Real Estate Agent Fees

[Nir]

As a new investor I would like to compensate the real estate agents working with me in the team. what is generally the common investor`s compensation (i.e. 0.5% or 1% in addition to their 2.5% commision) and how, technically, is this additional % paid? as a side deal? cash? any creative way to include it in the loan for example? (properties are purchased under a corporation by the way). THANKS.

 

[navaz]

Side deals and cash are very dangerous -stay away from them. All should be upfront. In the past when selling a property -I would specify a bonus to the selling agent or listing agent. For the buying agent, you can just write them a cheque -I have paid $500 or $1000 or it complicates the paperwork. Sometimes you have to be careful what your agents deal is with his broker -if they split then you would write the cheque to the brokerage as they have trust accounts and gst etc to deal with.

 

[GarthChapman]

This depends on what Province you are buying in as commissions are different in each.

 

[RedlineBrett]

QUOTE (investmart @ Dec 9 2007, 10:10 AM) As a new investor I would like to compensate the real estate agents working with me in the team. what is generally the common investor`s compensation (i.e. 0.5% or 1% in addition to their 2.5% commision) and how, technically, is this additional % paid? as a side deal? cash? any creative way to include it in the loan for example? (properties are purchased under a corporation by the way). THANKS.

Why are you paying them more than what their regular comission is?

If you are going to be buying multiple properties through this same agent they will do quite fine by you.

Those of us with licenses love our commission cheques, but repeat business from a low-maintenance investor client is compensation enough.

 

[trudijohnston]

Hi,

As a realtor I would not be allowed by my broker to accept anything other than the posted commission rate. Why pay them anymore? Thats our job!!

Thanks!! Trudi Johnston

 

[Nir]

Hello and thank you everyone who replied. The idea is simply coming from Don Campbell`s book who mentioned, if I recall correctly, he is gladly paying the successful real estate agent/s in his team around 3.5% commision. (meaning adding 1% to what he gets from the seller I`m assuming). So I`m a little surprised to read the responses against the idea as Don is a super genius when it comes to investing in real estate (well, that`s my conclusion after reading his amazing book real estate investing in Canada). Thanks again.

 

[samwei]

QUOTE (investmart @ Dec 11 2007, 08:59 PM) Hello and thank you everyone who replied. The idea is simply coming from Don Campbell`s book who mentioned, if I recall correctly, he is gladly paying the successful real estate agent/s in his team around 3.5% commision. (meaning adding 1% to what he gets from the seller I`m assuming). So I`m a little surprised to read the responses against the idea as Don is a super genius when it comes to investing in real estate (well, that`s my conclusion after reading his amazing book real estate investing in Canada). Thanks again.

I believe that, in Ontario, the real estate commission is 5% of the purchase price, which is split 50/50 between the seller`s agent and the buyer`s agent i.e. 2.5% each.

But in other provinces such as Alberta, the real estate commission (fully negotiable) is 7% on the 1st $100,000 of the purchase price and 3% on the balance, split between seller`s agent and buyer`s agent. I think that that may be where the 3.5% figure is coming from.

Right now, with the market being a buyer`s market here in Edmonton, we`re seeing the sellers offering 4% and 5% on the 1st $100,000 of purchase price to the buyer`s agent, as an incentive for buyer`s realtors to show the properties, or a $2000 bonus to the commission if an offer removed conditions before Xmas for instance. Motivated sellers...hmm...good time to buy.

 

[Nir]

Thank you for clarifying that Mr. Wei. However, I also see the benefit of adding bonus to the agent to build strong relationship even if it is not "the standard". Cheers

 

[DennisEpp]

Hey this is great to hear your intent. As it is said "for every action there is a reaction".
This is a very positive action u have questioned. Absolutely it is allowed, BUT MUST BE FULLY DISCLOSED, on paper your additionsl payment over and above the commission/renumeration the Agent is receiving. To not upset `the apple cart` I would suggest in paying the AGENT (Agent is the broker for whom the Realtor is registered to practice) on a seperate payment. The seller may not be concerned about the Realtor receiving a little addn`l monies but seeing it be paid thru their transaction whether using a solicitor or not)there is the knee jerk reaction that they are already paying. It must be disclosed on the offer to purchase or addendum to same, then there is absolutely no reason it can not be done. Hope this helps...

regards

Dennis Epp

 

[TorontoRealtor]

I have always tossed in an extra point or two for the lucky agent finding me the property I wish to purchase; it is this simple.... I am an agent and I have two prospective buyers. One buyer deal pays me a percentage of 2.5% and the other pays me my percentage of 4%. On a significant property this can be ten thousand dollars or more. WHO am I likely to run to first with the hot property?

Penny wise and pound foolish.