If a RE Agent gives . . ., what COMMISSION should I pay D Agent?

Question

Hi RE Investors,

How are you all doing? If a RE Agent gives me a lead I wholesale and I assigns the deal for $10,000.00 fee, what is the best and/or the highest percentage commission I should pay this RE Agent?

I am thinking this commission will be between 10%, at best to 20% at maximum, it  will depends on how much I makes per wholesaling deal; and also how many wholesaling deals I can do per week or per month.

Thank you guys for always helping with your responses, God bless you all.

Account Closed · Answer

Standard real estate referral commission here in Austin is 25%. On top of that, I usually give a $10 gift card and thank you note for all leads even if it doesn't close. A genuine thank you or doing something that shows you care about the relationship will do more for your business than cash alone.

Russell Brazil · Answer

Account Closed So referrals fees for agent are a little complicated if you are not familiar with the process.  The HUD-1 (which is disappearing in October) pays the commission to the brokerage.  The brokerage then keeps their cut...pays the referral fee out, and then pays the agent.

Here is an example of the math..and I will keep it simple

$200,000 property sells. I am the buyers agent, and I owe a 25% referral fee to another agent and the cooperation fee was 3%. Also let's say I have a 75%/25% split with my brokerage

On the HUD -1 $6,000 is paid to my brokerage. My brokerage keeps their 25% which is $1500.  I would normally then get the other $4500...but 25% of that goes to the referring agent so they get $1125 (Of which they split that with their brokerage) and I the agent get $3375 before taxes.

You are correct though that I can not pay a referral fee to an unlicensed person.

David S. · Answer

I think this is a good answer.

Also, you might want to ask, do I want this agent to refer other deals to me again?

If so, treat him/her right.  Give the 25% and see if he/she is happy with it.

Russell Brazil · Answer

I give leads to other agents but not to wholesalers.  My referral fee is typically 25% which I think is standard for the industry.  If I were sending referrals to wholesalers, I would not accept a 10% fee.  The lowest Ive taken from another agent is 20%.  Although on really cheap deals Ive referred out to some Baltimore agents, I forgo a referral fee and just ask them to send me a referral if they get one more for my area.  Some of those Baltimore area deals are so cheap I feel bad getting a fee on them.

Lawrence Monyei · Answer

My OFF Market means the property was once listed/under contract and advertised by a licensed RE Agent, the property did not sell, and the owner took it from this Licensed Agent. Because the property has been formerly/previously listed by a licensed RE Agent, the property information will still be on MLS as OFF Market property.

If a property was once listed by a licensed RE Agent on MLS, if this property did NOT sell and the owner takes it away from the Licensed RE Agent, websites like Zillow and Trulia will place an OFF Market tag on the property, these are properties I was talking about.

Lawrence Monyei · Answer

Okay guys, let me straighten this question and debate. The leads I am talking about, which I got or will be getting from RE Agents are OFF MARKET but still on MLS/properties Licensed Agents DON'T want to market again. We all know how difficult it is for so many RE licensed Agents to get buyers for sellers who DON'T want to rehab their properties, and these are properties called "Off Market" by web sites like Zillow and Trulia; these are leads I am talking about.

Thank you guys.

Wayne Brooks · Answer

Marvin, This is someone paying a fee To an agent/broker.

Marvin McTaw · Answer

Edit: 33% not 30%

Marvin McTaw · Answer

Hey @Lawrence Monyei it's up to you really. Pay them as much or as little as you think works in your business. I try to pay people as much as possible so that they bring me more deals. I personally would be willing to pay up to 20% with a minimum of $1,000, even if I only made $3,000 on it (which I realize is 30%). If it's a property I'm going to rehab, I would give them the fee upon purchase plus list the property back with them so they can make even more money.

If a RE Agent gives . . ., what COMMISSION should I pay D Agent?

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