Investor · Austin, TX · Member since 2020 · 3 posts · 9 votes
Hello,
I'm working with a buyer's agent to make offers on properties. I'm making an offer on one SFH for about $170,000. We're also making an offer on a 4-plex for over $500,000.
Given that the 4-plex is more than 3x the price of the SFH, would it be reasonable to ask my realtor to do the 4-plex at a lower commission rate?
If so, what would be a rate to request that would be reasonable?
At a 3% buyer's agent commission rate:
The SFH = $5,100 Commission to buyer's agent.
The 4-plex = $16,000 Commission to the buyer's agent.
How much more work goes into the contract on the 4-plex? Would asking for a 1.5% or 2.% commission be acceptable?
As others have said it is paid by the seller. A 4plex is actually more work than a SFH. I think it's besides the point. The last thing you want to do is try to cut the commissions/profits of people working with you. You want them to bring you more deals in the future and not be the guy who nickel and dimed them.
If you are finding the deals yourself, and you have an issue with the real estate agent getting a hefty commission, have you considered getting a real estate license yourself (or your spouse) so you keep the commission?There are other considerations if you become an agent and an investor.
I’ve read a few responses and some provide good rationale as to why you should let your agent keep the 3% commission they owned.
However, since YOU brought the deal to your agent, you’ve done part of your agent’s job. Unless your agent is providing more than paper services, I feel you are right in asking him to leave some commission on the table if only it’s going to actually keep costs low for you. That means your purchase price is actually reduced by the 1+% your agent is having to forgo, and its not simply just going back to Seller.
On the other hand, if your agent helps tremendously in underwriting the property as an investment, reads the leases and helps you avoid pitfalls, or finds deferred maintenance items, etc that you couldn’t find, then your agent has made up for the fact that he didn’t find the property for you.
I bought my current home without a buyer’s agent and Seller has his sellers agent reduce commission to 3% in order to stomach the offer price from buyer.
I’ve also taken a deal I found on my own and after vetting it at a high-level, I involved my agent as a buyer’s agent because I valued the relationship and he had tremendous knowledge to offer.
"I bought my current home without a buyer's agent and Seller has his sellers agent reduce commission to 3% in order to stomach the offer price from buyer."
That is like saying "I went to BK and told the manager I'd buy a Whopper but the cook has to only make $9.15 cents this hour"
"I went to Tractor Supply and told the manager I'd buy some feed but the cashier has to get minimum wage minus 80 cents for the time she helped me"
"I had my car painted but the guy that taped it up has to only get $18.50 cents an hour while he does it"
Sure they may say ..."um yeah we can do that........." in reality you are as blind as a bat as to what happens between the actual client and broker. The customer has zero input on what happens on the other side of the equation. Sure you can "Feel like you made all decisions and directed every cent", but in reality, it was a business decision decided on how to handle based on numbers.
You said, '....but in reality, it was a business decision decided on how to handle based on numbers.'
Exactly!
The Seller's agent was asked to reduce his commission and the agent agreed in order to make a deal happen at the bottom-line price the Buyer offered. Seller's Agent could have refused to lower his commission but made the decision based on the prospects of the deal. You are simplifying it by talking about Whopper's at Burker King. One Burger King sells several hundred Whoppers and they dont have to change their pricing to make a deal. Real Estate, on the other hand....everything is negotiable, as long as its legal.