Hey BP! I was curious to see how agents who find deals for investors get paid. Do you, as the agent, get the investor to sign a buyers agency agreement to ensure a commission or do you get some type of referral fee to allow the investor to close the deal faster?
I spoke with an investor and he mentioned that he was bothered by the fact that his agent insisted that he go to the agent's office to sign a buyers agreement which lead to the deal falling through because of time constraints.
As a new agent here in Maryland, I'm worried that I might be taken advantage of if I find a good deal for the investor and not getting paid for my work. How do you protect yourself and provide great and quick service to an investor?
Thanks again for the help!
@Carlos Jonathan Fuentes It's a level of trust. I was an investor long before I became a realtor and it drove me nuts when realtors asked for a buyers rep agreement before looking for investment properties. These realtors don't understand the many different exit strategies in real estate investing and that these exclusive rep agreements prevent them. A good investor is always looking for a win-win. You should too.
@Joe Funari I understand that trust plays a huge role in an investor-agent relationship. What systems do you have in place for compensation for your agents that bring good deals?
@Carlos Jonathan Fuentes I am a realtor. I was explaining between going between a wholesaler(you) and buyer(another investor) relationship. So it is important for you to start out wholesaling and get deals. Finding a buyer will come easy. Getting the deal under contract is the hard part.
You just have to trust that the investor will stick with you through the end and that they will not go around you. You cannot prevent this 100% of the time. But most people are honest and those people who you will want to build a long term relationship with will not go around your back.
@Joe Funari Okay that clears things up a bit. So when finding deals on the MLS, my goal is to get it under contract for an investor and once the investor finishes the rehab I'll be able to list it, correct?
Sorry for asking so many questions, just want to make sure I understand your point.
@Antoine Martel Trust seems to be the one thing connecting agents and investors. I've had some bad experiences with business partners in the past, which was my main concern when starting this post.
Yes you're right, trust is hard to come by, but business partners are different than investors I would say. Just because someone has screwed you over in the past, doesn't mean that you shouldn't trust the next guy.
@Carlos Jonathan Fuentes I have a system for this and it is something to pay attention to, but as others have said the agent-investor relationship is one built on trust so sometimes you will lose and just remember what went wrong.
If I am working with investors looking to buy and live in the property or hold, I don't ask for a buyer agency agreement, but I use something like that by getting an agreement on the contract that they will be paying a commission. I write the contract up for the off-market seller and include the commission to buyer on there. But, see next bit about working off-market sellers for a commission.
If I am working with investors looking to flip and I source the property for them, I charge the off-market seller a small commission for bringing them the deal and I run the deal as dual agency to keep the transaction friendly and on track. I do not charge the flipper a free because we have a handshake agreement that they will list the flipped property with me.
In all aspects, I disclose the commission to both sides and make it clear on the second point that I will end up earning two commissions, but I will show them how I earn it by bringing the deal together and then marketing the high-end flipped property to the max.
I hope this helps. PM me for more info.
I am an investor but I am also an agent which is why I understand the importance of agent commissions. When we work with agents to look for investment deals we will always provide both sides of the commission and treat the agent as a dual agent. It is only fair. Make sure you ask the investor if they will provide this service!
As a wholesale investor and a flipper , I work with agents without exclusive contracts. The main reason why is I would wear out 1 agent . I often times ask for what I'm looking to for from an agent and then they send me multiple listings. Then I will get comps and they may even look at the houses for me that I'm serious about. But if the mean time I have put in 5 or 10 offers a week, with follow up, comps, feed back, and counter offers ,etc that is a more then enough for one agent. and I may have 3 or 4 areas at one time I'm doing this with.
When we do get a property under contract that agent that stuck with me gets the commission when we assign the contract to the rehabber. Whatever commission percentage is normally received in that area.
On the resale, of the flip ....if I decide to rehab and flip it myself , I have full control of how resells it. And almost always I have the same agent sell it again after the rehab. Reasons why that has not happened is if I have a partner in the deal that just insists on someone else, or their has been a major reason the agent has proven they just are not willing to earn their commission on a sale. But that rarely happens, my agents are great and they know I bring repeat business to them. Where as the average client buys and sells a home maybe in a 10 yea spans or can be longer If an agent is used again a time all. I use them and buy and or sell multiple times in a year.
I hope this helps
@Jonathan Greene Wow, guys thanks for the responses! This is a question that I was struggling to find an answer to but with you guys help, I definitely have a clearer understanding of this particular situation.