Just wanted a little feedback on my budget basic listing plan. Comment on the plan but should you decide to flame be prepared to get burnt back badly!

First a little background. I recently started my own office with the intent to build my brokerage around an investment division. My investment partners and I will be purchasing and rehabbing/flipping properties that I will list. I have been approached by a few investors to list their properties which I am not partnering on and have come up with the following structure. Remember that my focus is on my investment properties and anything else is a bonus.

Basic Initial Listing Fee: $750 for Residential and $1500 for Commercial
Payable at time of listing and includes the following items and services:
1. List Property in MLS or CLS
2. Walk through with of list of maintenance and curb appeal items that should be addressed by either repair or reflected in the listing price.
3. A Detailed CMA to assist the client in correctly pricing their property to sell.
4. Digital Photos of Exterior and Interior for use in print and internet advertising.
5. A video tour of the property on CD
6. Three Color Flyer Designs for Residential Properties or a Standard Commercial Flyer
7. Yard Sign with Flyer Box and 2 street directional signs. Or Commercial Sign with a Flyer Box for Commercial Properties.
8. 100 Color Flyers of the Chosen Design for Residential Properties
9. Web Advertising
10. Broker Open House for Residential Properties
11. Color Flyer to all area agents inviting them to the broker open house or Color Commercial Flyer to all area Commercial Agents
12. Lock Box
13. The seller agrees to offer at least a 3% buyers agent commission payable at closing. The seller consents to dual agency should the listing agency bring the buyer for the property.
14. A transaction Closing fee in the amount $500 for Residential or $1500 for Commercial properties will be payable at closing.

Additional time spent on the listing will be billed at the agreed upon hourly rate. The time will be billed at the end of the week and will be payable within seven days of the billing date. This will include answering calls, e-mails, listing maintenance, Scheduling showings, offer acceptance and contract negotiations, scheduling inspections. A log will be kept showing the detail of time billed. The hourly rate shall be $50 for residential properties and $125 for commercial properties.
Menu of Additional Services for Fee or Hourly rate:
1. Fee, Print or Cable Marketing Plan. The Seller will be given a list of print media and cable TV advertising options available and their corresponding costs. The seller can choose which options they want and when they would like them to appear based on the ad schedule.
2. Residential Open Houses. The seller is free to conduct their own open houses at any time. See above for add cost. If the client would like me to conduct the Open House there will be the additional standard hourly rate which will include the time at the open house and any prep time to setup the open house.

Paul I can't believe you are doing this!(flame lol:)

My question would behow would you collect the hourly rate?
It's kind of like people owe 10 people money,they want to pay all the ten people but when the money runs out they can't pay.

What's to keep the seller from saying I don't have it this week,or writing a bad check.Would you put a lien on the house?In my state i don't even think you are allowed to as a broker I could be wrong on that one though.

It's kind of like property management,the tenant owes money but even if you take them to court and get a judgement they still might not pay you.What if there was a dispute over hours worked and services provided what is the protcol for that?

Some investors are ethical and others will stab you in the back if they get the chance.

The hours billed for any week would be fairly small, realistically not more than 1-3 in any week using a similiar system to the way attorneys bill hours. I also accept credit cards and as for as writing a bad check I would not worry too much about that as in IL I can recover 3 times the amount of the bad check plus legal fees. My attorney says I can also place a lien on the property in question.
My attorney made sure I was aware of what is needed to back up billable hours and I am very detail oriented in regards to my paperwork. The additional advantage is I increase my book of serious investors.

Paul,
The plan is well thought out. I think it would work well for residential. Homeowners are often cheapskates and equity poor. This offer would be hard to turn down. An option to consider if it is legal in your state is the tier spiel. Just catching on around here. List and sell your house for x percent at this price and advertise a higher price in MLS for the Bring Your Agent Price...it really is a shell game but seems to appeal to some sellers.

I think you would leave too much money on the table for your knowledge and experience on commercial deals. Owners expect to pay for service. I often joke that my low fee of 5% total is like sales tax. Who isn't used to that in this arena?

I just listed a 800k commercial listing (with a three way license in a maxed out city) at 5% total, with local MLS waiver and do not have to advertise any split. It should be a decent paycheck. Gotta love the commercial game.

I work with alot of commercial buyers so odds are I would collect the buyers agent percentage on most commercial deals. The upside is I have zero out of pocket expenses.

I am not really worrying about the fear of leaving money on the table as my focus is invesment deals.

In the last week I sold 2 of my flips. The NET on the two properties was 83K. One took my crew 12 days from start to finish and the other took 8 days. I had accepted offers on both properties within 3 days with zero advertising. One was bought by the neighbor for his daughter and the other was bought by a relocation buyer. Relo company was a little upset because they got 35% of a zero commission deal! They made me sign an agreement that I would give them 35% of my commission on the deal. I bet some bean counter at the relo company is still trying to make sense of why they did not make any money on the deal!

Personally for me, I wouldn't want to deal with the tedious task of tracking hours, billing, collecting, etc. I would figure you have an average of about 8 hours per month and tack on an extra monthly amount for every month the home's on the market... maybe. (I've not thought this one through yet.) Only problem with that is that sellers might feel like you don't have as much of an incentive to sell. But... the sellers would have more of an incentive to get it sold, which never hurts. I think the administrative tasks with hourly billing might be a little more tedious than you're thinking.

Carla,

The tracking and billing is really easy as I already do a lot of consulting work and have a system in place to bill hours. It is a system a programmer friend created for me and is uses outlook. It only takes moments to note time to a client. It is a modification of the Small Business Manager add-on. It allows me to link e-mails, documents, tasks, notes, appointments and other calendar entries. It totals the time recorded weekly, monthly and clients total for the year.

nice plan Paul

let me know if you need an additional exit plan if your investors are willing to carry the note.

Paul,
I totally agree with you and have a proposal that is much the same except I charge a monthly fee. I know what you mean about the flame - boy they throw them here. I put my idea out on the forum and had some zingy comments. I just don't think they understand that in order run a sucessful business you need to think outside the box. Congrats on your plan and I sincerely wish you all the luck in the world.

You are wasting the time of both you and your investor / sellers.

You are an investor and should stick to brokering your own properties. How can you ethically serve other investors when you have lots of personal inventory to sell.

If I was an ivestor, I would not list with you.

rich1mck,

It is a good thing that you are not an investor because you obviously have no clue what you are talking about. You are an agent that should not deal with investors or investment properties.

There are absolutely no ethical issues. "Lots of personal inventory"? What do you consider lots? If I have a buyer that is looking for property I will show everything on the market in the area and price they are looking for. If my property is the one they decide on then great, if not then I will sell them what ever property best suits them. People like you always find it easy to cry unethical but are always short on specifics.

Sounds like you are an agent that will never be an investor because you do not have what it takes to pull the trigger.

Hi Paul - you know I have read a lot your posts and I honestly have agreed with you on about every subject. but now I think we will disagree.

This is what YOU said "Remember that my focus is on my investment properties and anything else is a bonus."

I work with several major investors, one of which has bought and sold more than twenty properties through me AND HE NEVER HAS ASKED ME TO CUT MY FEES. He often refers to me as his "Money Man"!

I have also purchased and re-sold seven investment properties the last four years, all through MLS.

In addition, I do not have to DISCOUNT my fees to get listings! So I am definitely more of an Investor that you are a Realtor, but that is neither here nor there.

When you discount your fees and /or charge a seller up front to take a listing and then have investment properties yourself for sale, I question your ability to serve that sellers best interest.

If I was an investor, I would not consider listing with you on that basis. And as a competing Realtor, I could easily convince investors to list with me - over a broker with your model.

I just don't see this model as being successful. Maybe you should concentrate your efforts on just being an investor.

Richard,
I could not possibly care less about your opinion. I know exactly what I said and yes my primary focus is indeed on my own investment properties. I also do a considerable amount of project consulting on both subdivisions and commercial projects which takes up a fair amount of time. I put forth this idea based on being approached by several past investor clients to list their investment properties. I am looking to keep my expenses to a minimun hence the pay as you go listing plan for investors. I can then put my cash toward more profitable ventures such a flipping properties and aquiring additional long-term investment properties. Perhaps you were confused that I thought I Had to DISCOUNT to get listing but that is not accurate as I am not actively seeking listings anytime in the near future. I was simply approached by a few investor clients.

My last 3 years in Residential I did 100+ transactions a year and 70% of my business was referral and investors and my new construction homes. How about you Richard? 7 whole investment properties in 4 years??? Wow! I have done twice that just this year and I have been an agent since 1989 so your being more of a Realtor is just so much trash talk that fails to impress anyone. You might have failed to notice this as well but I was asking other Broker/Owners which I do not believe you are so your opinion means even less than stated above.

Geez Paul, for someone who started a topic on a "What do you think" basis, you sure don't seem to care about what people think. I think Richard was making reference to the fact that you are doing a service at a discount compared to most agents at your level. I'm sure you don't value my opinion either, but I think you started this topic prepared to take a little heat and someone gives a little constructive criticism and you get bent out of shape.

Looking at it from an outside perspective, it seems like a seller would rather have an agent who wants the inventory moved as quickly as possible. I understand your side as well though, your clients can save a lot of money, and you keep your up front costs low, but it seems like you are approaching the whole business almost like it's not enjoyable and you would rather spend your time doing the flipping and making money other ways. I get the feeling you only take listings right now to keep your investors happy and keep them your clients.

If I was an investor and I was working with a Realtor, whom I trusted to sell my properties, I would be hesitant if I knew that the agent also had his own listing he was trying to move. It's kind of like me, a mortgage broker, also doing real estate. Would you send your real estate clients to me? I could try and make them my clients. I am completely trustworthy and have never done it before, but wouldn't that make you just a little nervous? I think that is all Richard was trying to say.

I hope that you take this as an answer to your "What do you think" scenario, and I also hope that I have not evoked the wrath that is Paul Oaks.

Only you know how much your expertise and services are worth.

If you feel like you're only worth the discounted fees you posted and are happy with them, then best of luck to you!

Adam,
Everyone appears to be missing the point that I am not actively seeking listings. I do not know how I can make that any more clear! I am listing other properties only because those investors that have contacted me are aware of the results I get with my properties. I also directed my comments to other broker/owners as I posted it in the Broker forum instead of the Agents forum. Richards comments were to imply that I could not ethically represent other investors when I have my own properties listed as well. His assertion is totally without merit because it is all in the investor clients control; where they want their ads run, how much help they want or need. They can control these expenses with my plan which is helpful when your rehab budget is over budget. His comments were also based as an agent and he took it so far as to make comments about me as an agent when he has nothing to base his comments on. Richard was the one that decided to make it a personal attack or perhaps you missed that!

I am very practiced at selling my investment properties because I advertise them as an investor. When I put an add out it is all about the property. The largest part about my contact information is the phone number. This is not an add about my company or a look at me Realtor add. It is 100% to sell that property and that is the same type of ad the client will be paying for in my plan. They are not paying for my branding or my personal promotion instead they are paying to sell that house. Many of my investor friends do contract for deed sales and most agents do not grasp that concept and do not understand the process because they are too concerned on how they will be paid when the deal may not fully close for 2 years!


Gulf,
Where in my post did I say I was discounting commission? My hourly fee is between $50 residential to $125 per hour for commercial. Now how much do you make an hour with your non-discounted commission? Make sure you factor in all the unpaid work you are doing each week and lets compare numbers. The difference is I am not advertising this commission plan to the general public. It is directed solely at my investor clients. I do not care who sells the property which is why I stipulate that the seller must offer a fair buyers agent commission. If I represent the buyer then I could actually make less than the stipulated hourly rate because buyers tend to be very needy. I cannot actually represent buyers that purchase my properties as an agent. Their options are to have their attorney handle their side, represent themselves or be represented by a buyers agent which I have no problems with since I factor in the buyers agent commission into what I need to make off the deal from the start of the project.

I made over $60K NET off two deals in less than 3 weeks from purchase,rehab and sale so yes I would have to say I am more than satisfied with my new business plan. Contrary to Adams belief I did not start this topic to take heat. I simply asked broker/owners thier opinion on the merits of the plan as laid out not to start another full commission vs. limited commission debate.

Paul,
It sounds like I nailed it in my post, you don't really want listings, but in order to keep your clientèle happy, you offer them a listing package that doesn't take up a lot of your time and saves the investor money. You concentrate on the big money and the investor gets quality advertising instead of the agent getting quality advertising. It's a win win. I think your original post just didn't specify clearly that you want to offer this as a resource and not actively solicit listings. With that being said, I think it is a great model.

I didn't think you started this post to take heat, but I think you knew or expected there would be some. Good luck, I'm sure you will do well.

Paul: I signed up to sell my townhouse in DC with a husband/wife brokerage and for $300 I got items 1 & 13 on your list. I also offered the 3% buyers commission. Back then the market was just heating up and it only took me 24 hours to get a contract that closed. Saved me $7000. I wasn't an agent then and I've just started working to become an LO so my opinion is only from the "outside". I like the plan because you are offering a lot for $750 compared to what I got. The CMA would be very helpful. Since your focus is on investors I would suspect they would be more savvy than I was and probably need less than I did in the way of guidance. Especially since all dealings with the buyer's agent was through me as I was unrepresented. From a businessman's perspective if you can earn extra income with little work then I say go for it. The real estate game is changing and if you take a few crumbs from others that WISH they could get your listings then why not. RE Principles 101 states that commissions are not set and are negotiable. You are only offering less service for less money. Also, many investors in this market probably have thinner margins so saving a few % on the listing commission might make a deal work for them that wouldn't have othewise. Go for it! <flame suit on>