Question for Investors who also are Realtors Posted by: Cap10
Posted on : 3/11/2010 7:47:37 PM Hi guys,
here is a question from a newly RE-licensed investor in NY State.
How does it work with an investor's independent deals and the association with a broker?
When I mentioned my investment projects in an interview with a broker, she indicated that the Errors & Omissions insurance (required for all her sales people) covers ALL deals in that office (KellerW), therefore all deals (private or broker's) have to go through the brokerage and subject to their comm. split.
Could this be correct?
but then, there are so many investor/brokers among us, it's hard to imagine they split for ex. assignment fees, etc.
One option I thought was to use my S-corp. (I'm the only one in it) to do independent deals, and separately do whatever I would do with the agency in my name.
Will much appreciate your comments and wisdom on this.
many thanks,
Cap10
NY/CT
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Re:Question for Investors who also are Realtors Posted by: J Scott (ATL) Real Estate Investor
Posted on : 3/11/2010 11:51:19 PM All brokers I know of will require you to do all deals (regardless of whether you do them personally or through an entity) through the brokerage. This means you'll likely have to split the commission with the brokerage on every deal.
That said, why not look for an investor-friendly brokerage that has a very small (or no) commission split? For example, my wife pays only $40 per transaction to her broker, regardless of whether the commission was $100 or $100K...
J Scott (1-2-3 Flip.com)
http://www.123flip.com |
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another option Posted by: Scooby
Posted on : 3/12/2010 6:47:49 AM J Scott's idea is a very good one.
Depending on what the investment transactions look like, you could simply not take a commission. That should leave the profit a little bit juicier.
You mentioned assignment fees. Those aren't commissions. Put the fee in your pocket. It's none of the broker's concern.
In a SS or REO flip for instance, you would likely get a commission on the purchase side, but on the selling side you could simply not calculate a commission for yourself. Pay your $32 errors and ommissions insurance out of pocket to make the broker happy and take the profit directly to the bank.
Unless you are engaged in an activity that MUST be conducted with a license, your broker has no jurisdiction. You are an independent contractor, not an employee. As long as you disclose you have a license and follow any code of conduct your local board might have, then you should be fine in whatever transaction you're involved in --commission or no commission.
Take bigger profits and reduce/eliminate the commissions. Or get a better split. I'm on a 95% split, but I have to write a check to be able to come to the office every month. That might be an option for you, too. Maximize your split and simply pay your overhead each month. You can run the numbers on that to see which scenario works best with your production level. Good luck! |
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