How much to pay a Realtor for an off-market deal

Question

Hi everyone! Novice here, I've been looking into off-market deals but don't feel comfortable moving forward by myself. I have been working with an agent who owns rentals so is experienced and I trust his opinion, but he isn't the one finding me the off-market opportunities. But I still would love his help when I decide to move forward on one. How much % would you suggest paying him? Do I ask him what price he thinks or name a price first? Thanks in advance!

Jay Hinrichs · Answer

if your brand new using a trusted agent in my mind is the way to go.

off market properties are full of wholesalers who have zero fiduciary to you.. most will puff ARV and rehab estimates are WAAAY off to make the deal look good.. they will not give you a property disclosure form that the seller needs to fill out etc etc.

its total Caveat emptar .. so yes get a great agent and pay them to protect you.. Money well spent. WE see so many folks get screwed royally by wholesalers.. dont be one of them.

Mathew Pezon · Answer

Hey Aspen Jay,

Diving into off-market deals is quite the adventure, especially when you're just starting out. It's fantastic you've got an agent with rental experience you trust to guide you through. Figuring out how to compensate them, though, can feel a bit like uncharted territory, right?

So, usually, agents get something like a 5-6% commission split between the buyer’s and seller’s agents for the traditional market deals. But with off-market deals, things are a bit different since you might not be using their full spectrum of services in the usual way.

It's all about kicking off the conversation on the right foot. Chat with your agent about what you’re hoping they can help you with. Is it evaluating the deal, or maybe you want them in your corner negotiating? Once you're clear on that, it gives you both a better sense of the value they're bringing to the table for this specific deal.

From there, it's really about figuring out a compensation that feels fair to both of you. Some agents might lean towards a fixed fee for off-market deals if they're more in a consulting role rather than running the whole show. Others might still go for a percentage, but since it’s off-market and might not involve as much legwork, they might be open to something less than the usual rate.

Who throws out the first number? Well, it might be easier to let them pitch their fee structure first. They’ll let you know how they usually handle these situations, and you can negotiate from there. It's all about finding that sweet spot where you both feel valued and fairly treated.

Remember, transparency and being upfront about what you value in their help can really set the tone for a great negotiation. You’re acknowledging their expertise and the role they play in making you feel confident about your investment.

Wishing you all the best with this deal and hoping it’s the first of many successful ventures for you!

Take care,

Mat

Peter Tomeczko · Answer

@Aspen Jay

Ask for a buyers agreement. Everything is negotiable. Thats what I do with all my buyers/investors I represent. It’s common on the commercial but with all the changes coming up this will be the new normal for residential.

It doesn’t need to be a percent. It can be a flat fee with a sliding scale based on sale price. The options are endless.

Hope that helped.

Daniel Stoychev · Answer

Great post!

Kevin Sobilo · Answer

@Aspen Jay, finding the deal is not a reason to expect to pay an agent less. In a typical deal where the buyer is buying a primary residence the buyer is searching deals on the MLS and telling the agent what they want to see. A agent might do some searching or set up an automated search but except in the relatively small number of deals where the agent has an inside track about a property to come available the agent isn't making a huge difference for the finding of the deal.

The value of the agent is mostly in the execution of the deal. The advice, negotiation, referrals to inspectors, lenders, contractors, lawyers, title companies, etc. They do a lot to not only make sure you are able to follow through the process but to protect your interests throughout.

I also echo what @Daniel Stoychev said. With an off-market deal the buyer's agent is likely to have MORE work to do since there will be no seller's agent to work with. So, they will likely need to spend more time and work because the seller won't operate nearly as efficiently as a seller's agent would and likely need the buyer's agent to tell them things that need to be done throughout the process.

That said I would expect to pay a buyers agent 2-3% depending on the price point of the purchase.

Daniel Stoychev · Answer

@Aspen Jay

As an investor, and multifamily investment broker I have been on both sides of the coin.

Sometimes dealing with off-market deals is a bigger headache on everyone's part then on market, therefore his job could be significantly more complicated. The value he adds to you can increase substantially and save you a ton of headache.

An experienced investment broker will aid you in all aspects that come with the deal like underwriting, valuation, potential, structuring the deal, etc.

If you trust him, and have a solid foundation from the beginning ( which you should, otherwise don't use him ) ask him what his compensation is, and compare it to others to see where he stands. If you think he is worth it based on his knowledge, experience, reviews etc. than go with him. Focus on the deal's numbers, if they make sense to you, then you should not care how much a good investment broker/advisor makes on it.

Good luck.

Kevin S. · Answer

Just a general rule in negotiations: "He who go(talk) first, looses" :)

Jonathan Greene · Answer

Generally, it will be in the 2-2.5% range since that is the average for on-market. Sometimes, it could be 3 if it's complicated, but commission is always negotiable on- or off-market, but that doesn't mean an agent wants to take less to do a great job. 2 percent for off-market if they are going to do the whole process with you is far and up to 3 percent for a great agent makes sense.

Matthew Morrow · Answer

It's great that you're getting into off-market deals and have a trustworthy agent.

When discussing his fee, it’s a good idea to ask him first what he thinks is fair. This way, you can negotiate openly from there, ensuring both of you feel good about the arrangement. Remember, clear communication is key to keeping a strong working relationship. Get it out of the way up front, and make sure you each know your value.  If he cant talk about this up front, be cautious and mindful of their ability to represent you down the road Best of luck!

Aspen Jay · Answer

My thoughts exactly Jay! Thanks for the reassurance! :)

How much to pay a Realtor for an off-market deal

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