Considering becoming a buyers agent - rebates?

Question

Hi All,

I’m looking to get started in real estate investing. While I educate myself, I thought it couldn’t hurt to get a real estate license in the process.

I negotiate professionally in my full time job, so I believe I would do well helping others negotiate their homes in this competitive market.

My question is- if I studied and got my license, would I then be able to help friends/family purchase their homes and give them a rebate/portion of the commission?

I’m not interested in taking people to showings, marketing myself etc., but if people are willing to do some homework on their own and use me to close the deal, it could be a win-win. Home prices where I live are $2M+, so this would be a good opportunity for me to get additional cash flow.

Thanks in advance!

Jake Fugman · Answer

Account Closed  Bottom line, yes - you can represent friends/family and give back as much of the commission in a credit at closing as you want.  Typically the firm where you hang your license will take at least 20 - 50% (mine takes 20%) of the commission, so you want to collect at least enough to cover your time and the split to your firm.  This doesn't include the monthly flat fees your firm will charge for access to their tech, support, etc.

In general Id say it would be worth your while if you expect to do at least $1M gross in sales that come "easy".  Others will argue more or less depending on the work you actually do.

Good luck!

Account Closed · Answer

Thanks everyone for the feedback!

Russell Brazil · Answer

What no one has mentioned....if you dont actually show them the property, you are not going to be entitled to a commission.  Whoever shows them the property is the procuring cause of the sale, and they are due the commission. So if the listing agent is showing them the property, regardless if you negotiate on behalf of the buyer and representing them, you wont get paid a commission from the seller/listing agent side.

Annette Hibbler · Answer

Don't kid yourself. There are recurring costs and requirements to holding a real estate license. If you're plan is only to help others once in a while, you'll quickly start to realize that between membership dues (NAR, MLS and local Real Estate membership dues) not to mention monthly office desk fees (regardless of whether or not you work from home) and yearly fees associated with yearly 6 hours of required Continuing Education courses will keep you in the red and start to bleed you dry if you don't have enough business to cover these recurring costs.

I would suggest you first do some research and determine how much you will need to earn to cover these recurring costs over a 12 month period. The occassional 1-2 deals may not be enough depending on the average sale price and your commission structure. These expenses  & brokerage rules may put a kink in your plan to provide rebates. Also, note that not all brokers are the same. You'd probably have less expenses with a boutique broker.

Lynn McGeein · Answer

Before you decide to get your license, research your area's  brokers and make sure they will allow you to do this, as even if it is allowed in your state, some brokers will not allow you to offer rebates to clients.  Mine, for instance, allows me to charge less commission if I prefer, but I am not allowed to offer a rebate.  And some loans, most conventional ones, I believe, won't allow the real estate agent to give anything to the client, even if it's a relative.

Oscar Pinto · Answer

Sounds like a good plan. Just like most industries, there are clients that need a full service agent and some that are DIY-ers. Since you're working with DIY buyers that just need some guidance, than rebates make sense. The only thing is, at least here in CA, agents put their license on the line on every transaction, no matter how much involvement was actually done by the agent.