Broker Splits - What's common / the range?

21 Replies

We're evaluating options as we think about integrating a flip or two per year, in addition to our buy and hold efforts.  In doing so, we're wondering what typical broker/agent splits are.

Also I'd be curious on folks' candid opinions on the amount of steering that happens by realtors AWAY from FSBO listings. I know they're not supposed to, but we're evaluating options in listing these properties - and I'd be surprised if demand from real estate agents and their buyers was 100% the same for FSBO listings as for MLS listings given the competing business model, and all.

It's not steering to tell a seller that they will do better listed than with a FSBO, it's a fact. FBSO is not on the MLS, no one wants to deal directly with a seller unless they want to send a lower offer and especially no one wants to deal direct with the flipper who thinks the property is perfect. Any listing agent worth their salt will get you more than their 5-6% listing fee by putting it on the market the right way and doing their job than you would get as a FSBO. Also, agents are the ones with the buyers most of the time for flipped properties. Agents don't show FSBOs. You are missing out on the entire market and looking for drive-bys and scragglers who go on FSBO dot com. I flip and I list all of my own properties, a perk to having a license. But I also list for my flipper friends because they know I will get them as high as they can go by doing everything the right way with listing descriptions, high-end photos, videos, floor plans, maps, response time for showings, Open Houses, etc.

In my opinion, if I see a flipped property that comes out as a FSBO I think the flipper is cheap and also was cheap in the renovation.

@Jim Goebel , I would say most agents are getting 50-75% of the commission from their broker. That will largely depend on experience and the amount of business an agent brings into an office. Also, some costs can be shifted to the agent by the broker as well. So, its not simple to guess what agents are making. 

As far as agents eschewing FSBOs. Agents aren't going to seek out FSBOs to put in front of their client IF there are plenty of MLS listings that suit the clients needs. There are a couple reasons for that. First is that they would have to take the time to contact the FSBO to see if they would even offer a commission to a buyer's agent. If not, then they have to talk to the buyer and see if they would be willing to pay it (assuming its not spelled out in a buyer agency agreement). Secondly, since a FSBO has no agent the buyer's agent ends up doing MORE work because they are interfacing with someone who isn't well able to represent themselves. This additional work is a source of frustration for the buyer's agent in a FSBO deal.

Using a real estate agent is like any other aspect of your business. If you aren't willing, able, and interested in doing that work well you are better off hiring someone. Its no different than an electrician, accountant, or lawyer in that way. 

Hi @Jim Goebel

I don't steer away. My conversation normally goes like this.

"Hey Tony, I found a FSBO that fits your needs. They aren't paying a commission on it so if you want me to set it up I can do that but you will be responsible for my fee".

"Oooooh jees.... Um I guess that's OK"

"OK great, let me write up this contract for you to sign"

"You know what, lets just go look at something else, how's that one on Elm?"

@Mike Cumbie to add on to what you said....that use to be what I would do....but after so many FSBO's showings going nowhere, I just as a business practice do not deal with FSBO's any more. They are over priced, even when you get them under contract, the seller refuses to do any repairs or negotiate in good faith...the appraisals always come in low then they refuse to lower the price. You just end up spending 20 hours of your time for the deal to go nowhere. So now, I just dont deal with them at all.

@Jim Goebel I think it is dependent on the location and the FSBO owner. If it is in a location that is not all that special, why waste the time. But if the location can't be beat and is a rare opportunity I think it is worth investigating. I also think it is worth speaking directly with the owner that is selling - asking them why they are selling, what commission they might pay if you bring them a buyer and how long they are going to "go it themselves." You might find a gem and an opportunity to make both sides of the commission if it all works out.

in most markets FSBO unless they are giving it away simply dont sell.. so the owner thinking they saved money just lost a bunch of time and money paying payments on a property sitting there.. then end up listing it anyway.

As for broker splits.. thats highly regional on the west coast which in my mind is pretty progressive there are transaction based brokers that just charge a nominal transaction fee per deal  like 500.00.. agent keeps 100% of the commish. you get no support.. just a place to hang a license etc.

and then there is companies like were my wife works were you can just pay a flat fee per year.. so her fee is 10k due in Jan. she keeps 100% of her commissions  and there is pretty good support.. a broker who will step in etc.. Office to go to if needed although i bet she does not go to the office more than 2 or 3 times in the entire year and thats just to pick up her mail or her gifts the lenders send her.. the broker auto deposits all her checks..

Lastly in my mind if your house flipper of any kind of volume your goal should be to get your license and list your own deals unless your selling 100k flips or something but our market is more like 400 to 1 mil and those savings on list side fees can really make or break the flip financially

Originally posted by @Michael Noto :

@Jay Hinrichs Interesting insight on the broker splits. I had never heard of either of those before. Just goes to show how different the real estate agent splits game is in different parts of the country. 

ya Broker % splits went out the window at least 25 years ago on the west coast.. the ONLY ones who do those are begineers

and agent that is established is on a set fee.. So like my wifes company its 12k a year 1k a month or you can pay 10k in Jan and get the 2k savings that's what we choose to do. 

Although and I am sure you have them too my wife has a transaction coordinator that makes 400.00 per file and is worth every penny for the higher volume agent.. it allows her to do her deals from anywhere we happen to be.. like we are in Hawaii now.. LOL 

 

Originally posted by @Michael Noto :

@Jay Hinrichs Could not agree more regarding the transaction coordinators. I use one and it saves me a ton of time. A good one is worth their weight in gold.

I also think for someone who is very detailed but does not want to do actual sales this is a great gig.. 

A good one easily makes 6 figures a year.. So like with all these folks on BP that are trying to crack into the game in some manner you have a perfect occupation that will teach you more about real estate transactions then just about anything you could do. your working daily with top producers seeing the deals reading how they are put together etc etc.

 

@Jim Goebel - Let me give a differing opinion. After I became an investor but before I became an agent, I sold my home in Ohio as a FSBO and was under contract in 3 days for the price we wanted. I actually had only listed it on Militarybyowner and didn't even get to FSBO it officially as planned.

Wife analyzed about 15 properties as comps in our own neighborhood.  We knew what price we thought was market and listed $5K higher.

Had two showings within 48 hours.  Buyer agent called me, asked if I'd pay her commission, of course I said I would.  She then threw out a soft offer.  Wife and I discussed (it wasn't enough), and we threw out a counter, right at our interpretation of market price.  Buyers accepted.  Boom, done.  Saved about $7K.  

Not only that, but I liked the agent so much that I turned around and bought 16 apartments with a partner through her.  

Don't discount FSBOs.  You can always ask the seller to pay your commission and feel out if they will be reasonable.  Maybe most aren't this way and this was better set up because it was a military family buying from a military family with a military spouse agent in between so everyone already had it figured out.  Not sure.  

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@Jonathan Greene

Cameron

I appreciate the perspective, however I, like Charlie, had a good experience in my first FSBO. I got about 95% of list price, and it only took a few months on that one. A single data point, sure, but point by point many of the FSBO platforms offer everything you're listing out there that a traditional brokerage does. Many FSBO list services DO get on the MLS, by the way. Scheduled showings, sure.

Regarding steering, I'm referring to the buy side impact, not the sell side impact. I can be swayed by your 'facts' however I'd need to see DATA to back up the claim that non FSBOs do better. I'm dubious when there's usually at least 3% cost in the form of seller side commissions that is not present in the FSBO that would otherwise be present in an agent/agent deal. Bigger pie for buyer and seller!

@Kevin Sobilo

Thanks Kevin, good info!

We'll give EXP a look as we explore more.  We're frugal and independent so this sounds like perhaps a fit.  

@Jay Hinrichs

Finding a shop that'd be happy with just a $500 flat fee per transaction would be wonderful.  Any tips on finding something like that in Iowa/the mid-west?  

Originally posted by @Jim Goebel :

@Jonathan Greene

@Charlie Cameron Cameron

I appreciate the perspective, however I, like Charlie, had a good experience in my first FSBO. I got about 95% of list price, and it only took a few months on that one. A single data point, sure, but point by point many of the FSBO platforms offer everything you're listing out there that a traditional brokerage does. Many FSBO list services DO get on the MLS, by the way. Scheduled showings, sure.

Regarding steering, I'm referring to the buy side impact, not the sell side impact. I can be swayed by your 'facts' however I'd need to see DATA to back up the claim that non FSBOs do better. I'm dubious when there's usually at least 3% cost in the form of seller side commissions that is not present in the FSBO that would otherwise be present in an agent/agent deal. Bigger pie for buyer and seller!

@Kevin Sobilo

Thanks Kevin, good info!

@Ramsin Jacob

We'll give EXP a look as we explore more.  We're frugal and independent so this sounds like perhaps a fit.  

@Jay Hinrichs

Finding a shop that'd be happy with just a $500 flat fee per transaction would be wonderful.  Any tips on finding something like that in Iowa/the mid-west? 

have to google for them or start one yourself.  they are all over WA OR CA NV 

 

Originally posted by @Jim Goebel :

We're evaluating options as we think about integrating a flip or two per year, in addition to our buy and hold efforts.  In doing so, we're wondering what typical broker/agent splits are.

Also I'd be curious on folks' candid opinions on the amount of steering that happens by realtors AWAY from FSBO listings. I know they're not supposed to, but we're evaluating options in listing these properties - and I'd be surprised if demand from real estate agents and their buyers was 100% the same for FSBO listings as for MLS listings given the competing business model, and all.

FSBO are going to be avoided by most agents because FSBO are generally cheap and unrealistic. Ain't nobody got time for that. In addition agents aren't looking on Zillow when they are setting up showings for their clients. They are strictly looking at the MLS so just because a FSBO offers 3% or whatever it is on Zillow doesn't mean it's being exposed to the agents.

True story. This year my wife and I listed our home FSBO. Both our our children where in college and we simply did not need the size of the home we had. We painted the entire inside of the home, brand new carpeting upstairs thoughout, brand new HVAC systems (2), and did some other freshening up. Had professional pictures taken.

We listed on Zillow and had an offer within 10 days.  GREAT!  They backed out just before due diligence ended.  No big deal.  Thank you for the donation.  

We relisted and waited.....and waited....and waited. I then used a flat fee listing agent to get the home on the MLS and stated that we would protect the buyers agent commissions. We waited...and waited.

Our good friends immediately to the left of us were selling as were the neighbors and friends immediately to our right.  Not ideal I know.  The reason that they were moving was divorce and job.  Both actually waited until we were under contract before they listed.  We all thought we were in the clear.  No way would we lose another contract.  3 days later, we were under contract.  Out of town buyer from Michigan fell in love with our home.  He found it on Zillow or Redfin and asked to see it.  They put in a full price offer.  Yeah!!  Not so fast.....his wife (who did not see the home) got cold feet and 12 hours before we were out of DD they backed out.  

This is when it gets interesting.  The home to the left of us went under contract.  The folks to our right had multiple offers.  During the time we were on the market, NOT ONE agent asked to show our home.  Not one.  The other home had an open house, and some agents "offered to help us anyway they could."  Multiple calls from agents who had possible buyers but wanted to come buy to see our home first.  We heard it all but did NOT get one showing.

I broke down and called a friend who is an extremely good agent.  She came over.  Made a few recommendations (move this chair, add color here, etc) nothing extreme.  As soon as it went active that same day, 5 request for showings came through.  The great news is that we finally closed!  The bad news.....our neighbor and friend who's house was selling next to us overheard agent after agent bad mouth our home when they thought no one could hear.  Thank you "ring doorbell".   

@Jim Goebel - The splits depend on if you want support from the branch manager and the designated broker. Here in WA, there are plenty of 100% commission brokerages that only charge a monthly desk fee plus per transaction fees. Mine is $125/month desk fee then $495 per transaction (avg sale where I am is ~650k) and we share a few transaction coordinators.Then there are also plenty of 80/20, 50/50 up to a cap then 100%, etc commission splits. If you go to a bigger company like KW or Windermere, remax... you will have more support and more "requirements" like going to and paying for sales seminars, mentorship/coaching, floor time, sales quotas or cold calling. 

I had to call all the local brokerages to find one with the lowest fees and that matched my lifestyle. I don't go to the office ever, and most agents in my brokerage don't go into the office, very similar to @Jay Hinrichs ' s wife's brokerage probably. 

@Jim Goebel as all have mentioned above, it can be done. But is FSBO the highest and best use of your time? Engaging a broker will free up your time to focus on your business, and may even lead to other opportunities if you find the right broker.

@Mike Hyder

Good anecdote. I suspect there was some 'funny business' and unethical behavior driving what you observed with your FSBO. It's unfortunate but par for the course, I guess. Established business interests getting threatened, coupled with collusion, etc.

@Scott Wolf

I'd tend to agree with the sentiment.  It'll be my wife's call at the end of the day.  I'd say I'm leaning towards getting options with brokers, etc - however I'm not sure if we'll be able to do that before the current $150-180k house listing we have coming up in a couple months comes online.  We also have a good relationship with a C21 agent that we'd like to be loyal to and reward for his help, somehow - so that's a factor for sure.

I've never steered anyone away from a FSBO. That said, FSBOs can be pretty unrealistic in their pricing.

Like @Jay Hinrichs said, splits can be anywhere from $1k/deal to 40%. Shop around.

And yes, by all means get your license! So fun owning your own brokerage

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