That is a very loaded question. It is really going to depend on the amount you have available in the deal. If they are bringing you the deal give them a fair amount talk with them be honest about your potential profit and negotiate a percentage out of that. It is unlikely you will be able to give them the full commission unless you were fixing it yourself. Remember that having a Realtor willing to bring you a good deal is something that shouldn't be overlooked. Don't get shortsighted with your commission build a relationship and give them a fair amount. You may also be able to talk them up to your potential buyer if it is a fix and flip. If you can successfully get your buyer to use them as the listing agent after the fact you can bet they will find you on the next deal they have available.
Come up with an agreement for a percentage of your profits. Although you want to get as much as you can out of the deal, be fair. If you pay them well, they will think of you in the future and considering they brought you the deal, some money is better than no money.
He is asking a question regarding a referral fee. If you are a wholesaler working with a real estate agent that is consistently bringing you deals but you negotiate with the home owner you can still compensate the agent for the referral. Look into your state and federal laws that govern this to figure out how you would work this into your specific deal.
@Dell Schlabach This could be a situation where the realtor is looking to make money on both ends of the deal. Either way, you have to consider that if it was not for the realtor, neither you nor the seller wouldn't have any profits at all. Depending on how much the profit is, there should be communication between yourself and the realtor as to the percentage they are looking for, or if they are even looking to get a cut from you. Me personally, I believe in benefiting others who help me out.
You have Realtors that bring you deals, that you then negotiate directly with the seller? Are these off market deals? Houses they cant sell for list price and you negotiate short sales?
Can you provide a scenario or two of deals like this that you have done. Seems like I am missing a strategy.
@Account Closed
If the Realtor is looking to get both ends of the deal, they get the listing agent and the buyers agent commissions. You are suggesting you pay the Realtor part of your profits yet on top of that? Do you do that? How much do you typically pay your agent above the commissions he already received?
I believe in helping those who help me as well, my realtor made roughly 140,000 from us last year and I didn't pay him any bonuses above the comissions.
You have Realtors that bring you deals, that you then negotiate directly with the seller? Are these off market deals? Houses they cant sell for list price and you negotiate short sales?
Can you provide a scenario or two of deals like this that you have done. Seems like I am missing a strategy.
@Account Closed
If the Realtor is looking to get both ends of the deal, they get the listing agent and the buyers agent commissions. You are suggesting you pay the Realtor part of your profits yet on top of that? Do you do that? How much do you typically pay your agent above the commissions he already received?
I believe in helping those who help me as well, my realtor made roughly 140,000 from us last year and I didn't pay him any bonuses above the comissions.
We do negotiate directly with the homeowner for these deals. This means that the Realtor is not directly involved in the transaction and does not get a standard commission. Why would a Realtor give us a lead on a property they could list? If the property is so far gone they don't want to deal with it sitting on the market for an extended period of time. The only time we get referrals from agents is when they are going to refuse the listing because Location, Condition, Coding violation etc. Agents who work with investors that can close quickly benefit from not sticking the listing on the market by getting referral commission from purchase and the renovated listing commission after the fact.
Realtors can't show a property or advertise one they have no agreement with made by the owner, they can't advertise a FSBO without authorization, so why would they bring an off market property to you?
Now, if you enter into a buyer's agreement, they can beat the bushes but they still can't work with a FSBO without authorization, or any off market property.
The OP hasn't been back and needs to understand what Realtors can and can not do and why!!!! :)
I'm a little lost too. I can't think of a situation where a wholesaler could do a better job for a seller than I could. I know a half dozen active rehabbers, that I'm sure would net a higher price to the owner, and a higher commission fee to me than some wholesaler's referral/bird dog fee. I'm guessing the OP's question is theoretical, and he's hoping it's a dilemma he will have.