Acquisitions Agent Compensation Structure

Acquisitions Agent Compensation Structure

Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes

Hey all, I am looking at bringing some additional team members into my business.  Specifically, using my established realtor relationships to receive my inbound leads.  I've pitched the idea to several and they seem ecstatic to be able to do this.  I'll be providing them with my scripts, questionnaires, company email, and set up my phone service to forward to their devices.  They can then perform my lead capture, visit properties if necessary, and act as project manager or listing agent for additional compensation.  For unmotiviated sellers that would like to list, the agent is able to get a first impression and perhaps offer a free consult.  They'd also have access to my follow-up list to increase profits.

We will be targeting properties for wholesale and contract assignment, rehabs, and long term rentals.  So the whole spread. 

My question is, how would you structure the commission structure for an agent assisting in off-market acquisitions?  I'd like to tie it to my bottom line to incentivize the lowest prices. 

I could pay a buyer's commission, but then they are rewarded for a higher acquisition price.  A flat referral fee also doesn't give them room to shoot for big targets.  Perhaps 10 or 20% of profits?  50%?

Also, I want to use my brand for advertising and all seller interaction (beyond necessary license disclosures).  Think their broker will have issue with this?  

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Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
9y

@Christopher Morin

I would pay them $3000 flat plus 10% net profit on each deal they get under contract. If you close 5 deals a month at 10k profit each, that's an additional $5000 for their monthly pay...pretty damn good!

If the lead is an MLS lead, they could list it and once the property closes, they could pay your business a certain % from their comission.

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  • Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Christopher Morin

    If they list the properties you wouldn't be paying the commission, the seller would.

    If the owner would only be interested in FSBO and not paying a commission, then you would have to agree to pay a buyer's commission. You would have to negotiate that in advance.

    Agents in Florida can operate as either a transactional agent or a single agent. They aren't allowed to operate as a dual agent. Every state has different rules regarding how agents can be compensated, so, you'll need to discuss that with the individuals.

  • Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes
    9y

    Thank you @Christopher Phillips. Let me clarify, these are leads from my direct mail campaigns, not MLS leads. The agents are acting as my acquisitions agents, and will be answering the phones from motivated sellers instead of me. Any money the agents are paid will come out of my net.

    A % based buyer's commission does not incentivize my acquisitions agents to get a property at the lowest possible price.  I am looking for an alternate method that perhaps others have used.

  • Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Christopher Morin

    I see what you're doing, but when you have an agent involved they can either represent one side of he transaction or act as a transactional middle man. A seller would have to choose to either get their own representation, represent themselves, or agree to transactional agency.

    When an agent represents a buyer, their fiduciary responsibility is to the buyer, not to pump up the price in the seller's favor to get a higher commission.

  • Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    9y

    @Christopher Morin

    I would pay them $3000 flat plus 10% net profit on each deal they get under contract. If you close 5 deals a month at 10k profit each, that's an additional $5000 for their monthly pay...pretty damn good!

    If the lead is an MLS lead, they could list it and once the property closes, they could pay your business a certain % from their comission.

  • Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    9y

    In CA you can receive a gift but unless you are a member of NAR and broker. You can not solicit business without a license as a consultant.

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