Are Agents Truly Independent Contractors?

– Are we truly independent contractors? Or are we independent contractors when it comes to (not) being paid benefits and social security, and employees when it comes to “sales meetings”, “floor duty” and other “mandatory” things?

– To achieve real success, should we be “interdependent contractors”?

– Who’s really in control?

– Is a pulse and a few hundred dollars being necessary to get a license the reason why consumers look down on us?

I can’t express my personal views or say it much better than Matthew Ferrara did in his post entitled The Consumer-Unfriendly Myth of the REALTOR Independent Contractor. (It’s long, but definitely worth the read)

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8 Responses to Are Agents Truly Independent Contractors?

  1. Good observations/questions… I’d love to hear any of the big brokerages explain if they plan to continue with the old school of thought, or if they are going to change with the times as good agents start to demand it.

    Parking here to read everyone’s thoughts…

  2. Jeremy Hart says:

    I’ve been mulling over a similar thought for the last couple of months, Danilo, without being able to articulate it as well as Matthew. Is it reasonable to think that brokerages will be able to make such a widescale shift? It seems as if it’s a pipe dream to expect large corporations – like the one I currently work “with” – to adjust their fundamental approach to business.

    I’m of the opinion that the bulk of the brokerage houses will not be able to adjust mid-stream so creatively, and that it will take a culling of the herd. New agents, teams and brokerages will start with an interdependent mindset, while the independent mindset dies off. Teresa Boardman has alluded to this in one of her recent posts on one of the 60 blogs she seems to write for, and it’s gotten me thinking …. thanks for the push to look at how my business fits into this shift.

  3. Heather – I would love to hear from some of the big brokerage firms as well. But I’m not going to hold my breathe…

    Jeremy – Not sure that a lot of big brokerage firms will make the shift right away, if ever. The small to medium sized firms will probably be the first to make the shift and start doing so soon. (Some have already). The big firms probably won’t make the change until they start feeling threatened by the small to medium sized ones. And I bet, based on history, that the big firms will try and buy up the small ones that are “posing a threat” to them rather than trying to change themselves.

  4. Mark Grunden says:

    Until agents become employees, there are some advantages to the “independent contractor” status many Realtors® are not aware of but they should be utilizing. Did you know independent contractors have the ability to pay for 100% of their medical expenses tax free? It’s for real.

    As for now, this is a unique advantage to have. TASC is a new affiliate member with VAR and provides a new benefit option. TASC will be holding a seminar and hosting a booth at the Sept. convention. Check it out here:

  5. D: I think that the Independent Contractor status is simply a tax status that Broker’s tolerate to avoid additional paperwork and the ability to send back a real estate license with minimal liability, as opposed to an actual employer.

    The policy and procedure book, in and of itself is a reminder that you are otherwise an employee. My observations have been that Brokers who run their offices more like a corporate structure, than the wild west are more successful and so are their agents.

    Mark: Being able to deduct 100% for insurance is only a benefit if you can afford it in the first place. Insurance would more affordable and obtainable in a corporate structure, than for independent contractors. I just think that if it was affordable, more people would have it and that’s a good trade off for the lack of ability to deduct 100%. That’s just my perception; and I am very willing to hear an discussion to the contrary.

  6. Mark Grunden says:

    Matthew: There is no question that the rising cost of healthcare is burdening everyone, independent contractors and employers alike. However, as we look for solutions with the high cost situation we have now it’s nice to know the IRS eases some of that burden for Realtors®.

    Regardless of being able to afford insurance premiums, everyone has medical expenses whether it be contact lenses or prescriptions and over the counter medication. To the self-employed agent all of these current expenses can be paid for with tax free dollars and be used as a tax deduction for the business. This is at least one great benefit to the filing status Realtors® hold now.

    Again, this site will show you how it all works:

  7. Very interesting post. Matthew Ferrara really has said it best. What other business could survive the way we do. Answer: NONE

    It’s true that this situation hurts brokers but the real loosers are the new agents. The 90% that end up as the “you can’t tell me what to do crowd”. I am not one of the big guys, in fact I am a little guy but I am going to get on board. I am going to do it for my business but more important I am going to do it for my agents.

  8. Pingback: What are Virginia REALTORS® reading? Top clicks from July 2008 Commonwealth Online | VARbuzz

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