REALTORS® can take a joke as well as the next person, but when you see a movie like "American Beauty" in which the amoral, self-absorbed lead character is a Realtor, the fact that the movie is among the nation's number one rentals isn't reassuring. The movie's lampoon of Realtors was underscored by comic Billy Crystal's remarks at the Academy Award presentation in March, in which he made fun of "getting screwed by a Realtor" to over 65 million people across the world. There's no question that Hollywood has created a powerful new stereotype.

Admit it, you laughed along with the rest of the world, and part of you may have agreed. Like any profession, real estate brokers have their bad apples. If they were, why would they be hired to assist in 85 percent of the home transactions across the U.S.?

There is a lot about Realtors that Hollywood and the general public don't know about this misunderstood and often unfairly maligned profession.

Although the industry is embracing some changes, Realtors today are mostly independent contractors, responsible for their own expenses, equipment and tools. They are paid at the closing of the contract, from the proceeds of the sale which is arranged from the listing side to pay both parties. A seller who is interested in selling his/her home arranges to pay both agents out of the proceeds which are built in to the sales price of the home. This device, in theory, allows the seller to net as much as possible by assuring the agent community who brings the buyer that they will be paid. Although buyers actually fund the commission for both sides (in the purchase price of the home,) they generally don't contract to pay the Realtor outside of the transaction unless they want exclusive representation, and this can generally be accomplished by asking the seller to pay the buyer's agent in the offer document.

Buyers can be represented by Realtors who can serve as fiduciaries or transaction facilitators according to state regulations and the agent's own service model. Most buyers don't work under contract, yet expect Realtors to be able to advise them on the most intimate aspects of the transaction such as offer pricing. When the Realtor presents a representation contract, many buyers recoil in horror, failing to understand that a contract protects the buyer as well as the agent. It holds the agent to a higher level of service.

The real estate industry is one of the most highly regulated industries there is. Like CPAs and airline pilots, and physicians, real estate professionals must not only get licensed to practice, they must serve under the supervision of a broker. Unless they meet the requirements to become a broker and operate their own office, they must always work under supervision. They must meet continuing education requirements to demonstrate that they have mastered the latest changes in regulations or they can not retain their licenses. That puts them in the category of other professionals from pilots to attorneys to physicians, who must also undergo continuing education to remain licesnsed.

Agents today face a tremendous learning curve and expense to be able to serve consumers in two worlds - online and offline. With over 1/3 of consumers shopping for homes online, agents must be proficient in online business practices as well as traditional real estate practices. They must be individually equipped with cell phones, laptops, PalmPilots, pagers, Web sites, hosts, and other communications tools to be competitive. They must continue to pay for expensive media advertising to get themselves and their listings publicity at the local level, too. They must farm for new prospects online and offline by walking and calling on their adopted neighborhoods. Competitive agents are highly skilled at balancing both worlds, which is more expensive, time-consuming, and challenging than doing business only the traditional way.

When you contract to have a Realtor represent you, you are actually contracting with the broker. The broker provides the office, support, and liability backing to his/her agents. The agent is the agent of the broker. S/he only becomes your agent when you sign a listing agreement, a representation agreement and/or make an offer on a home. If you are a buyer, your agent is working for the seller, even while showing you homes. When you sign a representation agreement, then you become a client of the broker and agent, with rights to full service.

The real estate industry offers alternatives to full service. Discount services mean exactly that - less service for lower fees. Some consumers welcome this alternative, but many fail to realize that when they receive less service, it is because they are shouldering greater liability in the transaction. By paying marketing fees upfront, consumers assume more risk.

Commissions are typically split four ways, between the broker and his/her listing agent and the buyer's broker and agent. When customers ask for a commission reduction, most agents are unable to comply, because they can only speak for their own fees. If you are selling a home and ask an agent to lower the commission, the agent knows that if fees are lowered across the board, there will less enthusiasm all around for the home. The other agents have other homes to show in which they will receive their full fee. Why should they show yours? Ironically, it is the sellers most in need of selling who typically make such requests. They are in a must-move situation in which cash is imperative, yet they want to ham-string the marketing of their own home by announcing to the Realtor community that they aren't worth their full commissions.

Commissions are negotiable by law, however. Even if you can get an agent to agree to lower his or hers below the "going rate," you will never know where the agent trimmed services in order to make receiving a lower commission from you cost effective.

Realtors are one of the few professions that are paid on contingency and often without a contract. This is risk-reward entrepreneurism, and that takes a special kind of fortitude. Imagine going to work each day not knowing when and if you are going to be paid. Imagine having to put a smile on after learning that the customer you have assisted for weeks, looking at home after home, has just put a contract on a home listed by another agent. Imagine working with a seller who prices the home too high against your advice and then fires you when the home doesn't sell. Imagine having to carry expensive errors and omissions insurance to protect yourself from buyers who don't get inspections and then sue you when the water line leaks in their 40-year-old home.

The incredible irony of these examples is that while the Realtor is exposed to these risks, many consumers expect them to reduce their fees or work for free, while shouldering all the liability for the transaction!

How hard would you work for a customer who is constantly looking for ways to cut your commission or use your services for free? Yet, every day, the intrepid Realtor does exactly that.

One of the intentionally funny, yet poignant scenes was of the manic Ms. Bening stripping off her clothing to give her mediocre listing a good scrubbing before her open house. The outdated home failed to generate any interest in buyer after buyer, and you saw Ms. Bening wilt like a rose in the sun by the end of the day. From an industry standpoint, the scenes perfectly illustrated the very real chasm that exists between buyers and sellers, and why Realtors are such a necessary bridge. Buyers want bargains, sellers want top dollar. It is the Realtor who gets them to agree on a price. But like many real life agents, Ms. Bening found no buyer, and as you now know, she wouldn't have been paid for all that effort on the seller's behalf.

Remember that "American Beauty" offered a caricature of a Realtor. Now that you know more about how Realtors make their living, you will understand that they offer a unique opportunity for both buyers and sellers to come out ahead - by helping you find a buyer for the home you want to sell and helping you find and buy the home you want.

Published: May 26, 2000

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.