Would it be wrong to ask for 1/2 the commission?

[MarkTorgerson]

I have been working on a deal on a large multi unit building. I found the property, worked the numbers, requested info, etc all on my own. The numbers work and I am at the point where I am going to put in an offer. I have a realtor that I use for most of my deals. The commission on this deal would be around $50,000 which would then be split between 2 realtors. Since he has had nothing to do with this deal up to this point, would it be wrong to ask for 1/2 of his portion of the commission to basically spoon feed him a deal? He would still need to follow through with everything from this point forward. I know if he didn`t do it, another realtor would... I`m curious to everyone`s thoughts...

Thanks
Mark

 

[Nir]

Hello Mark,

It really depends on:

1. How such a reduction will affect your realtor`s motivation/performance.
2. The norm when purchasing $Million properties. If it is a common practice to reduce their fees, you can try. However, if it is NOT - buyers rarely do that, then there must be a good reason, people don`t just pay around $12.5K they could save. I guess looking at the big picture, if it is not common, a good real estate agent can potentially save you much more than 12.5K on a $Million property. I recently put an offer that was accepted and thought the realtor had almost nothing to do. Later, there were so many unexpected issues that I would never be able to resolve without him and his relationship with the seller`s realtor for example(!)

Good luck,
Neil

 

[MarkTorgerson]

QUOTE (investmart @ Oct 8 2008, 07:37 AM) Hello Mark,

It really depends on:

1. How such a reduction will affect your realtor`s motivation/performance.
2. The norm when purchasing $Million properties. If it is a common practice to reduce their fees, you can try. However, if it is NOT - buyers rarely do that, then there must be a good reason, people don`t just pay around $12.5K they could save. I guess looking at the big picture, if it is not common, a good real estate agent can potentially save you much more than 12.5K on a $Million property. I recently put an offer that was accepted and thought my real estate had almost nothing to do. Later, there were so many unexpected issues that I would never be able to resolve without him and his relationship with the seller`s realtor for example(!)

Good luck,
Neil

Thanks for the comments. In this case, it is basically a gift. He doesn`t even know that the deal exists. I have also given him many other deals that have taken minimal effort that he has made out well on. In regards to reducing his fees, I would rather get a cash kick back than reduced fees.

 

[RedlineBrett]

I would suggest you ask him what he thinks is fair. Many agents like to think that the `easy` deals with a clients are easy because of a relationship of trust, professionalism, and reliability that has been built over many deals. A good agent educates their client as they do business together and then, like an expert in any field, it can seem like the money they make comes easily.

If you are handing him a big cheque on a building and you feel that he is being over compensated for his efforts you need to bring it up with him or it will eat you up from here on out.

If you have an `order-taker` type of agent who is only pushing paper for you I don`t think you`d be out of line asking for a reduction in fees. Agents like that are a dime a dozen. If you want a kickback it`s a way different ball of wax because your agent will be taxed on the bigger cheque and then have to hand over the $$ to you. There are some other options for how you could structure a deal that I`d be happy to discuss with you if you sent me a PM or gave me a call.

QUOTE (MarkTorgerson @ Oct 8 2008, 09:42 AM) Thanks for the comments. In this case, it is basically a gift. He doesn`t even know that the deal exists. I have also given him many other deals that have taken minimal effort that he has made out well on. In regards to reducing his fees, I would rather get a cash kick back than reduced fees.

 

[MikeMcCrae]

Also the cash kickback plan puts your Realtor at odds with his associations rules.

 

[MarkTorgerson]

QUOTE (MikeMcCrae @ Oct 8 2008, 12:55 PM) Also the cash kickback plan puts your Realtor at odds with his associations rules.


Thanks, as I am not aware of all their rules. I am kicking around the idea of him paying for all the closing costs. Not sure yet. In my case, I am going through a certain amount of frustration finding a realtor in my area that gets what I am doing and can filter properties for me. I have found and negotiated almost all of my deals and I`m taking them for the ride. I am seriously thinking about getting my license even just for my own deals.

 

[amantei]

It seems you have had previous deals with this agent in the past and seem to have come to the point where your feeling he is not "earning his worth" or it`s to easy for him to be getting such a large commision for what he does. I feel you should deal with your concerns early on not after the fact. I`m sure you were aware of the commission structure when you found the deal and knew your agents work, experience, input, and potential for liability as a professional, etc. As a realtor/investor I have been fortunate to see both sides of the fence. I became a realtor while waiting on a company sale as I knew I would be involved in real estate once my company sold. I wanted to understand "the business from the other side" I`ve also had to deal with agents who slid into a deal, did virtually nothing, went on holidays while I ended up babysitting their client ( in one case saved it from collapse 3 times due to issues on the other agents/clients side) I had to be especially carefull as I was taking on liability if something went wrong from that point. I would love to have been able to get the money I felt I deserved from the guy who did next to nothing. Unfortunatly that`s not the way it works I just add this to my experience and move on. Consider as well some deals look easy, some are, and some can effectivley come back with additional issues and be a total nightmare to work through. I have had clients who felt my income was to easy on some deals but I tell you if I didn`t get a "smooth deal" once in awhile I wouldn`t be an agent for long. The turnover rate for realtors is one of the highest in any industry. (over 80% in 2 years) If you have a good agent he/she can often help avoid issues/problems during the process that make the deal look easier and go better. Thats a GOOD thing.

 

[MarkTorgerson]

QUOTE (amantei @ Oct 8 2008, 03:00 PM) It seems you have had previous deals with this agent in the past and seem to have come to the point where your feeling he is not "earning his worth" or it`s to easy for him to be getting such a large commision for what he does. I feel you should deal with your concerns early on not after the fact. I`m sure you were aware of the commission structure when you found the deal and knew your agents work, experience, input, and potential for liability as a professional, etc. As a realtor/investor I have been fortunate to see both sides of the fence. I became a realtor while waiting on a company sale as I knew I would be involved in real estate once my company sold. I wanted to understand "the business from the other side" I`ve also had to deal with agents who slid into a deal, did virtually nothing, went on holidays while I ended up babysitting their client ( in one case saved it from collapse 3 times due to issues on the other agents/clients side) I had to be especially carefull as I was taking on liability if something went wrong from that point. I would love to have been able to get the money I felt I deserved from the guy who did next to nothing. Unfortunatly that`s not the way it works I just add this to my experience and move on. Consider as well some deals look easy, some are, and some can effectivley come back with additional issues and be a total nightmare to work through. I have had clients who felt my income was to easy on some deals but I tell you if I didn`t get a "smooth deal" once in awhile I wouldn`t be an agent for long. The turnover rate for realtors is one of the highest in any industry. (over 80% in 2 years) If you have a good agent he/she can often help avoid issues/problems during the process that make the deal look easier and go better. Thats a GOOD thing.

Great feedback everyone!!
In my case I am not deciding or changing anything "after the fact". I have no obligation to use him at all on this deal as he doesn`t even know about it. I could deal with the listing realtor or find somebody new all together. I am not one of those people who "grind" anyone but I also believe in earning what you get paid. If he brought me several deals that didn`t work out, I would without hesitation give him this one. I was looking at this as a potential way of getting somewhat of my own "finders fee".

 

[Thomas Beyer]

QUOTE (MarkTorgerson @ Oct 8 2008, 06:25 AM) I have been working on a deal on a large multi unit building. I found the property, worked the numbers, requested info, etc all on my own. The numbers work and I am at the point where I am going to put in an offer. I have a realtor that I use for most of my deals. The commission on this deal would be around $50,000 which would then be split between 2 realtors. Since he has had nothing to do with this deal up to this point, would it be wrong to ask for 1/2 of his portion of the commission to basically spoon feed him a deal? He would still need to follow through with everything from this point forward. I know if he didn`t do it, another realtor would... I`m curious to everyone`s thoughts...

Thanks
Mark

yes, it would be VERY OK. Or tell him what you expect him to pay you as a "consulting fee". Legally, you do not get a commission. He gets it. There are certain rules the realtor association make him abide by. You engage him, and he pays you a pre-determined amount, whatever you both feel is equitable: 50/50 or $20,000 or $12,500 or whatever. You invoice him for "services rendered" .. and he pays you as a consultant + GST.

Option 2 is to ask the seller`s agent for the same. As he will double dip (without your agent) he may be willing to do that. Risk is you don`t know him ..

Option 3 is to not do it with either: The benefit of having one agent is that the seller`s agent is more likely to push for a price discount as he makes a sizable commission even if the price is 20% lower !

 

[amantei]

If your agent had to work exceptionally hard on a file would he/she be offered "extra money"?
The reason many people go into the industry to become a realtor is because they think it`s easy money. The reason most drop out is because they find out it`s not.

 

[MarkTorgerson]

QUOTE (amantei @ Oct 8 2008, 03:35 PM) If your agent had to work exceptionally hard on a file would he/she be offered "extra money"?
The reason many people go into the industry to become a realtor is because they think it`s easy money. The reason most drop out is because they find out it`s not.

It is interesting to see how the comments vary between the realtors and the non realtors.
I appreciate everyone`s comments but I am ultimately leaning towards Thomas on this one.

THX

 

[RedlineBrett]

This is an excellent post, spot on IMO.


QUOTE (amantei @ Oct 8 2008, 03:35 PM) If your agent had to work exceptionally hard on a file would he/she be offered "extra money"?
The reason many people go into the industry to become a realtor is because they think it`s easy money. The reason most drop out is because they find out it`s not.

 

[samwei]

QUOTE (MarkTorgerson @ Oct 8 2008, 06:25 AM) I have been working on a deal on a large multi unit building. I found the property, I`m curious to everyone`s thoughts...

Thanks
Mark

Hi mark,

Can i ask how you happened to find the property?

Was it through utilizing your realtor`s website? Was it through an automatic email notification sent by a computer search set up by your realtor on your behalf? If this was the case, then the relationship you had set up with your realtor enabled you to find this property.

If you found the property through driving around, using the general MLS website, then you don`t owe him anything for this.

From the sound of this situation, it appears that you don`t believe (in general) that this particular realtor of yours is contributing anything further to your acquisition of properties, and you would be better off dealing with the listing realtors as a whole. If you`re comfortable not having a buyer`s agent, this is the way to go.

As for commissions, they are built into the price already if you`re buying through a listing realtor. It all depends on whether you want the entire commission to go to the listing agent, or to be shared with a buyer`s agent whom you feel is bringing a benefit to you, or whether you want to get a discount in the price if the selling agent is willing to cut his commission to make the deal work.

 

[MarkTorgerson]

QUOTE (samwei @ Oct 8 2008, 07:05 PM) Hi mark,

Can i ask how you happened to find the property?

Was it through utilizing your realtor`s website? Was it through an automatic email notification sent by a computer search set up by your realtor on your behalf? If this was the case, then the relationship you had set up with your realtor enabled you to find this property.

If you found the property through driving around, using the general MLS website, then you don`t owe him anything for this.

From the sound of this situation, it appears that you don`t believe (in general) that this particular realtor of yours is contributing anything further to your acquisition of properties, and you would be better off dealing with the listing realtors as a whole. If you`re comfortable not having a buyer`s agent, this is the way to go.

As for commissions, they are built into the price already if you`re buying through a listing realtor. It all depends on whether you want the entire commission to go to the listing agent, or to be shared with a buyer`s agent whom you feel is bringing a benefit to you, or whether you want to get a discount in the price if the selling agent is willing to cut his commission to make the deal work.

Hi Sam

To be honest, I have been a little taken back on what many feel may be owed to this realtor. I have done business with him in the past, but like I have mentioned before, he had nothing to do with this deal. I often surf ICX looking for various deals. I came across one that I liked. I had the information package sent to me. Executed the preliminary due diligence process to see if the numbers all work. I have submitted my intended offer to my commercial mortage broker. I am now at the point of writing the offer. My realtor still has no idea this deal even exists. I am not sure if working with the listing realtor would help reduce the overall price or not. I have been careful not to work with him to this point so he doesn`t feel like he is representing both sides.
Like I mentioned before, if my realtor had been bringing me deals on a consistant basis that kept falling through, I would without question give him this one. But that hasn`t been the case. I was basically looking at this as a gift where he could benefit from something that has fallen into his lap, and I could also get paid a "consulting fee" for finding my own deal.

 

[Savard]

I`m not sure why you would bring in a broker? You seem to have everything under control.
I`d only bring in the broker if he can bring value to the deal. Will he help broker a successful deal? Some brokers are incredibly valuable by helping close a deal. Many are just order takers.
The value may vary from a whole fee to a bottle of scotch.

You should be able to reduce the price of the property by the amount dedicated to the "outside agent". If the listing agent puts up a stink and wants to double dip- maybe you bring in your Realtor for 10-25% fee and put the remaining fee into your deal.
You have to manage fee expectations at the beginning - it is tough to negotiate fees when you are into the deal.
Every fee is negotiable.
Disclaimer - I am a commercial broker