I am working on securing my first deal in the DFW area. I have a realtor who is charging me 5.5% for selling the property once the fix and flip is done. Talking to other investors, they say this fee is too high even for the DFW market. She also asks for a finders fee for off market deals. Can anyone give me a range of what they pay for realtor fees or finders fee?
You will find many agents in DFW who will list it for 1 to 1.5%. There are even some who will do flat fee listings for $300-500, some for $1000. Levels of service vary. I use a flat fee service, because I typically do my own staging, do my own photos, write my own descriptions, and do my own negotiations. I really just want an agent to put the house in MLS. But I've been doing it for years and have done dozens of transactions. When I was new, I didn't have that experience and knowledge.
Two things to note:
1) The 5.5% you're talking about is a combination of commission for buyers' agent and sellers' agent. Total commission in DFW is typically 6%, split evenly. The buyer's agents work their asses off, running buyers around to look at dozens of homes, put in offers that may or may not get accepted, and so on. I would NEVER recommend cutting buyer's agent commission.
2) When you're new, you need advice and market knowledge. I would not recommend a flat fee agent for the first few transactions. Find one that'll give you decent service for 1-1.5%. Good advice on prepping the house for market is valuable, and then the first time you have a contract dispute or have to negotiate a repair amendment, that help will be valuable. As you get more transactions under your belt, switching to a flat fee agent may make sense.
@Michael Hayworth Thank you for your response! I appreciate the information!
Real estate commissions are completely negotiable. I personally do give breaks to repeat clients, so maybe talk to him.her about discounts on future deals.
YOu can call around and see what other reputable agents are charging in the area.
When you say a finders fee for off market deals, these may be deals where the seller is not paying a commission and he/she is using her network to find flips, foreclosures, probate. etc. You can probably get the commission put into the contract so you aren't paying directly, but through escrow. These are deals that she needs to work to find, so a finders fee (If you cannot get the seller to pay) is perfectly reasonable. IMO
I never thought about the finders fee like that!! Thank you for your response and we will definitely get it out in the contract so we aren't paying it directly. I will also discuss discounts on future deals because We want to continue working with her. Is there a range you have for investors?
Normally we pay 6% in commission to sell real estate. 3% for the selling agent, and then 3% goes to the buyers agent.
We are paying a reduced fee of 4% to my realtor in Miami, as the buyer didn't came through another realtor. Only for this deal.
Good information. We have been finding our own deals and calling etc so I think we will be changing our strategy to make sure we aren't overpaying for our realtor fees.
Have you considered using "flat-fee" real estate services? This is very common in California at least. You can pay $100-$200 to get listed on the MLS and still offer buyer agents the appropriate commission (typically 2.5 or 3%). If you end up needing help with the paperwork you can always get a flat fee attorney or agent to do it for .5%.
I'm an agent and investor dfw. I don't invest in dfw, however I do live here. If you would like to connect, I list for 1.5%, if the property is over 300k, 1%. Contact me for more information.
Working with a great real estate agent will earn you money. You both will make money. Ours saves us tons of money in time. She has arranged inspections, repairs, found us great tenants, and helped us find valuable properties. Her advice is invaluable.
Do understand when people say they pay 1.5% for listings, they are failing to mention there is also a buyer agent fee of 2.5 to 3.0%.
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