Generally, people respect entrepreneurs. The show “Shark Tank” takes this notion to a new level as the entire program — successful season after season — glorifies entrepreneurialism and equates it with “The American Dream.” The secular success of Silicon Valley and the enshrinement of venture capital in the edifice of America (and now the world) further burnishes entrepreneurship. Risk and reward are the dyad that forms the basis of innovation and even of capitalism, as the story goes.
One can debate the relative merits of this argument; some would argue that stable jobs at large companies are the best alternative for most. Others would suggest that capitalism is based more on socializing risk than on taking it on headfirst. But whatever the case may be, there is a strange gap in perception when it comes to some professions. Some entrepreneurs are never given the credit for being so.
Are real estate agents undervalued?
Of these, real estate agents are in the crosshairs of the naysayers, who suggest that this group is largely paper-pushing, monopoly-driven, and low-value addition. It is a curious notion that needs to be unpacked. The issue here is not to glorify the profession but to suggest that the very logic used to elevate entrepreneurs of all sorts should also redound in favor of real estate agents. But it never does.
We’ve heard it all. “What value do they really add?” is a question we hear a lot. “It’s an easy 6%” is another truth bandied about. While the structure may not be perfect or logical (witness the recent lawsuit in Missouri), the canards that are passed off as truth are unfair to agents.
Let’s think about this in clear terms: Entrepreneurs take on enormous risk and expense to build a set of products, services, and relationships. They take on costs, remove themselves from the paycheck-life, and typically eat what they kill. They have enormous sunk investment before any notion of profit is possible. Well, so far, this describes the life of an agent as well.
Entrepreneurs and others sell their expertise and know-how. Consultants, lawyers, and accountants do that and so do bankers, engineers, scientists, and software developers. Entrepreneurs use their cultivated experience, acumen, and connections to build businesses. Sounds a ton like real estate agents.
Entrepreneurs spend money and resources on building products and services in the hope that someone, at some time, will buy them. They invest time, money, and resources in a thing that might or might not pay off. We respect them for that. What does this sound like? The life of an agent.
It’s just paperwork, right?
When presented with this sort of comparison, naysayers will often veer into anecdotes about a particular agent that made money just to “do paperwork” or a particular agent who is incompetent. Fair enough, but find me a profession in which the entire cadre is picture-perfect? Are all consultants, bankers, engineers, writers, lawyers, and accountants equally skilled and talented? We know the answer to that.
This is not to suggest that the role of the real estate agent won’t change, that the compensation structures are excellent, or that scrutiny is a bad thing. But the inconsistency and the ensuing negative perceptions make no sense.
To be honest, I believe that much of the perception stems from individuals being annoyed that they must pay when they sell their houses. But very few are honest enough to realize that whatever it is they do for a living, someone paid for as well. We all live in glass houses.
Romi Mahajan is CEO of KKM Group and CEO of ExoFusion.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Romi Mahajan at romi@thekkmgroup.com
To contact the editor responsible for this story:
Tracey Velt at tracey@hwmedia.com
Thank you for this. We work with amazing agents who help buyers avoid costly mistakes everyday. Is it time for some change? Maybe. But adding to buyer costs, many of whom barely qualify now with the 2023 changes to LLPAs from the GSEs, appears to further erode buyer affordability. How this all shakes out will be interesting to watch.