after all the gut wrenching work that it took to get to this point, now the principals want the Agent to work for less.


When markets are very strong or very weak one principal has the upper hand, which makes it exponentially harder to make a deal. Sellers who were expecting more of a profit or who don’t want to take a loss, expect concessions from the only person who was able to get them out of their investment – at market price. Yes – Market Price – which is what a Buyer is willing to pay for it. The agent can’t control the price of a property anymore than he can conjure up a Buyer when there are none.


What he CAN do is know the market and the sales process so well, that when he finds willing Buyers and Sellers he can convince them to put aside their ego and their preconceived estimates of value, and do the deal where it should be done. This is not easy and a positive result is often not possible. So at any given time the Agent needs to have 4 or 5 of these potential deals in the works just to ensure one might close.


Oh and by the way, I am talking about what an agent who is working full time for a CIREBA firm does to make a living. Part time agents often do not have the time to do all this properly. And non CIREBA Agents may not have the experience or ethics required which is generally why they are not CIREBA Members in the first place.


While all this is going on, the CIREBA Agent also has to ensure he/she has done enough due diligence, (and collected evidence of that), to ensure that CIREBA itself and the Monetary Authority are satisfied with that effort. In fact, all CIREBA firms are reviewed by a third party compliance firm to ensure they are operating properly in this regard.


Further, the principals can be comfortable that the documents used in the transaction have been drawn by an attorney and are constantly being revised whenever an improved version is possible. The deposits are all kept in segregated trust accounts in CIREBA firms, and CIREBA may ask to audit its Members to ensure compliance. One local Realtor is no longer a CIREBA Member as a result.


Most of the data used by the Agents to determine listing and eventual selling prices comes out of the CIREBA database which is far more user friendly than the Lands & Survey records, and available on a more timely basis. This is made possible because CIREBA Agents pool all the sales information and this information has type of property, dimensions, condition, etc. – all of which is not available at L&S and all of which is crucial to a property valuation.


The question of commission amounts often comes up. And yes for a million dollar deal a company may gross $50,000. When you realize the amount of work involved, plus the expertise required and break it down by time and effort spent on all the different aspects – (not only on the deal which eventually happened, but also by all the showings and deals which he worked on which didn’t happen)… it would be impossible to calculate the actual time involved. But when you take the gross commission and deduct the referral fees or co brokerage, the marketing costs, and then divide the Agent’s net proceeds by the time spent, you arrive at a figure by the hour which is significantly less than you would expect, and, on average, considerably lower than most other professions.


We also hear that commission rates should be lower because prices are.  Well, the fact is that since the Real Estate agent works on a percentage, his income on each deal decreases at proportionately the same rate as the price does.  In a “down” market, it is down on each transaction for Realtors too.


So the next time you wonder what a Real Estate Agent actually does for his fee, or whether it is smarter or safer to deal with a CIREBA Agent, hopefully you will already have your answer.





--- J. C. Calhoun  is one of the Founding Members of CIREBA, a member of the CIREBA Board of Directors since 1985, and a Broker/ Owner of Coldwell Banker Cayman Islands Realty.