OfflineWhen doing an assignment of contract you may have the question: How does the Realtor get paid?
Many think that an assignment of contract has to do with putting a property under contract then raising the price and making the difference. What I described is often called a double closing.
To do an assignment of contract without raising red flags you will put a property under contract with "and/or assigns" in the contract. You then find a new buyer. This new buyer pays you before closing at the time you are going to "assign" or sell the contract to them.
That being said how does the Realtor or Realtor(s) get paid?
The seller is usually going to pay 6% in commissions for Realtors. The listing agent (the Realtor working with the seller) gets paid by the seller - usually 3%. The selling agent (the one working for the buyer) gets paid the other 3% from the seller.
The part that gets a little confusing is when we used a Realtor to find the property to assign then we assigned the property to a new buyer. How does our Realtor get paid? Our realtor is still getting paid the 3% just as I mentioned above. The Realtor we used is the agent for the buyer. Remember, the buyer is "Your name and/or assigns".
Your agent brought the buyer which was you or the person that had the contract assigned to them so the Realtor, gets paid from the seller.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
I never have put and/or assigns after my name on my own assignable contract. Here in Colorado anyway, maybe it is different elsewhere. My contract simply states that this contract is assignable. I then assign my assignable contract to my buyer using a second contract. The assignment contract. I take the two contracts to my investor friendly title company and close. EVERY time with no problems. Of course I deal directly with homeowners, NO AGENTS, NO BANKS and I use my own contract for the purchase. It is only one page long! Unless it is a pre foreclosure property, then I must include the documentation that keeps me compliant with the Colorado Foreclosure Protection Act (another 2 pages!) I have NEVER tried submitting an offer through an agent with intent to assign. I only offer on REOs and short sales through an agent anyway. Those I double close. This is my system and what I do, Others may get good results placing and/or assigns offers through realtors. I know it happens but from what I understand they are few and far between. Nothing to establish a consistent business plan on. Usually you just go through a lot of realtors. Maybe in other parts of the country it works??
Michael Mangham
MD Home Acquisitions LLC
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
Many of the homes i find already have hired realtor companies. I am still interested in the properties and was wondering how do you go about getting the property if the realtor is already in charge of selling the property? Do you still make the offer with the owner with the realtor present at the time?
In most cases the seller has signed a listing agreement if they have an Agent. So the seller would have to involve the agent no matter what. So you can submit it to the agent or have both the agent and seller there when you submit.( having them both there is a good idea if you feel the agent is not going to present your offer in a fair light).
Sorry to be hijacking this thread but I am a new investor and just found this forum researching this question. I am looking to get properties under contract directly from the seller but have a realtor contact who will help me locate properties fitting my buyers' criteria. The seller is not using an agent.
So if I get a property under contract from seller "A", and assign that contract to my buyer "B" with the realtor having been the middleman that helped me find the property in the first place, and I never actually take ownership of the property, does the realtor's commission come from my profit on the spread, or is that a factor in the buyer's purchasing/ closing costs?
Thanks!
Hello everyone,
I am new to the site and this is my first post. I've read all the posts that everybody else has put in and they have all been interesting and insightful. I am a new investor as well as a new real estate agent here in Southern California. I'd like to comment on some of the questions and replys that I've read on this forum.
On the question of agents getting paid. The buyer's agent (selling agent) will normally get paid 1/2 (ie. 3%) of the commission that was agreed upon by the listing agent with the seller (ie. 6%). The buyer does not technically "pay" the buyer's agent unless they had executed a "Buyer Representation Agreement" contract beforehand. Under this contract, the buyer agrees to pay the contracted buyer's agent (a %, a $ amount, etc.), once the agent has found a property suitable to the buyer.
Contracts used. Each state is different and has different guidelines. For example, here in California, the California Association of Realtors have created forms that is generaly used by all agents. Although it does cover most of the issues in a real estate contract, a buyer and seller can always scratch out and put in terms that are suitable for them. If both buyer and seller agree to the terms and both sign the contract, then it becomes legally binding.
I'm very excited to be here and look forward to getting to know all of you and sharing knowledge and encouragement with everyone!
If the Realtor you bring in is not a part of the transaction from the beginning with the Seller you will be paying the Realtor.
The Realtor has to get paid from somewhere. The seller did not agree to pay the Realtor leaving you to pay them from the profits you make or out of your pocket.
The only time this would be different would be in the case that you put into the contract that you gave to the seller that they would pay the Realtor fee.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Want to see if I got this straight.
Seller A and his agent except my offer, buyer B, I assign the contract to buyer C. At closing is when people get paid. Do I and my assgned buyer with agents addent closing? At closing my agent gets his 3% from seller A and when buyer C closes he pays his agent, if he has one?
few questions here...
Does the seller always have to pay the 3% commission to both realtors? If i were to to assign the property at a pretty steep discount wouldn't it be kinda of frowned upon to make the seller pay the realtor's commission?
Can't you make the buyer pay the realtor's commission, closing costs, etc?
"Whenever you find yourself on the side of the majority it is time to pause and reflect."
-Mark Twain
This is my understanding in working assignments with realtors. The realtors get a commission from the seller, they split the commission with selling agent (which is me). You receive a assignment fee from the endbuyer up front and also get your 1/2 of commission at from realtor at closing? What am I' doing wrong.
Phyllis Jackson
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Thanks all for all of your comments on this issue. I just connected with a new Real Estate Agent and the first thing she did was ask me to sign an exclusive buyers agent agreement. Wondering if there is any problem with this?
and
I was also wondering how the commission works; If my agent brings me a deal, I put it under contract then I assign that contract to another buyer, how does my agent get paid on that deal?
-Kevin
- think about what if? - and what is possible rather what is not
- Kevin
You can Join my Buyers list: http://www.townlineproperties.com
Thanks all for all of your comments on this issue. I just connected with a new Real Estate Agent and the first thing she did was ask me to sign an exclusive buyers agent agreement. Wondering if there is any problem with this?
and
for clarity here is a specific scenario:
I was also wondering how the commission works; If my agent brings me a deal, I put it under contract then I assign that contract to another buyer, how does my agent get paid on that deal?
-Kevin
- think about what if? - and what is possible rather what is not
- Kevin
You can Join my Buyers list: http://www.townlineproperties.com
Forgive me but I am a little confused here.
who's agent is who here?
"The buyer's agent (selling agent) will normally get paid 1/2 (ie. 3%) of the commission that was agreed upon by the listing agent..."
Whaaaaat now? How many agents are there here?
"The buyer's agent (selling Agent)"
isn't that contradictory?
someone please clarify
thanks
~ Kevin
- think about what if? - and what is possible rather what is not
- Kevin
You can Join my Buyers list: http://www.townlineproperties.com
Hi Kevin - The trainer who started this tread (nstreet) did so back in 2008, and the last comment before yours was 5 years ago. I don't show here often, and I'm kind of a novice myself, but I'll try to help you here.
Q. How Does my Realtor (Buyers agent) get paid in a wholesale deal
A. nstreet started out by saying that the wholesaler's agent gets paid by the buyer (You and/or assigns (end buyer)). If you actually buy the property, then you would pay.
In regards to the exclusive buyers agent agreement, I once heard Matt Larson say that he explains to new agents that he's a pure investor (not a one-time retail buyer) that buys several properties each month, nationwide, and there's no way one agent could keep up with all his needs and requests, thus he cannot contractually commit exclusively to one agent, and reassures the agent that working with him will be simple & lucrative. If the agent can't handle that, then they're not qualified to assist you in your quest. You'll have to keep searching for investor friendly agents.
Hope that helps. Keep pressing forward, and good luck.
Ron
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