Flippers with Real Estate Licenses - Commission handling

4 Replies

I'm in the midst of gaining my license, and I'm wondering how those of you who are licensed who also flip handle your buying and selling commissions. 

1. When buying a property do you offer dual agency to the listing agent, represent yourself and take the commission, or waive the commission as a bargaining tool?

2. When selling your flip do you list the property yourself and only offer 3% to a buying agent? 

@Todd Williams last one i bought i waived the buyers side commission.

When I listed my spec home i offered buyers side commission and then gave my brokerage what would have been there split on the list side. I had what would have been my split add to sale proceeds so i do not have to pay earned income on commission.

There was a recent discussion here where i was informed I am an idiot for not taking a commission on my purchases but i was happy since i negotiated more savings on the sale price than what would have been my commission.

Flipping incomes and RE commission incomes are taxed the same, so it doesn't matter where you put them. The only exception is in your broker split you have to pay. So if a home is listed for say $700k and the listing agent is offering a 2.5% commission to selling agent, then you as a RE licensed flipper can either negotiate the price down $17,500 and run the buyers side paperwork without commission or you can offer the $700k and collect your $17,500 commission less the broker split and fees. Depends on your situation which would work out best.

On the selling side, again you have two main options, list for $1M with a listing commission % (of whatever you choose) and still offer selling agent commission as standard for your area, or option 2, list with no list commission and lower your price by the commission amount it would have been to attract more buyers at a "lower list price".

I have done both and it was all situation dependent.

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@Waylon Zook we didn't say you were an idiot, just that most of us wouldn't go about it that way. But I am glad to hear it worked out for you!

@Todd Williams Here's the link to that thread if you're interested. We all discussed this exact topic, and I think everything that I would say here I already said there. https://www.biggerpockets.com/...

As for the selling side, yes I list my properties "myself" however as an agent, not a broker, you still only get 70% or whatever of your side of the commission back, so just keep that in mind. But yes, definitely best to list with your broker so as not to piss them off, especially if you plan on doing this regularly. You can discuss with them what percentage you want to take as the seller's agent, and since you're representing yourself you broker will likely be fine with a smaller percentage.