Agent wants 2.5% buy side on $180k houses, I offered flat $4k plus a dead deal fee. Stuck.

The dead deal fee is the piece I'd look at hard before anything else. In some states compensation to a licensee has to flow through her broker, and her broker may have a policy that anything outside a closing statement is a problem for them. That's a state and brokerage question, not a negotiation question. Ask her to take it to her broker in writing rather than agreeing with you and finding out later.

Separately, from the management side, the agents who bring me investor clients that stay are the ones getting paid per closing in a way they're happy about. An agent who feels underpaid on your file works your file last.

Dumb question from the cheap seats: if the seller's side doesn't offer anything toward her fee anymore, does she just not get paid on deals where the seller says no? Or does that come out of your $4k either way? I can't tell from your post whether you're proposing $4k total or $4k on top of whatever the listing side offers.

@lantern the tiered thing sounds neat and I think it does the opposite of what sable wants. A flat fee per closing rewards closing. She gets paid the same for the marginal house that barely pencils as the one she fought for, so the rational move for her is volume and speed. Sable said he's at one closing per nine or ten offers because he's picky. Pay him for closings and he stops being picky on his behalf.

I don't know what fixes that. Maybe nothing does and you just have to trust the person.

Here's the part worth saying: you're arguing over about $500 a deal.

2.5% of $180k is $4,500. Your flat is $4,000. You've spent two weeks and a fair amount of goodwill negotiating eleven percent off a number that isn't your biggest exposure.

The term you should actually be fighting about is the twelve month whole-metro exclusive. That's the clause that can cost you 2.5% on a house you found yourself through your own mail, and the clause that keeps costing you after the relationship goes bad. Get the carve-outs and the term right and then hand her the 2.5%.

Numbers, because nobody's done them from her side.

Ten closings at one per nine and a half offers is roughly 95 offers written. Call it 250 properties screened to get 95 offers. If she spends 45 minutes per screened property and three hours per written offer including negotiation, that's 187 hours screening plus 285 hours on offers, so call it 470 hours over the year on your account alone.

$45,000 on 470 hours is $96 an hour gross, before her brokerage split and before her costs. If her split is 70/30 she's at $67. Your flat fee version pays $40,000, so $85 gross, $60 after split.

So the two structures are 12% apart in her pocket and she's working the equivalent of a quarter of a full time year for you. Neither number is outrageous and neither is generous. The variable that swings her income far more than percentage versus flat is your offer-to-close ratio. If you tighten to one in five she makes the same money for half the hours. That's the thing to negotiate: what you'll write offers on.

@ledger has the right frame and I'd extend it. Sable, you said her rent comps were better than yours. Be careful about what you're buying there. I don't want an agent's underwriting, I want her access and her read on the street. The proforma is my job and my mistake to own.

If you're paying her partly for analysis you're paying twice, because you'll re-underwrite everything anyway. Price the access. Access is what's scarce.

I'm still building my list so I have no deal to compare, but reading this the thing I'd want in the agreement is a definition of what "she brought me the property" means. Two of the agents I've talked to had wording where introducing me to a property included me seeing it on the MLS during the term. That's everything, basically.

On @beacon's question, because it went unanswered: the listing side can still agree to contribute to the buyer's agent fee, it just isn't advertised through the MLS as an automatic offer the way it was before August 2024. So on plenty of deals you ask for it in the offer and get some of it. sable, if your agreement is written as "buyer owes $4,000, credited by whatever the seller contributes," your worst case is $4,000 and your normal case is less. If it's written as "$4,000 plus anything the seller offers," she's the one with upside. Which one did you propose?

I paid a full 3% on an off-market fourplex two years ago and I'd pay it again. The agent knew the seller's sister. Nobody else was ever going to see that building.

What I learned since: that was worth 3% because it was one deal and the fee was small next to the spread. On your ten-deal program the arithmetic is different and I think the flat fee is defensible. But don't build the structure so tightly that she can't make real money on the one weird deal that's worth more than the other nine.

I'm lost on one thing. Who signs the agreement, her or her broker? And if I sign with her and she leaves that brokerage, am I stuck with the brokerage or does she take me?

@rigging the agreement is with the brokerage, she signs on their behalf. If she leaves, the file usually stays with the brokerage unless they release it. Ask about that specifically, I've watched it turn ugly.

sable, on the renovation side: two of the last three agents who sent me numbers had ARV estimates 12 to 15 percent high. Not lying, just optimistic, because optimistic listings win listings. If any part of your $4,000 is buying her opinion of value you're overpaying. Buy the door opening and the seller relationship.

Ten closings with one agent who likes you beats a clever fee structure. Pay the 2.5%, fix the exclusivity term, get on with buying houses.

@verity that works right up until you buy at a foreclosure auction and get a bill.

I buy from wholesalers and at trustee sales and I've had an agent hand me an agreement with a whole-county exclusive and no carve-outs. Sign that and every auction purchase for twelve months owes her a fee for zero work. My agreement now excludes, in writing, anything acquired at a public auction sale, anything from a wholesaler where the contract was assigned to me, and anything from my own direct mail where I can show the mail date preceded her introduction. That last one is why I keep the mail log with dates.

sable, at one in nine and a half you're already fighting for deals. Don't sign anything that taxes your own channels.

The thing that jumps at me is cash to close. On my first deal every dollar was accounted for and a $4,000 fee I hadn't planned would have killed it. sable, with ten deals you can absorb the timing, but if you're stacking closings in the same quarter that's $12k of fee money out at the same time as three sets of down payments and closing costs. Have you actually laid it on a cash flow calendar or is it a per-deal number in your head?

Different corner, but worth knowing: on the land side the customary buy-side ask is far higher than 2.5%, sometimes 8 to 10 percent on small raw parcels, because the dollar amounts are tiny and the work isn't. Whenever somebody tells me a percentage is standard I want to know standard for which asset. Yours is a residential number applied to a residential asset, so it's at least the right family.

One mechanical thing on the lending side. A buyer-paid agent fee is generally treated as cash the buyer brings, and lenders differ on whether it can be paid from loan proceeds or counted against seller concession limits. On a DSCR product the concession and fee treatment can be stricter than you expect. Get your lender to confirm in writing how they'll treat a buyer-paid broker fee on the settlement statement before you set the structure, because if it lands as cash to close on every file that changes your $40,000 into a working capital question, not an expense question.

Whether it's deductible or added to basis is a question for your CPA, and the answer isn't uniform.

From where I buy, $50k to $80k houses in small towns, 2.5% is $1,500 and no agent will take the call. Flat fees are the only reason anybody works my price band at all, and I pay $3,000 flat because that's what it costs to get somebody to drive 40 minutes. Your problem is the nice version of my problem. She's asking 2.5% because she can get it and you'll pay it because she brought you two things off market, and I'd stop pretending the number is the issue.