Agent/investor deal logistics?

Question

Howdy BiggerPockets folks!

I'm an agent and investor.  I'm considering buying a piece of commercial property (50/50 with a partner).  It's a small piece in my hometown.  The goal is to buy it at a discount, repair it, and rent it out.  Once I get the Cap Rate up, we may sell it to get the cap gains out of it for a bigger project.

My question(s) are around being an owner/agent in this deal.  As an agent, what happens with the commission?  Do I get that back in the form of a credit toward the down payment?  Do I negotiate it out of the sales price and not take the commission?  I will have to pay my broker their cut, regardless, so I'm curious/confused on the actual logistics/paperwork of how that will go down.

Thanks in advance!

Sharon Tzib · Answer

If you are paying all cash, it's totally negotiable. Whatever all parties agree to, title will implement. If you have a lender involved, they may have some say as to whether or not you can apply the commission to the down (this happened to me once years ago).

Also, since you legally have to disclose you are an agent in the contract, the seller may not want to pay the commission, so discounting for it in the price upfront is not a bad idea. Just structure the deal the way that makes the most sense for you and your partner, and then let the seller counter.

In regards to your broker taking a cut of your own personal acquisitions, I would work on changing that. I know mine certainly doesn't.

Wayne Brooks · Answer

You collect it just like any other transaction.