How much should I pay my realtor as an investor?

[Harriet Mugweru]

Hi everyone, I am working on securing my first deal in the DFW area. I have a realtor who is charging me 5.5% for selling the property once the fix and flip is done. Talking to other investors, they say this fee is too high even for the DFW market. She also asks for a finders fee for off market deals. Can anyone give me a range of what they pay for realtor fees or finders fee? Regards, Harriet

[Michael Hayworth]

You will find many agents in DFW who will list it for 1 to 1.5%. There are even some who will do flat fee listings for $300-500, some for $1000. Levels of service vary. I use a flat fee service, because I typically do my own staging, do my own photos, write my own descriptions, and do my own negotiations. I really just want an agent to put the house in MLS. But I've been doing it for years and have done dozens of transactions. When I was new, I didn't have that experience and knowledge.

Two things to note:

1) The 5.5% you're talking about is a combination of commission for buyers' agent and sellers' agent. Total commission in DFW is typically 6%, split evenly. The buyer's agents work their asses off, running buyers around to look at dozens of homes, put in offers that may or may not get accepted, and so on. I would NEVER recommend cutting buyer's agent commission.

2) When you're new, you need advice and market knowledge. I would not recommend a flat fee agent for the first few transactions. Find one that'll give you decent service for 1-1.5%. Good advice on prepping the house for market is valuable, and then the first time you have a contract dispute or have to negotiate a repair amendment, that help will be valuable. As you get more transactions under your belt, switching to a flat fee agent may make sense.

Good luck!