As most agents know, real estate transaction coordinators have quickly become one of the most important members of their team. More and more agents, especially those closing more than the national average of 11 homes per year, are utilizing a “TC.”
The value is quite clear: the transaction coordinator helps handle everything from contract-to-close in order to free up their agent’s time. In practice, this typically means an extra 15 hours saved per transaction that the agent can spend on listing appointments instead of rescheduling an inspection for the third time.
The obvious question is then: what is the fee agents need to pay for a TC?
Said differently, what is the cost per hour of the added 15 hours the real estate agent saves per transaction?
Let’s find out.
How much should you pay a transaction coordinator?
We have the data below to help answer this question. The short answer to how much you should pay is everyone’s favorite: “it depends.”
However, the detail is important to understand because most agents overpay for their transaction coordinator without realizing it.
Let’s examine the three different types of real estate transaction coordination models and the associated costs with them.
Full-time, in-house transaction coordinator
A full-time, in-house transaction coordinator is exactly that: someone hired by a specific brokerage or team and entirely dedicated to that team. There are certainly some advantages to this model, such as being able to work out of the same office as your transaction coordinator or directing the TC to complete other tasks, like marketing.
However, many agents find the cost is actually rather prohibitive when it comes to hiring an in-house TC.
The direct cost of an in-house TC
However, that’s not all. Employers will need to cover employment taxes and benefits for full-time employees. MIT’s business school analyzed these cost and calculated total costs for employees is roughly 1.3X their full-time salary.
That means, at a salary of $43,342 per year and a 1.3X multiple, your total direct cost of an in-house transaction coordinator is $56,344.
Even worse, this doesn’t even include the cost to get the TC a new computer, software expenses, a desk and chair, and more.
The indirect cost of an in-house TC
Since you are hiring a full-time employee, that means a substantial time investment to find and hire these individuals. Brokers or team leaders need to review resumes and hold interviews to help find the right person. The time commitment there is so substantial that the National Association of Colleges and Employers estimates it costs $7,645 to find and hire someone!
Even worse, a 2015 Leadership IQ study highlighted that 46% of hires are considered “failures” after their first 18 months on the job. To make our math below easier, let’s round those numbers up and assume it’s 50% of hires are failures at two years into the job.
Let’s do the math:
- It costs $7,645 to hire someone
- 50% of hires are considered failures
- At two years into the job.
If we multiply that out, we can infer that hiring an in-house transaction coordinator has an indirect cost of $1,911 ($7,645 X 50% X every two years).
This is also not taking into account the lost time in productivity your agents will have as they need to redo work the failed hire as a transaction coordinator will have.
Total cost of an in house transaction coordinator
Let’s look at the numbers:
- $56,344 in direct cost per year
- $1,911 in indirect cost per year
- $58,255 per year in total cost
Keep in mind, that total cost doesn’t include expenses like a new computer or the lost time in productivity for your agents training the new TC.
Is $58K a good price for an in-house real estate transaction coordinator?
Let’s think about it in terms of “how many sales will it take for the transaction coordinator to pay for themselves?”
According to the Federal Reserve, the average home sale price was $393,300 as of January, 2021. Let’s make it simple and assume your agent makes 3% as commission.
That’s a commission of $11,799.
At a yearly cost of $58K, that means the cost of the transaction coordinator is the equivalent of five full commissions.
Let’s now look at other options for transaction coordinators.
Freelance Virtual Transaction Coordinator
Since the cost of an in-house transaction coordinator is so high, many real estate agents have started looking externally. UpWork is a common strategy that many real estate agents have used to find a TC. Hiring a virtual real estate transaction coordinator is certainly more affordable, but it might not be the right decision for you.
Let’s look into it in more detail.
The direct cost of a freelance virtual transaction coordinator
The direct cost for a freelancer transaction coordinator is relatively simple. Most coordinators charge $350-$500 per transaction and upwards of $800 if they serve in a dual agency capacity. $400 per file is a fairly consistent benchmark for real estate agents using a transaction coordinator.
This fee may not sound like a lot, but can climb very quickly as you start to complete more transactions.
Most agents who look to hire transaction coordinators are top agents who closes more than the median 12 deals per year (according to NAR). Let’s say a hypothetical agent closes on 20 files per year. According to research on the MLS, roughly 10% of transactions are dual agent transactions. Let’s assume that means 18 of the 20 files are single-sided transactions and 2 are dual agents.
Your fee for a transaction coordinator at 20 files a year is, therefore:
- $7,200 for the 18 files at $400 each
- $1,600 for the two files at $800 each
- $8,800 for the 20 files
While this expense is clearly much lower than hiring an in-house transaction coordinator, it can get more expensive as agents close more files. Also, don’t forget about the indirect cost.
The indirect cost of a freelance virtual transaction coordinator
The indirect cost of a freelance virtual transaction coordinator is substantial. The reality is that many have decided becoming a transaction coordinator is an easy way to make money at home.
In practice, this means there are thousands of virtual transaction coordinators with very little skill or experience.
The danger to agents here is substantial. Just yesterday, Sean (the CEO of Close Concierge) was on the phone with an agent who hired a freelance virtual transaction coordinator who advertised they had “five years of experience.”
This virtual transaction coordinator did not know what earnest money was.
To quote the agent: “There is no way they had even five seconds of real estate experience if they didn’t know what earnest money was.”
Not only was this supremely disappointing for the agent, but this virtual transaction coordinator had asked the agent’s clients what earnest money was.
Said differently: the agent looked badly in front of her clients since her TC asked a silly question & the agent still had to coordinate the transaction herself.
What is a realtor’s time worth?
To calculate the indirect cost here, let’s figure out how much time an agent wastes fixing or double-checking a virtual transaction coordinator’s time. A good transaction coordinator (LINK TO BIG PAGE) should save an agent roughly 15 hours per transaction.
Let’s assume our agent above, closing 20 deals per year, needs to spend at least 5 hours per deal to check the TC’s work. That’s 100 hours per year double-checking.
The Bureau of Labor Statistics says the top 10% of agents earn $111,800 or more per year. Since the average American works 1,801 hours per year, we can do the math to see the top agent’s time is worth $62 an hour.
So our agent spending 100 hours a year double-checking their TC, at $62 an hour, spend $6,200 to ensure that the agent’s work
The total cost of a freelance virtual transaction coordinator
Let’s look at the numbers:
- $8,800 in direct cost per year for 20 transactions
- $6,200 in indirect cost per year for 20 transactions
- $15,000 per year in the total cost
When compared to a full-time person, it’s clear that a virtual real estate transaction coordinator is substantially more affordable.
However, that indirect cost is only factoring in lost time from checking the TC’s work. If a serious mistake were to occur, a deal could end up falling out of escrow and the agent loses a potential commission.
With that in mind, it’s clearly more affordable but also not the same quality as you would expect to see with a full-time hire.
Let’s look into one more type option: the transaction coordinator service.
Transaction Coordinator Service
More and more real estate agents are looking for a happy middle ground between an expensive full-time hire and a freelancer with suspect quality. These agents are increasingly turning to transaction coordination services.
Let’s examine the cost structure below.
The direct cost of a Transaction Coordinator Service
At the time of this writing, all but one transaction coordinator service charges the exact same fee structure as a freelancer: a fixed, per-transaction fee. Most charge roughly $400 per transaction.
As we’ve seen above, an agent who closes three files per month can expect to pay $14,400 on the year. This fee increases even more when agents close more transactions per month.
However, most services charge additional fees on top of that. For example, one agent who works with Close Concierge and used to work with one of our competitors, reports that he had to pay a fee as well for deals that fell out of contract.
In practice, the combination of per-transaction fees and other fees means that agents never know the exact amount of money they will be invoiced for at the end of the month
However, there is an even better model for agents out there: Close Concierge, a transaction coordination service built to provide white-glove, 7-star service for agents.
The direct cost of Close Concierge
Close Concierge is the only transaction coordination service that instead has a simple, straightforward, flat model: $1,000 a month per agent. If you are a team or brokerage, you can sign up any combination of agents you would like. For example, it wouldn’t make sense to sign up an agent who specializes in leases to Close Concierge.
We went in this direction for pricing after years of experience and hundreds of conversations with real estate agents. Agents prefer a flat price model because:
It rewards agents who sell more
Our flat fee doesn’t increase, meaning agents can close substantially more transactions but pay the same price.
Once an agent closes 3 or more transactions per month, Close Concierge is more affordable than any freelancer or service. The Close Concierge price remains at $1,000 a month, while that agent is now paying $1,200 for their three transactions.
Agents know exactly that the price is
As mentioned above, most services add in additional fees that make it difficult to calculate exactly what your final bill will be. This is frustrating for agents and completely against the idea of a world-class, white glove experience for agents.
With a flat price, agents are never surprised at the invoice.
The indirect cost of a Transaction Coordinator Service
For a transaction coordinator service, there are two key elements here: agent time & quality. Let’s start with agent time.
The unfortunate reality is that many services are designed about what makes the company’s life easier, not the agent’s. That doesn’t make any sense, because a good transaction coordination service exists to provide white-glove service to agents.
Quality is always a highly critical factor. Unfortunately, many services do not have the highest quality transaction coordinators on staff.
This is a hiring post for a transaction coordinator for one of our closest competitors. As you can see, they are looking to “hire” a coordinator as a 1099 contract employee. They don’t offer benefits like healthcare either.
The reality is that the best transaction coordinators do not want to be 1099 contractors. By only hiring 1099’s, this service has a limit to how strong their TC’s are. Close Concierge takes a different approach to ensure quality by providing the most compelling employee value proposition in the industry, thus ensuring the best TC’s want to work with us.
Let’s assume, as before, an agent needs to spend 100 hours a year reviewing the TC’s work. At $62 an hour, that’s $6,200 on the year
Let’s now dive into how Close Concierge ensures quality
The indirect cost of Close Concierge
To ensure the best experience and lowest indirect cost to agents, Close Concierge makes sure they attract and retain the highest quality transaction coordinators as our employees.
To do that, it means we at Close Concierge:
- Hire all of our coordinators as full-time, US-based employees
- Provide fantastic health care benefits, including one year of fully paid parental leave
- Profit-sharing for all employees
- All employees have a ‘vote’ in all of our hiring decisions
In practice, that means Close Concierge provides most attractive employment package, by far, within the industry. It’s why we can attract the absolute best and retain the best.
That TC talent means the indirect cost for agents is effectively zero. Your Close Concierge TC’s skill level will give agents the confidence to not need to check all of the work. You also won’t be asked to re-type information the team can easily get from the transaction documentation.
Total cost of a transaction coordinator service
If we look at the standard transaction coordination, the typical cost would be:
- $14,400 in direct cost per year for 3 transactions per month
- $6,200 in indirect cost per year
- $20,600 per year in the total cost
Total cost of Close Concierge
Close Concierge, however, ends up being more affordable for agents that close a higher volume of transactions.
- $12,o00 in direct cost per year for unlimited transactions per month
- $0 in indirect cost per year
- $12,000 per year in the total cost
The total cost of Close Concierge ends up being the most affordable option and still ensure the highest quality transaction coordinator for you and other agents.
Is hiring a transaction coordinator worth the cost?
At this point, this post has highlighted several different options for paying a TC fee and what the ROI of that is.
In short, a transaction coordinator is absolutely worth the cost for most agents. The best way to think about it is that a TC enables agents to get their time back so they can focus on growing their own business.
The key phrase above there is “most agents.” If you have one transaction or less per month, then working with a transaction coordinator might not be the best fit for you. The amount of time spent coordinating transactions would not be significant enough for you to consider offloading that time.
If you are interested in figuring out if your ROI is worth it to hire a transaction coordinator, we’ve built a transaction coordinator ROI calculator. By inputting in your data, you can see exactly what ROI you can expect from a TC.
Can a real estate agent charge a transaction fee?
One trend growing amongst the real estate market is agents charging a “transaction fee” or “admin fee” to their end clients. This fee is often used to offset the cost of a transaction coordinator.
For example, the listing agent might make a 3% commission (after splitting). However, this agent signed a listing agreement with their clients that stipulated their compensation would be a percentage commission and a “$200 admin fee.”
In most cases, clients are happy to pay this fee as it’s fairly nominal when compared to the revenue generated when someone successfully sells or buys a home.
If you are interested in charging a similar fee, make sure to ask your Close COncierge about best practices we’ve seen with clients.
In this post, we’ve covered a lot of ground regarding transaction coordinator fees. In summation, we covered:
- The different transaction coordinator models
- How transaction coordinators are paid across these models
- The ROI of each of these models
- Why a service offers the highest ROI
- Why a flat fee makes the most sense for most agents
Feel free to reach out with any additional questions or comments at any point!
About Close Concierge
Close Concierge helps agents grow their business by handling everything for them from contract-to-close so they can focus on getting more clients and more homes under contract.
The way we help agents grow their business is by pairing fantastic agents with our fantastic, internal, USA-based, full-time team of transaction coordinators. (The other guys don’t have full-time employees or US-based employees). We handle everything from coordinating earnest money, making sure all dates and contingencies are met, the inspection happens, and everything else in between.
We can deliver a fantastic experience for agents because we attract & retain the best transaction coordinators via the best working environment. Other transaction coordinator companies hire TC’s as freelancers & underpay, OR they hire international virtual assistants. We hire full-time employees at an above-market salary with fantastic benefits.
Our goal is simple: be the number one customer company in the world, regardless of industry. Anything else would be a failure. We exist to help agents grow their business, meaning nothing less than a 7 star experience would do
If you are interested in working with a company that saves you time & is built on customer service & treating their employees right, reach out to our team HERE.