Agent Commission Deal when Flipping

[Sven Simon]

Hi all,

Wondering what your thoughts and experiences are on the following:

I'm a flipper, and as an 'incentive' for agents/brokers, I generally agree for them to be the listing agent of a property that they originally refer and complete with me as the buyer's agent. For example:

John, a realtor in one of my target areas, will call me as soon as a great flip opportunity hits the market. If I end up going after the deal, he'll represent me as the buyer's agent as he brought the opportunity to me. At the same time, I'd have him be the listing agent on this property once I completed the rehab on it.

Therefore, John is 'incentivized' to call me up if he comes across great flip opportunities as he's getting two commissions without any additional 'hustle' (and as part of one original deal).

When I purchase the property, the commission is paid by the seller (and let's just assume that's 3% for my agent - as the buyer's agent). However, what's your thought/experience in regards to what the commission could/should be for my agent when selling the property again? I certainly want to ensure that John is still incentivized but I also want to make sure not to pay 'too much' as he's getting two commissions for presumably less work/time than two seperate deals.

Thanks in advance

[Jeff Clawson]

@Sven Simon

I will give you my opinion from an agent that works with multiple investors. If the flip is a good deal, I always have at least 3-4 investors that will buy it. If I present the property to the investor, I expect to get a commission on the purchase, and I expect to get a full 3% commission on the listing. I always present the deal to the investor that is most likely going to close the deal, will re-list with me, and will not challenge me on the commission.

You should NEVER attempt to negotiate the listing commission with an agent that brought you the deal. You are probably not the only investor that they are working with. When the next deal comes up, you want them to send it to you first, right?

I have a very small handful of A+ investor clients that I continuously present deals to. They never challenge me on my commission, and they always see the best deals first. One of them will be making over $1,000,000 this year on properties that I presented to him in Austin, so he has no problems paying my commission.

On the other hand, if YOU find the deal, then you definitely would have some room to negotiate a commission and I would even recommend looking for a flat fee type listing.