I’m a newly licensed agent (not a realtor) and I’m curious how other agent/investors utilize their commissions when buying investment property.
Let’s say it’s a 6% listing – 3% for the listing agent, and 3% for the buying side. Do you prefer to simply take the commission after you close just like you would for a client? Or would you negotiate the 3% into your offer, so say, on a $100,000 house, you’d start with $97,000 and work down?
I’m thinking if you took your commission after closing (the way you normally would if you’re working with a client) the extra cash could be used for repairs if it’s a fixer-upper, or whatever.
I use the commission to lower the price of the home.
I also don’t hire a Home Inspector. I was a H.I., & Commercial Pest Control Consultant early on in my career and choose to inspect the property myself.
I do a fairly thorough check initially & if I feel confident little’s wrong…I waive the Home Inspection (gives me an edge in a hot market).
I watch the MLS daily for deals (MLS is a gold mine if you know what to look for)…in that way I don’t have to do much maintenance.
I’m looking to ride the equity elevator in emerging markets. I leave the rehabbing to my brother.
the first thing to verify is that in fact you will be entitled to a coop commission. if you are not a Realtor, then you are probably not an mls member and the coop commission may be only offered to those that are. the commission is not a professional courtesy but an agreement by the cooperating agent that they will contribute to the close of the sale, by arranging all visits, inspections, appraisals and preparation of all things for the buyer, even if you are the buyer. if you are able to do all these things, they may require access to mls, keycard, familiarity with contracts, title cos. etc. then as the listing agent i would be enclined to offer you the coop commission. if however, i as the listing agent will have to perform those functions, i would not.
Don’t forget to ask your broker how this would work before suggesting a commision cut from the purchase price on a deal. I don’t know what office you work out of, but many require some type of split on MLS deals, or a flat fee. This often applies to personal purchases as well. From my understanding, some offices do not, and get their money from desk fees- I don’t know how it would work at those offices because, well, my office isn’t one :P. All and all, make sure everybody gets their taste, and you will have a long profitable career.
OK, what do you look for in the MLS? I’ve always figured that properties listed on the MLS are always going to be at least market value (the theory being that to be successful at REI, you have to find them at less that market value to begin with).
I happen to live and work in the only region in America where the local MLS has no affiliation whatsoever with the National Association of Realtors. ;D Saves me $600 a year – I like that!
Therefore, Realtors and non-Realtors alike do business with each other and split commissions all the time.
Good point. As it turns out, I discovered that my broker requires all commissions to be paid directly to him at closing, then he cuts me a check after that. So I have no choice but to take the commission after closing.
I suppose I’d have the option if I had my broker’s license and were doing business for myself though. Oh well, I’m not getting one of those any time soon so the point is moot.
I use the commission to lower the price of the home.
So as a BUYER you lower the price through the commissions? How does that work Would that not mean that as the BUYER you were going to pay the commissions? But lowered the price instead?
I’m sorry you’re having such a hard time grasping this concept…I’m equally sorry you’re so adversarial regarding this topic. But I’ll try to explain…yet again. Please keep your debate civil & please don’t threaten me via private message anymore.
I’m not a typical Buyer…I’m an Agent. As an Agent…it’s my commission THAT THE SELLER WOULD TYPICALLY PAY A BUYER’S AGENT that I’m negotiating to lower the sales price.
It’s up to the SELLER to decide whether they’re going to accept my offer, but they’ve really no reason not to accept it as THEY WERE WILLING TO PAY A BUYER’s AGENT to begin with.
A buyer could always try to negotiate the Buyer’s Agent commission, but to do so…they’d have to either work without Agent representation, or find a Buyer’s Agent to work for a lesser fee.
Best of luck in either regard.
But, remember, the SELLER doesn’t have to accept the offer because, THEY’RE THE ONE PAYING AGENTS COMMISSIONS.
This really isn’t that difficult a concept to understand. If you’re still having problems may I recommend you sit down with an accountant…look over your HUD-1 (assuming you own properties) to see who pays what…or contact the Department of Licensing - Real Estate Division in your State - perhaps they can explain it to you in simpler terms.
'Buyer’s pay Agents commissions because, without a buyer there isn’t a sale" doesn’t wash. That’s a simplistic viewpoint that is illogical. Seller’s have costs…Agents services (commissions) are among those costs.
If you and I took a short car trip and we stopped for gas and I gave you $20 for gas and you pay the attendent the $20 and later on someone asks who paid for the gas on the trip what would you tell them.
By the way I grasp your CONCEPT but that is all it is nothing more then a concept. I really could care less what the hud says and if you ever want to compare Huds, bank accounts or even net worth I am open to that. I honestly think that you have never worked a non-hot market so that is where this confusion is coming from here in Denver there are deals all over discounted for not using a Realtor I also have bought them in other cities. So if I get that discount as a buyer that also would mean that I as a Buyer would have paid that and what ever the hud says the hud says.
Actually Robb…who typically pays Agents commission is fact. It’s not a viewpoint…it’s not opinion…it’s not a belief, feeling, impression, thought or theory. Another source to dispell your notion would be the IRS.
“I really could care less what the hud says and if you ever want to compare Huds, bank accounts or even net worth I am open to that.”
As always…you presume too much. I started investing in 1986…you were what…11?..12? You were 15?..16? when I became a real estate professional. I’ve been in this business and investing more than half your life.
Additionally, you’ve stated in the past…you’re a high school drop out (?)
“I honestly think that you have never worked a non-hot market so that is where this confusion is coming from here in Denver there are deals all over discounted for not using a Realtor I also have bought them in other cities.”
Again…you presume too much. Markets are in a constant state of flux & continuously cycling. I’ve seen plenty of market cycles…up…down…and sideways.
I was in Denver April of last year with my team - meeting with a Western Regional Builder. I’m familiar with a number of markets…including Denver.
Regardless…I accept your challenge. Divulge your HUD-1’s…networth…and bank accounts.
“If you and I took a short car trip and we stopped for gas and I gave you $20 for gas and you pay the attendent the $20 and later on someone asks who paid for the gas on the trip what would you tell them.”
I’d tell them…paying for gas isn’t an arms length real estate transaction between a buyer & a seller both acting in their own best interest. Seller has costs / Buyer has costs and whether YOU “could care less what the hud says”…every other knowledgeable & reasonable person does.
I challenge the readers to investigate this topic for themselves. Then ask yourselves…if they’re wrong about this…what else are they wrong about.