Re: Splitting Commision with Realtors - Posted by Ron (MD)
Posted by Ron (MD) on March 24, 2006 at 19:07:39:
It’s not chinzy or petty to pay a listing agent a reduced commission. Many agents willingly negotiate listing commissions. After all, the hardest part of the job for the listing agent is signing up the listing. After that, there just ain’t that much to it…especially when you seller/client is a professional who doesn’t need his hand held with understanding contracts, etc.
I pay a broker a $300 flat fee for listing my rehabs. She’s happy to get it because her work is limited to the ten minutes it takes her to type the info into the MLS system. Buyers’ agents call me for showing instructions. They fax contracts to me. I negotiate the deal, etc.
Don’t let bigtime Dave’s aspersions make you feel like some kind of cheapskate for doing something that makes sense. If you’re gonna give your agent volume (which means more than one listing in a year), he’s probably very agreeable to taking a reduction.
A couple caveats, though.
Your agent should be fairly paid for the work that he does for you. For example, if you’re buying junkers for $20k and he’s the guy running you around looking at 8 of them, making offers on 6 so that you can land one deal…all so that he can collect a net commission of $500, well, he should somehow be getting more from you.
When I was working that way, I used to give my agent $2,000 over and above his paltry selling commission. He also provided me all the comps I needed to evaluate deals and set my selling price. I was happy to give him a full commission on the sell side.
Now, I have my own access to the MLS database, so all I need from my listing agent is the simple, mechanical part of entering the data into their system. I’d be stupid to pay full commission for every deal I sell.
Another caveat…be sure to pay the buyer’s agent a full commission. (Whatever full is in your area.) A buyer’s agent will steer clients away from your house if you are offering a reduced commission.
I think rehabbers have gotta watch their expenses if they want to be successful. Flip guys like Dave will say that your deals are too thin if you have to cut a realtor’s commission. My deals aren’t thin…I just like to pay for what I get and keep more, not less.
Hope another opinion helps.