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Updated almost 4 years ago,
Is this commission split fair?
Hi. I'm a new agent. I've been license for a few months. Before I got licensed I was finding deals for some flippers for about 1 year. Recently I referred a potential seller to another agent (let's call him Paul) for 25% of their commission. That house's value was around 3m. That seller never ended up signing the listing but Paul still suggested we work together to find future deals. Paul knows a large developer in the area that builds new single family homes. The developer has a deal with Paul where whenever Paul brings them an offmarket opportunity they guarantee he can list the new build on the back end. Paul agreed that for any offmarket lead I bring him that the developer buys he will not only give me 25% of his 2.5% commission on the front end but also 25% of his 2.5% from the newly built home as well. This seemed like a good idea because the developer often pays 2m+ for teardowns and then builds 6-7m dollar homes. Recently we got our first deal together under contract. The purchase price is 1.05m with a 60 day escrow and the new home should sell for 2.3-2.5m within 12-16 months. That means I'd be getting around 6k after 60 days from the first sale and then 14-15k for the second after 12-16 months. This deal took about 3 weeks of back and forth with the seller to get tied up but most of the high level negotiation and all of the paper work was done by Paul. My main role is effectively to cold call lots of owners from a list and just line up appointments for Paul. I've been toying with the idea of asking for a higher split of the commission. At least on the front end. My question though is from Paul's perspective could this demotivate him to continue working with me etc. Should I just be happy with the agreement we have and leave it at that or should I ask for more money on future deals and if so what would be the best way to go about asking? What do you think?