Finder's fee to RE Agent?

7 Replies

Hi,

I am brand new to RE investing and looking to buy my first property in FL. I have been talking with an agent there, who is an investor with 20 plus properties. I've spoken with one of his clients who has 20 plus properties through this agent and she gave him a stellar review. He requires a $1000 finder's fee per closed property. He said due to the the low price point of the properties and time required, he would need this fee to make it worth his while. This is in addition to his commission. I'll be looking in the $80k to $120k range. Would you say this is acceptable, particularly considering I will be investing in another state and I have no experience in this market or RE investing in general? I believe this fee applies to all properties, not just off market.

Thanks very much!

I don’t think that’s outrageous. If you don’t want to pay it you can work with someone else but it sounds like he has a good track record and a good handle on the area.

You have to remember he will only make roughly $3k gross on a $100k house, will split some with his broker, some to his costs and will most likely net around $2k. If he spends 40 hours on the transaction he’ll only make $50 an hour.

@Danny Mulvihill   As @Jordan Moorhead pointed out, agents (like me) working with investors make very low commissions on rehab properties - especially when compared to what we could be making with retail buyers.

I don't charge a retainer to investor buyers, but it's something I've thought about.  I feel like selling the rehabbed properties makes the relationship worthwhile, but I can tell you that it's a close call, given the amount of work I put in on the buy side.  

I like the idea from the agent's point of view, not because of a low price point, but the footwork involved.  If you are buying out of state,  the agent is doing everything that you can't do from far away. He finds it, he inspects it, draws up the offer, does all of the due diligence work, etc. The risk to you is that you have to trust him completely, and nobody is perfect. Try him on one deal and see how it works out. 

Perfectly reasonable......also the sign of an experienced, competent agent.

Thanks everyone. Pretty much confirms my initial thoughts. 

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