Home Buying in Miami>Question Details

Mia5063, Home Buyer in Hollywood, FL

How much commission do you charge when you represent a buyer for a property around $50k?

Asked by Mia5063, Hollywood, FL Sun Jan 27, 2013

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Thumbs up to Alma.
A real dose of reality regarding low cap properties.
Your question was regarding commission.
As a real estate professional who has been in the business since 1982, you should place value on these estimate that somewhere between 24 to 60 hours will be invested by some one in every home that is sold.
If one assumed the 'prevailing rate' the gross compensation for $50,000 real estate will look like:
$3,000 gross compensation divided equally by buyer/seller brokers
$1,500 customary split between agent and their broker
$750 for agent / 42 hours = $17 per hour (if 60 hours are spent it drops to $10/hr)
You should also keep top of mind the number of low cap purchases that fail. Someone must absorb these costs. From this $750 dollars the agent must pay their real expenses (the broker does not provide that car), taxes, insurance and all costs related to being in business. No, the broker pays not a single dime...the agents pays for EVERYTHING!. The real dollars the agent has to spend is SIGNIFICANLTLY less then $750, but I will use the highest number for this example, $750 for the home owner agent and $750 for the agent representing the buyer. The possibly of working for much less that $10 an hours certainly exists. I only takes on mistake, one failed attempt, and the situation is unrecoverable....that means the agent loses money. They in essence have to pay in order of a buyer to purchase low cap real estate. And when that happens...not even a 'thank you' from anyone.
For low cap real estate, it is not uncommon for the buyer to pay their agent. It depends on the property. In the end. those real estate professional intending to be in business next year will have a business model for low cap properties will have effective fees equivalent to 12 to 25% compensation. (Use a $3,000 flat fee and reverse the math) Now add to that fee any fees passed on to the buyer. In some cases the BUYER must pay their agent directly. That is usually a flat fee that must be added to the effective compensation. The price of the real estate is low but the costs to complete the sale remain the same. Therefore the ratios get distorted at the low end of the market.
To be quite frank, you should feel fortunate if you can find an agent who will work with you using the traditional model. By necessity, alternative models have been developed that makes your compensation question a foggy notion that simply does not work in this environment.. If low cap properties are not managed properly, they will be the quick sand that can devour a real estate business.
The good news is, there are models that work. You simply need to pick up the phone and call a Hollywood Fl real estate professional.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
2 votes Thank Flag Link Mon Jan 28, 2013
$2k minimum if it is an ALL CASH buyer...so if a seller pays my firm $1500 the buyer would have to kick in an extra $500 for me to spend time assisting on a low priced property. If the $50k buyer has to get a mortgage then I probably would have to pass working with him/her because it's too difficult to compete in this investor heavy ALL CASH buyer market, sorry. I'm in Tampa and some rookie Realtors will donate their time and work with low priced buyers but you may get frustrated while the Realtor "learns the ropes".

All the best,
Alma Kee
2 votes Thank Flag Link Sun Jan 27, 2013
VERY helpful, thanks Alma!
Flag Wed Jan 30, 2013

You should not take less than $2,500 as that 50k purchase will likely take 10 times the time and effort of a 100k purchase!

1 vote Thank Flag Link Mon Jan 28, 2013
Typically Realtors do not charge a commission to the Buyers. Real Estate commissions are paid by the Sellers. It is standard practice in today's market to charge what some call a processing fee, transaction fee, etc. This processing fee is usually between $295.00 to $495.00.
1 vote Thank Flag Link Sun Jan 27, 2013
good morning
You dont have to pay nothing as a buyer
All commissions comes from Sellers
Im glad to assist you in that
my email is renatarealty@gmail.com
phone 786 2998558
Thank you
0 votes Thank Flag Link Fri Feb 1, 2013
none...not even processing fee
0 votes Thank Flag Link Sun Jan 27, 2013
I'm in Miami no in Georgia
0 votes Thank Flag Link Sun Jan 27, 2013
The listing agent who works directly with the Seller get paid by him and share their commissions with the selling agent who are helping him in the transaction bringing a buyer
0 votes Thank Flag Link Sun Jan 27, 2013
Nothing at all to a buyer - commissions are paid by the seller. Note that you are in hollywood Fl.
My office is in Pembroke Pines and I work primarily in the S. Broward area. Let me know what
you are looking for - and I am sure I can help you
0 votes Thank Flag Link Sun Jan 27, 2013
Dan's right... commissions for both the buyer and seller's agents are paid by the seller. Some agencies do ask buyers to pay a fee... which varies by agency.
0 votes Thank Flag Link Sun Jan 27, 2013
Commissions are typically paid by the seller not the buyer. If you agreed upfront through a buyer's agency agreement to pay your agent a set amount, and the listed commission was less than you would owe the difference.
There are no "set" amounts and commissions by law are negotiable. Each agent or office can determine what they expect or want to get paid. It's also not uncommon for some offices to charge a higher percentage on land or less expensive properties then for more expensive ones.
0 votes Thank Flag Link Sun Jan 27, 2013
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