All Forum Posts by: Gary Lucido

If you want to pay him an hourly rate I would suggest $125/ hour and see how he reacts.

This is not as hard as some people make it out to be. First of all, don't push any savings back to the "seller". It may not end up there. The listing agent can keep it for themselves. Get a cash rebate/ credit for yourself at closing.

You're talking about a homebuyer rebate. It's part of some realtors' business model (mine for instance but also Redfin's). You can either get an agreed upon percentage rebate or you can even pay some realtors by the hour and they will give you 100% of the commission. Just Google it.

And all that nonsense about how hard realtors work and how much value they provide is a red herring. What we do has a dollar value. No need to overpay for it. How much is an hour of a realtor's time worth? If your transaction is easy and a realtor spends 15 hours on it how much should they earn for that 15 hours?

It's 2020. The idea of a flat rate commission is kinda obsolete.

@Marcus Auerbach, are you saying that you should work with an agent that does 25+ deals per year? When my agents get past 25 deals things start falling through the cracks at the busy time of the year. More is not better.

Having trouble with posting. Can't delete old message.

What financial metric would you be using to evaluate investment properties?

I don't understand the whole reference to "Because the broker will normally receive the full 3% commission (as opposed to an agent who must split the 3% commission with the broker)". We may have terminology confusion here but all brokers split their commission with their brokerage.

Nevertheless, you can find brokers willing to split their commission with you. Search for home buyer rebates. Also, if Redfin is in your area they offer small rebates - about 10 - 15% of the commission. And you might even be able to find a broker who would give you the entire commission if you pay them an hourly rate.

I'm from Illinois but I sold my parents home in Dallas (with an agent). I was under the impression that they don't use attorneys in Texas. Wonder if maybe you only need a realtor.

This is more of an ethical question than anything. You began working with this agent under the implied assumption that he would get paid when you ultimately bought something - whether or not he actually found the specific property you end up buying. It's called an exclusive buyer's agreement in Illinois. To change the rules at this point in the game would be unethical.

@Jay Hinrichs, indeed our buyers get the co-op commission and it's totally legal in most states, including Illinois where we operate. So on a $400K deal at 2.5% that would be $10,000 which would cover 80 hours at $125/ hour. A serious, no-nonsense buyer should totally consider this.

Interestingly, most of the people who pursue this route with us are extremely analytical types: quants at hedge funds, engineers, accountants, lawyers, etc...

@Jay Hinrichs, yes we ask for a retainer up front and bill against that. When the account runs low we get them to replenish. We do this on both the buy and sell side. On the sell side they also have to pay our out of pocket expenses like photos.

It's not the only way we work. In fact, it's a small percentage of our business so there is no minimum volume required for us to get this model to work for us. Our rate can be anywhere from $125 - 150/ hour and we charge for ALL our time, including travel. I just don't think real estate agents are worth more than that. How much does a typical 40 hour/ week agent generate in the year with commissions? Probably less than $125/ hour.

The advantage of the model is that it aligns the interest of agent and the client. Clients won't waste our time and when we tell them their listing is overpriced or this property is a good deal for them to buy they don't have to worry about us just trying to get the commission. 

Also, the problem with the traditional approach is that the easy clients subsidize the difficult ones. This eliminates that problem. In many cases it's the client that holds all the cards and determines whether or not a deal closes. The agent has little control - life events, inspection issues, appraisal problems, ego.