This is a little nugget I want to drop on your desk about real estate commissions and investors. Really, I want to ask the question: why would a Real Estate Agent work with a Real Estate Investor? It starts with the listing agent and the seller.
If a seller signs an agreement with a listing agent, the contract generally stipulates that all agents on either side of the transaction will split a commission that may range from 5% to 6%. Understand that the commission is split between the listing agent and the buying agent. Since the buying agent is writing the contract, they’ll generally give themselves a few extra basis points. That is, the listing agent gets 3.25% and the buying agent gets 2.75%.
Okay, but back to my original question… why would a Real Estate Agent work with an Investor? Why would an Investor work with an agent? Because if that agent has a pocket listing, which are almost always non-retail ready, and the investor doesn’t want to use an agent themselves, the listing agent can then become both listing agent and buying agent. What does this mean? Double commission! The agent unloads a hard house to sell house, all with little work, and the investor gets a discounted house to renovate and flip.
Generally, we don’t work with Real Estate agents, but we take a look sometimes. Just to see what they have in their back pocket.