Real Estate Agent or Investor?

Question

For Realtors/Agents who are investing:  If you make an offer on a home from the MLS, do you always represent yourself (write the contract, submit it, keep the commission, etc.) or do you enlist the selling agent as your representative.

I heard of wholesalers and investors giving the realtor both sides of the commission.  I would like to do this as well, as a licensed agent. Do you simply give it to them free to incentivize, or do they work for it?

I don't have a realtor "working for me" (bringing me deals) because I'm licensed and can do my own research.  However, the process of submitting offers seems to be taking up quite a bit of my time when my goal is to submit 4 offers per day, among other daily goals.  I'm just finding it so much easier and faster to send an e-mail/call with some specifics and let them do the rest.

The agents are confused and I can't blame them.  What satisfying explanation can I give them?

J Scott · Answer

Just to clear up a common misconception here...

I've purchased about two dozen REOs (my wife is licensed and is a principal in our company, so she is the buyer also), and I know of about two dozen other REOs purchased by other investors who are licensed, and I don't know of a single purchase where the seller refused to pay a commission to the buyers.

I know on a couple of the REOs we've purchased, the listing stated the commission wouldn't be paid, but ultimately we got the commission without any discussion of it whatsoever (and yes, we disclose that we're agent-as-principal).

So, while there may be some situations where an agent won't collect a commission when purchasing an REO for himself, I believe this is pretty rare and really shouldn't be a major consideration when deciding whether to get your license or to write your own offers.

Just my $.02, of course...your mileage may vary...

Aaron McGinnis · Answer

Personally -

It takes me... Maybe 5-10 minutes to write up and submit an offer (Unless it's one of those situations where you have to do a ton of custom paperwork)

Personally, I'd rather keep the commission in my pocket than give it away. I guess I'm just cheap, or greedy... But I am not going to pay someone else a thousand dollars to fill out a pdf form.

Kinda like in college where you always go for the easy extra credit... Go for the easy extra cash and fill out the darn form yourself.

YMMV.

Jake Kucheck · Answer

You are licensed, but you don't say whether you are an agent or a broker.  I'm guessing an agent because of the title of the thread, which means you have to work under a broker.  If you work under a broker, there is at least one other person in the office making money when you do a transaction.  It would probably make sense to have this person writing your offers for two reasons:

1) You take on increased liability when representing yourself in a transaction.

2) Most lenders will have a clause like "If agent is acting as principal on the transaction commission will not be paid".  If your goal is to collect commissions from these transactions in addition to whatever else, representing yourself would be a particularly dumb move.  If instead it is your supervising broker writing the offer, he will collect the commission, but how you share the split is between the two of you.  You should definitely discuss this before the check comes in, not after.

J M. · Answer

Hey Guys,

I am an agent who will attempt to buy REO for myself and flip them.

I was wondering this very same thing. I actually came across a listing agent that advised that if i put an offer for myself then I would not get paid the commission.

So, to clear this up. If I have a Realtor friend represent me, will the bank still pay the commission to the buyer's agent, even thought the principal is still an agent?

Also, when you send an offer for an REO are you buying as LLC or in your own name?

Is your LLC a person's name or a company name? In Example: Larry David LLC vs Starlight Group LLC

Nemi W. · Answer

Thanks for the input! To be more clear, I'm making offers as a wholesaler and I typically assign contracts. Apparently you guys are mainly closing the deal.

Do any of you let the listing agent have both sides of the commission?  I don't know...perhaps the incentive wholesalers and investors speak of is for realtors who work hard to bring them deals, because it sounds like you all are looking to keep your commission.

@realtyman-LOL. Is it just as strange to you for a wholesaler/investor to give their commission to the listing agent? Actually, I could use an assistant with the agressive goals I have.

@Jake--I am an agent and work for a large, very well-known broker that would not be considered investor-friendly.  Planning to make a change in 4 months.  I'm thinking I could act on your suggestions ONLY when I make that change.

@Jscott--The commission is not my first priority, particularly if the listing agent will be more inclined to deliver my offer to the seller on a silver platter.  For a $30k fixer-upper, I would only be left with around $450.  To make $5k, it's worth giving it away.

I just want the listing agent to work for it a little, and save myself some time in the process.

Jake Kucheck · Answer

Not debating that you can work around it, but I guess my point here is if there is a no-friction way to accomplish the same thing, why not just have your broker (or his TC, or you) fill out the forms but with him (or her) being the agent of record on the transaction.

This is the way I purchased my first condo (while licensed, and it was an REO) and not only did the bank agree to the full 3%, they agreed to a $5000 bonus, and accidentally threw in paint and carpet w/o contractual obligation when they forgot to call of their contractors once escrow had opened.  I got the same split from my broker that I would have gotten on any other transaction (and actually he gave me a 5% bonus because it was my first personal purchase).

I miss 2008 and Countrywide REO :)

Jake Kucheck · Answer

I somehow posted twice.  See the one below.

Dale Osborn · Answer

They certainly should be confused! They think it strange one agent asking another to do their writeups. Perhaps what you really need is an administrative assistant to do some of the minutia items and you concentrate on the more important items.

Real Estate Agent or Investor?

Most Popular Reply