"Commissions paid net of closing costs"

[David T.]

For the benefit of simplifying matters, lets address the issue on the basis of an average close of $200k per property deal.

Between agents fees and buyers closing costs (around $4k) and other stuff tacked on the the closing we end up paying about 10% closing costs on the average transaction. If you take for example the Buyers closing costs of $4,000 per deal which is straight off the top and we're still paying agent fees of 6% on this which is $240 per deal, $2400 for 10 deals and $24,000 per hundred deals. We have often tried not to pay this or asked for the buyer to pay it and the agents all get really hissy about it.

So looking at the bigger picture if we're getting deducted around $20k in closing costs per deal and 6% agent fees on  this is $1200 which seems to be unreasonable because this is money other people are getting and we're effectively being charged fees on funds we never even get to touch.

Most banks for example do their closings "Commissions paid net of closing costs" which means they won't pay any commission on money they don't get at closings. 

Why shouldn't Investors take the same position?

[Dooreuhn Cee]

Realtors don't make much money.  That 6% is effectively 1.5% by the time it is split firstly with adverse parties and split secondly with a broker.

I remember the Realtor preparing me on my first deal.  He pointed out how many different people had a hand in the deal (from Realtors, to attorneys, closing company, and more, and each of those have support staff, rent and light bills) and noted that "everyone has to get paid".