Agent commissions when investing out of state

6 Replies

Hello Fellow Agents.

My question is a general question as well as a moral dilemma in regards to Agents commissions when investing out of state. When looking for a investment property out of state, as an REA, are you upfront about being an agent and ask for referral credit (to save some money during the deal)? Or do you just let your investor friendly agent help you find the property and not worry about commissions?

I only ask as I if the shoe were on the other foot per say and an outside investor asked me for referral credit on a deal if they were an agent, I would most likely comply.

With that being said, I was possibly thinking of a deal where if they find me a property on the market, then my referral would be in place. But if they were able to find me an off market deal then they would keep full commission. I understand it’s all about having the conversation with my fellow agent but I was curious of others thoughts.

Am I overthinking this or do you have a strict way of doing business?

Thanks for reading!

@Shane Lafleur Hmmm.. interesting question. I think if I was using an investor, friendly BP realtor from a different state, I would not try to get my referral fee for my own properties from them. I don't think I would blame others for doing it, but for most rental/rehab/BRRRR kinds of properties...they are on the cheap side as it is usually, and the agent won't make that much anyway. Thinking through it..$125,000 x 3% = $3,750 before splits/expenses/time/you know the drill! 75% of that then leaves realtor at $2812 before splits. If starving, they may work with you again... but don't expect a lot of effort. And if they are good/busy agent, they may tell you they are too busy.

If it was a large purchase, then that might be different....($500,000, apartments, etc...)

I dont ever ask for referral fees when I hire an agent, nor do I offer them when Im representing an agent from another state. It is generally considered to be low brow to do so. 

It wouldn't make sense to ask for a referral fee for a property you are buying. Most buyers do not pay anything to a Realtor or agent. Only when selling. If you were referring a buyer to the listing agent, then it would make sense to ask for a referral. Where I live, there is a Referral Fee Agreement form. And I've used it several times out of state. But it's only when I refer a buyer to another agent. 

@Shane Lafleur

Does your company have a referral network set up? It’s usually easiest to go through their already-in-place systems.

If referring out a listing for your own property, yes, I would ask for referral fee.

If using an agent for your own OOS purchase, no, I would not seek a referral fee.

@Mason Hickman

Mason and everyone this was perfect and kind of what I thought in regards to a response but I wanted to get a gauge on it.

The territory I want to look for a rental I have someone lined up to reach out to. I’m with Keller Williams, we have a network and a referral form, and the other agent is with KW. Again this was more of common practice type of question so I appreciate all the input