The Bronx, NY · Member since 2020 · 13 posts · 7 votes
Hello fellow investors! I am purchasing my first rental property out of state through a realtor (purchased for 57k) and I am wondering if I should send her a monetary bonus? If so how much? Also should I wait until after it's been refinanced? It is my first BRRRR attempt. Thanks!
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
5y
Yes, you should definitely give her a generous bonus ;) Just kidding, it's not customary, nor technically legal as a real estate agent cannot receive money for anything related to real estate services unless it goes through their broker, but super nice of you to consider. You could send the money to her broker, let them know it's a bonus and request the broker give it all to her I suppose. I think it's rare but I've had clients buy me nice gifts after closing, which I believe is completely acceptable as long as an agent isn't accepting money directly.
Her commission, which typically comes out of the seller's proceeds, is kind of low in this case due to the total sale price of $57k. She's probably earning somewhere between $1,425 and $1,710 total (2.5-3% of sales price). Then she'll have to pay a commission split with her broker, probably a transaction fee and/or franchise fee, and income taxes out of that total amount. So she'll probably get to keep around $900-950, which probably breaks down to around $30-50/hour depending on how much time she spent on the deal. If she did an exceptional job you might consider a gift. Sending flowers would probably be sufficient, and is more than most people would do. Your repeat business and referrals are the best gift you can give an agent.
Auburn, NH · Member since 2016 · 234 posts · 207 votes
5y
@Arjay Estrella no, the best bonus you could give her is to keep using her for all your investment properties and tell anyone interested in that market about her. (assuming she has done a worthy job at her job)
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
5y
@Arjay Estrella Your realtor is most likely making $1,700 on this sale. Thats how realtors make money, though it sounds like on this deal your realtor didn't make much. Don't worry about him though, he's in this for the continued business in the future, so just be faithful
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Arjay Estrella if it is your first BRRRR and you paid $57K, you may want to hold on to that cash. There is lots can go wrong buying low dollar properties like this. You may regret that bonus a year from now.
Pittsburgh, PA · Member since 2019 · 41 posts · 11 votes
5y
@Arjay Estrella
It may depend on the state but for most of them, legally you can’t pay them anything. The only commission they can collect is from the broker. You could go to her broker and say you’d like to give them a bonus but I would not give to them directly (although they’d probably still accept).
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
5y
Yes, you should definitely give her a generous bonus ;) Just kidding, it's not customary, nor technically legal as a real estate agent cannot receive money for anything related to real estate services unless it goes through their broker, but super nice of you to consider. You could send the money to her broker, let them know it's a bonus and request the broker give it all to her I suppose. I think it's rare but I've had clients buy me nice gifts after closing, which I believe is completely acceptable as long as an agent isn't accepting money directly.
Her commission, which typically comes out of the seller's proceeds, is kind of low in this case due to the total sale price of $57k. She's probably earning somewhere between $1,425 and $1,710 total (2.5-3% of sales price). Then she'll have to pay a commission split with her broker, probably a transaction fee and/or franchise fee, and income taxes out of that total amount. So she'll probably get to keep around $900-950, which probably breaks down to around $30-50/hour depending on how much time she spent on the deal. If she did an exceptional job you might consider a gift. Sending flowers would probably be sufficient, and is more than most people would do. Your repeat business and referrals are the best gift you can give an agent.
Rental Property Investor · Havre de Grace, MD · Member since 2018 · 15 posts · 11 votes
5y
@Arjay Estrella wow I'm kind of shocked at everyone's answers. I would absolutely send something...a gift card to a local restaurant or something of that nature. It'll go a long way in solidifying your future relationship. No one can live on 57k house commissions so the realtor is of course hoping for a continued relationship and referrals but you showing your appreciation for their efforts will not go unnoticed.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
5y
If they were paid a normal commission on the front end I do not think that is necessary. Referring them to other people and using them if you make any future purchases is the best "bonus" for an agent.
Investor · Palmdale · Member since 2016 · 112 posts · 80 votes
5y
It depends. If you feel guilty of her making such a low comission, my answer would be a quick and definitive, NO! If she did an excellent job, truly went above and beyond and you want to build rapport for her to send you off market deals, I would lean towards something small ($20 or less). Like others have said, your continued business will achieve the same goal. And most business owners love 5 star reviews and followers on social media. Be very sure in what you do because oftentimes when giving gifts, at times it can shift the dynamic. Remember, you are the client. Treat your agent with respect, but they work for you....make sure that doesn't get lost through goodwill.
Morrison, CO · Member since 2018 · 33 posts · 17 votes
5y
On our first deal, we gifted our agent a bottle of wine. He "invested" in us newbies and we've been loyal ever since. (Of course, he is exceptional and earned our loyalty . . . we don't remain loyal out of guilt. :))
Rental Property Investor · Pittsburgh, PA · Member since 2013 · 178 posts · 57 votes
5y
@Arjay Estrella if you paid commission, I would say no. If they went above and beyond their duties, which is possible since you're out of state, I would definitely consider it.
Think long term, if you take care of them, they'll think of you first when they come across a nice deal!
Rental Property Investor · Milwaukee, WI · Member since 2018 · 138 posts · 52 votes
5y
@Arjay Estrella
They are getting a commission on the sale. I don’t typically send one, however I am about to buy my third property with one agent. To our relationship we have built over the course of a few years, I plan on sending him a small personal gift just to say thank you.