Trying to find a new realtor. I found one that I’m interested in working with however the fees he says that are charged is a minimum commission of $2k. So if I buy a house for 30k using him, his minimum is still 2k and not 3%. Is this normal or should I shop around for a realtor that charges a flat 2-3% no matter the price?
normally its 3% or whatever you agree to. I would pass and find another.
Why do you think you need a realtor?
So for you buying a $30K house, he should get a normal split of 3% or $900. Is he saying you as a buyer would have to pay him the other $1100 to satisfy his “fee”?
If that’s the case and you’re going to be buying lots of properties, I’d look elsewhere. I’m not a Realtor, but if I was, I wouldn’t mind doing multiple smaller deals for someone I knew would be able to close them rather than the Lookie Lou who wants you to take them all over hell and back looking at properties they can’t or won’t buy.
Based on what he said, their standard fee is 3% but a minimal fee of 2k (need clarification though).
Need a realtor for house access on mls deals, submitting offers.
I would 2nd the clarification here because the seller isn’t going to pay extra fees for this Realtor’s fee schedule; it will be you if he’s stuck on the $2K/deal for the cheaper homes.
It all depends on the spread and the amount of profit you can make. Also depends on if the realtor is a reliable source of leads.
Another thing you’ll want to think about is creating a bird dog or property locator system so that less costly people can beat the streets to find deals for you.
There is ALOT more to the story than being told. What you’re not telling us is what you expect the agent to do for their commission AND what the average sale price of homes in your area AND what your ratio of offer/buy (that is how many offers to how many actually bought).
All these things, and more, come into play when determining your agent’s commissions.
If this was just a one-time offer, no prep on the agent’s part (ie no show, no work, just offer), then I’d look for another agent because there will ALWAYS be one that works for less (and you do get what you pay for).
However, if you are trying to establish a relationship with the agent, then YOU should be the one telling THEM that there should be a minimum commission for them. It always amazes me how investors think that an agent should be pulling them comps, driving them to see the properties that the agent found, making offer after offer, handling a million other problems that the “investor” isn’t even aware of and then thinks that the agent should reduce their commission for the “privilege” of getting to work for the investor.
An agent is a tool for the investor. Is it better to use a well-honed, sharpen blade to cut or a broken, rusted, dull one? Same principle. Keep the tool sharpened (paid well) and it will perform well.
And just for those that will get the “he’s an agent” thing going here. This was my exact process for years before becoming an agent. I always paid my buyer’s agent well. If the agent wasn’t putting a $1000 in HER pocket after her splits (commissions are split with the company, btw), she was paid extra.
Raj
That is why I posed the question here for one thing. It also seems like you’re somewhat assuming I’m having the realtor do a bunch of leg work. I’m all for and willing to pay if a realtor is helping, bringing deals, doing a bunch of work, etc…
As of right now, the primary reason for looking at realtors is because I’m not one myslelf. I do have access to comps, so I don’t need a realtor for that. I simply need one to get my into properties that have lock box (whether or not the realtor is there, I don’t care…he can give me the code and I can look) and to submit offers for me on property that I cannot.
So far all the properties I want to look at have been ones I found on my own and NOT anything a realtor has sent me. All the realtor simply has to do is help me to get into see properties and submit offers for me (at this point anyway).
No assuming here. Just pointing out some possibilities is all.
I don’t like to question your position, but unless you have access to your market’s MLS system, you probably don’t have good comps.
An agent cannot legally “give” you the lockbox information and let you look for yourself. That’s all I’ll say about that.
As far as offers go, it really isn’t just as simple as submitting (Of course, that’s what I thought, too, before I became an agent and viewed it from the “dark side”). If it’s one or two offers, then probably no big deal. However, investors usually don’t make just one or two offers. They made several. If you’re really active, you should be making between 20-100 offers a month. If you’re going through an agent to make these, they have to write them up, present them, counter, etc. AND then they are responsible for keeping all of them, even the rejected ones, for legal reasons.
So again, “just” submitting offers can be a real job for an agent working with an investor, and from the other side, I can now say that it’s a real slap in the face for the agent to make a bunch of offers for an investor and then get only a small commission for the trouble.
Just my thoughts.
Roger
I tend to agree with Raj (I know… I know… Another realtor… :O)
One way of looking at this is by calculating the hourly rate the realtor would make. If he has to spend 90 hours in a deal+gas to get only $900 commission that he will in turn have to split with his company, than he is probably not making good use of his time. He could probably do better doing something else.
In the other hand if all he had to do was to pull some comps, submit an offer, do some follow up calls and spent no more than 20 or 25 hours, than the $900 is probably a fair commission.
The other thing to consider is the risk - even with the 3% or $2k minimum rule he still has the risk of investing a lot of time and not see a dime.
Having said that you can probably find a hungrier agent (probably someone with less experience) to do the work for you for a flat 3% or even 2% commission. The fact that this guy charges a minimum of $2k tells me he probably has some experience and is running his business like a business. He knows he can’t afford to spend time with someone and make only a meager $900 at the end of the month.
I hope this helps.
Have a good evening!
many broker’s have a minimum fee. the Realtor would end up having to pay his/her broker to make that minimum. It takes a lot more effort to make a deal work with inspections, financing, and re negotiation on a 30k property than it does a 250k property. they are not a vested interest partner, they are providing a service. if you do not require their service, do it on your own through the listing agent.
the way i look at it - if the commission is 50% - who cares - as long as it’s IN THE DEAL. why?
because if the agent PERFORMS - gets you deals - good ones - that’s what it’s all about.
if the agent is trying to tell you that any portion of his commmission must be paid by you “on top of the agreed to price” - they have no idea what they’re doing.
this is of course - new york state specific - but i’m pretty darn sure it’s standard throughout the business:
if you sign a buyer agent agreement - make sure that it’s states that the “agents commission will be paid by the seller on behalf of the buyer from the proceeds of the sale” - period.
now - this may indirectly make the price of the property go up if the seller “tacks on the buyer agent commission”…as long as the numbers still work and it’s a deal - who cares.
if this keeps occuring and your deals are turning sour because of it - then check your margins for profit - you may be negotiating too thin.