Fees Paid to Broker While Flipping Houses as Your Own Real Estate Agent?

Question

Hello BP World:

I'm a new investor and I plan on obtaining my real estate license to utilize all of the benefits rather than hiring one as "a middle man" for each flip. I'm wondering for those who flip houses while acting as your own agent, what kind of fees/percentages are your brokers charging you for your flipped property deals?  Any backlash for working out on your own and not full time for your broker?

Any advice is much appreciated.

Thanks!

Jon

Darrell Shepherd · Answer

I've got mine at Keller Williams right now, but only because I went to HS with the broker.  He cuts me a break on my stuff.

Know another investor that is a broker who offered me $200/transaction using her.  If I was doing higher volume, I'd switch.  Just not big expense yet.

Really depends on what all you want to do and how much training you want.  KW has pretty good training materials, that $200/transaction broker isn't going to do anything.

Honestly, I don't see TOO much value in the KW name recognition with what I do, but there is some.  As hot as the market is right now, I'm actually considering marketing for listings.  Pretty high $/hour for that work right now around where I live...

J Scott · Answer

Find a flat fee broker.  We pay $99 per month and $395 per transaction, regardless of the sale price.

Mindy Jensen · Answer

I wanted to get my license for years, but held back due to the commission splits as high as 60% to the employing broker.

I found a company that allows me to do as many or as few deals as I want, and charges me $52 a month and $499 per transaction.

With this type of structure, I am free to set my own commission as I choose. This system works for me, and we are not seen as a discount brokerage, because we are not a discount brokerage.

Jay Hinrichs · Answer

@J  Scott

this is exactly were all the wanna bee wholesalers should be going.. get a license work for flat fee..

For my wife and I we pay 12k a year no transaction fee... so it works out.  but we also have one of the top boutique firms in our little boutique city

J Scott · Answer

I don't believe the OP is suggesting a flat fee listing agent or discounted commissions.  He's just asking about hanging his license with a broker that takes a flat-fee off the commission versus a split.

Clarence Johnson · Answer

From an agents perspective I would not do a transaction for a flat rate.  I work hard and fight diligently for my clients.  You often get what you pay for and saving money on a discount agent may cost you money in a transaction.

As an investor, I definitely do not want to give up 3% off of every transaction ($300-500k avg in Ca) but I do understand and respect the value that a quality agent brings.

Strategically I have seen people very successful in using the listing agent to represent them on the purchase side of REO, shortsale, and foreclosure properties.  If necessary you may need to offer the listing agent the resale to acquire the property.

If there was an investor feeding me transactions I would not work for a flat rate ($400-500), but I would not charge them the market rate (3%) to list and market the property.  My overhead to properly market a property hovers around $400.  Open houses, social media and email blast, professional photography and virtual video tours of every property cannot be done for $400 flat rate or even $1000 flat rate on my end of the world.  Your $400 listing agent may lose you money by having your house sit on the market with their $40 marketing plan.

My opinion is that there is value in getting your license provided that you have the time and energy to properly market the property when the time comes.  Listing a property is one thing and selling it is another.  When time is money I suggest spending the money, that's why investors aren't painting their own flips on their off days, they hire a crew to have it done in 2 days.

J Scott · Answer

This is in Maryland, and we've seen probably a half-dozen relatively small (under 100 agents) brokerages like this in the area.  This was the fee structure from day one.

My wife still holds a license in Georgia as well, with one of the largest brokerages in the state -- they offer about $70/month and $300/transaction.  They have over 3000 agents.

I'm not sure if they're available in every state, but I'd be surprised if they weren't...

Joel Owens · Answer

Jonathan sometimes the flat fee brokerages will make you have experience first so your first 5 deals might be on a regular split and then once you are trained up some then it goes to a flat fee split.

What I see is agents wanting this sometimes are new out of the gate or an investor who just got licensed. Either way they pose an incredible amount of litigation risk for a brokerage.

These types of brokerages mainly have agents for numbers and trying to squeeze out a buck. How low can  a brokerage go per transaction fee while taking on more risk is a failed business model to me.

I have friends that make 70k a year babysitting agents but it's not my thing. What a brokerage will do is spelled out in their IC agreement when you sign on. Before signing if you do not agree with something then you can try and cross it out and initial or discuss it.

Some brokerages the trans fee is not their main revenue source. They can do volume with trans fees and if they lose their brokerage license from something bad happening they just shut it down and keep doing investments. For brokers who want to be around long term as profession it is different.

I got rid of all my agents  years ago but I am sure you will find lot of companies where you are at using the trans fee concept.

Agents over value themselves today especially the new ones............... : )

Jonathan Drago · Answer

Thanks everyone for the input! J, those seem like really good terms for flat fees. Are those typical rates, or have you received a discount over time with a broker based on continuous business?  How did you and your wife choose your broker?

Manolo D. · Answer

Lots of fixed fee brokers on craigslist here in CA, even if you don't have license. $2,000/transaction regardless of amount and work needed, regular price is around 500k here.

Fees Paid to Broker While Flipping Houses as Your Own Real Estate Agent?

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