How do we pay people who help us close the deal?
16 Replies
Ashley Victor
Investor from Miami, Florida
posted over 3 years ago
Hello, My partner and I need help figuring out how much to pay this person. Here's what happened, she answered the call, negotiated the deal, we bought the property @ $160,000, we'll be keeping it as a rental. How much do we pay her for picking up the call and negotiating the deal?
Christopher Phillips
Real Estate Agent from Garden City, New York
replied over 3 years ago
Who was this person? A wholesaler? A broker? A transaction broker? A third-party that just put you two together?
Ashley Victor
Investor from Miami, Florida
replied over 3 years ago
Someone on my team who I forward all my leads to, she basically negotiated the price I was wiling to pay and I closed the deal.
Christopher Phillips
Real Estate Agent from Garden City, New York
replied over 3 years ago
When you say "team," do you mean a virtual team or are you paying her a salary?
Ashley Victor
Investor from Miami, Florida
replied over 3 years ago
Not virtual and not on salary. It's my mom she got me into the business years ago and I really can't put a price on what she brings to the table, but I want to be fair. If I was selling the property it would be a percentage but since I'm holding it I'm having a hard time figuring out how to compensate her.
Ray Johnson
from Irvine, CA
replied over 3 years ago
Matthew Paul
from Severna Park, Maryland
replied over 3 years ago
Its your Mother , stroke her a check for $ 25,000 she wiped your butt , put on your band aids and made your meals .
Christopher Phillips
Real Estate Agent from Garden City, New York
replied over 3 years ago
Okay. If she's your mom, and I assume she's another investor like yourself and not an agent, you should just really decide up front how you want to handle things. Could be a reasonable gift. % of cash flows or sales profits.
Ashley Victor
Investor from Miami, Florida
replied over 3 years ago
Plan was if we sell the property she gets a percentage, but we are holding it, now I can't figure out how much to give her.. @Matthew Paul she'd love you for that..lol @Ray Johnson she knows I will give her a nice check, but at the same time I'm running a business that's why I needed some outside opinions.
Brandon Ingegneri
Rental Property Investor from Providence, RI
replied over 3 years ago
$8000. 5% of the deal. Throw in a sweetener if you like because it’s Mom. Call it $10,000.
Sam C.
from Lehigh Valley, Pennsylvania
replied over 3 years ago
A percentage of the rent each year rented and same percentage as in the past when sold.
Justin Brown
Real Estate Agent from Allentown, PA
replied over 3 years ago
How much time did she take on the negotiating? It looks like it was not a lot of time. If it was a couple of hours and then you took it from there I would say giver her a nice hourly rate $100/hour and calculate it out.
My sister works for me doing paperwork and some admin stuff about 4-6 hours a week and is just out of school. I pay her $15 and she thought that was too much! I know it can get tricky with family being fair but running a business, so it's good to be up front and even ask..."mom what would you think was fair for your time helping make that sweet deal happen, I really appreciate your input and getting the job done and want to compensate your eel for your efforts?"
Harrison Smith
Real Estate Agent from Biddeford, Maine
replied over 3 years ago
@Ashley Victor I would pay her like a buyer's agent since she basically represented you, negotiated the deal, and got you to closing on a property. Most buyer's agents are making 2-3% of the acquisition price, so pay her $3,200 - $4,800 and move on to the next deal.
Gary Lucido
Real Estate Agent from Chicago, Illinois
replied over 3 years ago
I agree with @Justin. Maybe $125/ hour.
Owen Dashner
Flipper/Rehabber from Omaha, NE
replied over 3 years ago
Was your mom expecting anything out of it in the first place? Is this going to be a regular activity for her, or just a one off thing? How much equity did you capture with the purchase? The answers to those questions might paint a better picture on what is the correct amount... My first thought was $5K based on the limited information.
Ashley Victor
Investor from Miami, Florida
replied over 3 years ago
After all costs equity in the property is 105k, I can make it an ongoing thing. I really would like to establish a flat rate. If I were to consider hourly pay then I would also have to pay for the endless hours of tire kickers. Seems like 5k per closed deal should be it, at the end of the day the job remains the same whether we purchase a 30k property or a 300k property so percentages wouldn't work all the time. Thanks everyone I really appreciate the input. Continued success to all!
Account Closed
replied over 3 years agoI think you should base your decision based on the amount of hours she put negotiating the deal and perhaps how satisfied you are with the amount of equity your getting from the deal. If just making a few calls, I would say she was more of a "deal finder". But if she put in a decent amount of hours, followed up consistently with the seller and got you a better deal than you had anticipated, then she probably deserve a decent commission. Keep in mind, I'm using the commission term loosely. In most states it would be illegal to receive money for brokering services without having a license.
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