What is the amount you pay a Realtor?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
3y

I typically charge my clients 3% for off market properties for a normal priced property. If it is particularly expensive, then it may go lower. 2% is usually the lowest Ill go. If it is a cheap property, then the percentage may be particularly higher. We did one at 15% earlier this year because the price was only $60k on the property. 

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    What ver you two negotiate. Depends on who found the deal and how much work each party put into it. I pay 1% 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    I typically charge my clients 3% for off market properties for a normal priced property. If it is particularly expensive, then it may go lower. 2% is usually the lowest Ill go. If it is a cheap property, then the percentage may be particularly higher. We did one at 15% earlier this year because the price was only $60k on the property. 

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  • Tony Davis
    OP
    Member since 2021 · 23 posts · 3 votes
    3y
    Quote from @Eliott Elias:

    What ver you two negotiate. Depends on who found the deal and how much work each party put into it. I pay 1% 

    That’s kinda what I was thinking. I would be doing all the work. Realtor would only be finding the properties.
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  • Rich Hupper
    Broker / Investor · Tewksbury, MA · Member since 2008 · 1k+ posts · 351 votes
    3y

    There is finding the properties then building the relationships with the owners. You dont need to be a realtor to get access to property data. Check out GIS maps for the town you are looking for properties. GIS maps will give you the same information the city assessor has access to including a mailing address. 

    In my experience off market properties take months or years of follow ups before they come to fruition. However if a broker does bring you a true off market deal expect to pay a premium for it. 

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  • Nathan Grabau
    Realtor · Longmont, CO · Member since 2021 · 577 posts · 631 votes
    3y
    Quote from @Tony Davis:
    Quote from @Eliott Elias:

    What ver you two negotiate. Depends on who found the deal and how much work each party put into it. I pay 1% 

    That’s kinda what I was thinking. I would be doing all the work. Realtor would only be finding the properties.

     If finding off market deals was not a lot of work then you would just do that too. Off market deals are gold, and you want to make sure your Realtor sends them to you and not the next person. 

    I could see that number going down below 3% if there was volume there or higher priced deals. But one off's, no way. 

    I'll take 1% just to do the transaction, but there are wholesalers take 10-15% of a deal or even more in hot markets. 

    And on my out of state deals when I use another broker, I am not negotiating with them, I negotiated with the seller. There is very little value in competing with people on your team for 1 or 2% from the investor side. 

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  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    3y

    Hey @Tony Davis - pretty much depends on what you and your realtor work out. Note that you probably want to keep them happy if they're consistently sending you good off-market deals. What I've seen done before is anywhere from 2-5% of the purchase price of the property, or a flat wholesaler's finder's fee ranging from $10k-$20k. I'm in NYC, so our properties are more expensive, you'd likely have to adjust for your own market. 

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  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    3y
    Quote from @Tony Davis:That’s kinda what I was thinking. I would be doing all the work. Realtor would only be finding the properties.

    "Only finding the deals.." - good for you, if you find someone willing to do this for you for 1%. Maybe a new agent? If that person is smart, they will wholesale it and make 10%.

    You don't pay anything if the property is active on the market, because the seller pays commissions.

    If a client wants to buy a FSBO (For Sale by Owner) the going rate is 3% and often the seller is willing to pay that out of the proceeds. Every time I do this for a good client, I swear to myself this was the last one I did for 3%.

    Most FSBO are a royal pain to work with!

    There is a reason why they did not sell on the MLS. Either they think their house is worth more than what an agent told them, or they had a terrible agent, and now resent the entire industry. Or they hire an attorney, and nobody can screw up a good deal more than an attorney. We had one last year, they arranged for a bidding war, buy promising an agent a single party contract if she could bring offers. Well, she bid by posting it on an agent group, I had to leave a dinner with friends to get the contract written before 10pm that night, my clients offered 125k over asking cash. They had 8 offers, rejected all of them and sold it to a family member for the average price of the 8 offers, that was their plan all along.

    Or they change their mind and don't want to sell, want more money 2 days before closing, don't show up for closing... lots of fun stuff! Get ready for it!

    When a deal goes on the MLS the listing agent has been working with the seller to "prepare the package", so it's ready to go, all you have to do is make an offer.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y
    Quote from @Tony Davis:
    Quote from @Eliott Elias:

    What ver you two negotiate. Depends on who found the deal and how much work each party put into it. I pay 1% 

    That’s kinda what I was thinking. I would be doing all the work. Realtor would only be finding the properties.

     Thats most the work

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  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    3y

    @Tony Davis off market deals are often more challenging than on market deals and they are cheaper... 

    When I started investing I always tried to pay the bare minimums. I wanted the lowest: agent fees, property management fees, general contractor prices, etc. Over time you will realize "you get what you pay for." If you're serious about investing then you should consider overpaying people that bring you value. If an agent is bringing you a deal 20% below market with no competition then pay the agent accordingly. 

    Think about it from a relationship perspective:  

    if you are willing to pay the bare minimum (1%) two things will happen: 

    1. the agent will likely not work as hard to help you on your first transaction. Why would they spend so much time on off market deals to make 1% when they can make 3% on standard on market deals? They will send the best off market deals to their better clients first and you will be left with the scraps. 

    2. the agent will be discouraged from working with you in the future. Again, their time is better spent elsewhere

    3% is a fair amount or a minimum $ amount (e.g. $2,500, $5,000, etc.) 

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  • Tony Davis
    OP
    Member since 2021 · 23 posts · 3 votes
    3y

    Just trying to learn here. I did not realize how big a deal it was to find properties that had fallen off the MLS. I just assumed I would be sent an email with some properties. I close on one and give the Realtor a set fee. I'm doing all the paperwork. All the legwork. It seems it's not as simple as I thought.?

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    Technically it could be a violation of a Realtor's fiduciary responsibility to a seller NOT getting them the maximum net sales price.

    Not sure where you're finding Realtors willing to risk their licenses for this.

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  • Garrett CrosbyPro Member
    Real Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 162 votes
    3y
    Quote from @Tony Davis:

    Just trying to learn here. I did not realize how big a deal it was to find properties that had fallen off the MLS. I just assumed I would be sent an email with some properties. I close on one and give the Realtor a set fee. I'm doing all the paperwork. All the legwork. It seems it's not as simple as I thought.?

    Love that you are here to learn - and anyone claiming to be the be-all-know-all expert is really not the person I would listen to. 

    So a few things. I started out as an investor before I became an agent. I will tell you that I absolutely love the investing part and the only reason I became an agent was to help myself land more deals while controlling the negotiating (at first). Since getting my license though, I've really fallen in love with the relational process of helping investors succeed in this market. :) 

    With that being said, it really isn't that hard to find properties that have fallen off the MLS (we called them expired listings). You can do this by using great online tools like Prop Stream that can run lists set to parameters you choose. For instance, you could run a list of local properties that have recently expired on the MLS, have 40% equity or more, and are currently vacant. Then from here, you can send letters to the owners or skip trace to get phone numbers to cold call. This is the process most use when "wholesaling" - but it's also a great way to find off-market listings as well.

    I tend to like educating my clients about these tools so that they are able to narrow down searches and find deals themselves. Then when it comes time to purchase, flip, list, etc. I will step in to support the process. For the most part, I never charge to help clients find off-market deals. I only will charge a commission if I need to step in to manage the transaction on either side - and even still, I will usually charge a minimal amount to the seller. 

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  • Tony Davis
    OP
    Member since 2021 · 23 posts · 3 votes
    3y

    Not sure where you are getting I would be paying less as you say. I never said that. 

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  • Tony Davis
    OP
    Member since 2021 · 23 posts · 3 votes
    3y

    Ok, I will check that site out. Thank you. 

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Jon Kelly:

    @Tony Davis off market deals are often more challenging than on market deals and they are cheaper... 

    When I started investing I always tried to pay the bare minimums. I wanted the lowest: agent fees, property management fees, general contractor prices, etc. Over time you will realize "you get what you pay for." If you're serious about investing then you should consider overpaying people that bring you value. If an agent is bringing you a deal 20% below market with no competition then pay the agent accordingly. 


    THIS !

    really like it.

    1Reply
  • Rich Hupper
    Broker / Investor · Tewksbury, MA · Member since 2008 · 1k+ posts · 351 votes
    3y

    the appeal to an off market aka off the mls deal is that there is less visibility on it so less competition. If you are looking for true off market deals forget about brokers and realtors. Find the owners yourself and reach out to them directly. Build a relationship with them and become the person they call when they are ready to sell. As soon as the seller starts talking to brokers the deal is lost. The broker will want to put it on the MLS and capture the highest bid. This is why having cash is so important with off market deals. You need to be ready to write a check as soon as the seller is ready to dump the property. You basically want to have done all your due diligence even before a contract is signed so you know exactly what you are getting into. Sometimes this might even mean ordering a title examine on the property before you have a contract to purchase with the seller. I have done this before in preparation to purchase something I really wanted to get my hands on. Now if you are buying something where you plan on developing it obviously dont spend too much money on due diligence until you have a contract. Engineering and permitting will get costly. However I know some builders that will buy property with no building permit contingencies.

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  • Tony Davis
    OP
    Member since 2021 · 23 posts · 3 votes
    3y

    So look for recently divorced, death, etc.

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    3y
    Quote from @Tony Davis:

    When you have a Realtor find you off market properties. What is a reasonable amount to pay them? Is it the same as when you buy the property when its active on the market? Is it a flat rate? 



    I will only speak for myself and my team.  We get a lot of requests for off-market deals from clients. So we oblige because we get off-market deals sent to us almost daily from realtors and local wholesalers. What we charge depends on how much time we have to spend on the deal. 

    We have some clients who are very specific in what they are looking for & we provide them access to our resources to find specific types of properties.  This means direct mail, phone calls, back office support, contracts,.... We pass these costs on to the clients.  Our fee depends on the type of relationship we have with the client & the type of property that has been sourced. In some cases it may be a straight commission; in other cases we may actually partner w/ the client.
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  • Rich Hupper
    Broker / Investor · Tewksbury, MA · Member since 2008 · 1k+ posts · 351 votes
    3y
    Quote from @Tony Davis:

    So look for recently divorced, death, etc.


    divorces are difficult because they can take forever to dispose of property and sometimes the property is not disposed of. Probate in my opinion are the best opportunities. I would just keep your eyes on properties that are vacant and dilapidated. Find the decision maker for the property reach out to them and offer to mow their yard. Tell them you are doing pro bono landscaping work for your youtube channel. Or find a property where the elderly person cannot mow their grass /  do other yard work and offer them the same labor. Its about building rapport with the decision markers. If a broker facilitates an off market deal he basically has already done all the leg work. 

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    3y

    Generally speaking, you shouldn't pay them anything. As a buyers agent, they should get half of the commission paid by the seller (usually 6% of the purchase price total, so 3% to the listing agent and 3% to the buyers agent.) If they're finding off market properties that are unlisted, then I would pay them the commission they would normally receive if the property had been listed; i.e. 3% of the purchase the price. (And if you do a large amount of a volume, maybe get a quantity discount and drop it to 2.5 or 2%)

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  • Nathan Harden
    Real Estate Agent · Puyallup, WA · Member since 2022 · 551 posts · 378 votes
    3y

    If the agent had nothing to do with the helping of finding the deal or negotiating then they should only make 1% for just writing up the contract. When buying properties on market, the buy side does not pay commissions unless that is negotiated into the contract.

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    3y

    @Tony Davis

    The real estate market is still hot in many areas of the country with more demand than inventory. Frustrated buyers who have been bid out of homes need any advantage they can get. Although MLS Statement 8.0 severely restricts access to off-market listings it does not ban them entirely. Do your homework, realize that there are risks, and know that finding your next home through an off-market listing can be worth the effort.

    The reasonable amount to pay them is totally negotiable and depends on how much value offered.

    All the best!

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  • Holly Barrett
    Real Estate Agent · Dawsonville, GA · Member since 2017 · 206 posts · 144 votes
    3y

    @Drew Sygit it’s my understanding that it is illegal for licensed realtors to “market” off market properties, pocket listings are a thing of the past…am I correct that this is no longer allowed? I still need clarity on what we are and are not authorized to share in terms of an off market listing. Need to ask my broker!

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    @Holly Barrett every state is different, but more are cracking down on wholesalers skirting state real estate licensing requirements.

    What everyong seems to get confused about is wholesalers that do not get caught, but are still breaking laws, and everyone misinterpreting that this somehow makes it legal.

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