Hi there, new here and hoping for some advice...

I feel like Im in the middle of a rock and a hard place. I am very new to investing. I purchased a new constrcution home and leased it out. My agent is my best friend and has always been my agent. In the past Ive purchased properties for myself, and he always shares the commission.

Well recently I began looiking for a second property. He recommended a mortgage broker to me and they got me approved, stated income. Now its time to shop. He has shown me several properties. I made an offer on one but lost that battle. So Im still looking...

Another friend of mine, who happens to be My Agents' cousin, is a Lawyer. He wants to invest in property as well, and asked me if I wanted to do a joint investment deal. We can purchase multiple properties and better our chances for a return. He has his financing squared away as well.

My friend the Lawyer said we do not need an agent, as he can represent us both, and even do the title work, as thats one of his firms companies. The savings we'd get from not having an agent are HUGE opposed to what I would get from my friend the realtor.

I want more money obviously, but I am worried that I would upset my friend the realtor if I dont go through him. On the other hand, he is much more experienced, and with his help I could probably do better, but I would only be able to purchase one property.

I know its starting to sound confusing, but I just want some advice. Should I stick with my agent/best friend who will share some of the commission, or should I go with his cousin, the lawyer and get all the commission?

Most investors will probably think Im crazy because its all about money, but my friendship with these 2 really matters.

I feel like Im taking the loan that I got, from my agents recommendation, to another guy and buying a house and leaving him out.

Give your friend, the agent, the opportunity to defend his position. Be tactful. You may be able to get a win-win situation.

mikeman,
Just because this guy is an attorney does not make him knowledgeable in the market and other aspects of investment properties. You said this attorney is also a rookie investor but he thinks because he is an attorney and in most states can buy & sell real estate that also makes him competent. If your Realtor deals with investment property then it is money well spent!

This attorney is the cousin of the Realtor and is trying to cut them out of the picture? And people wonder why lawyers are compared to Sharks!

Stick with your friend. He is giving you commission that he does not have to give you, you trust him and he has always been there. I think he may take it personally if you leave him out. You can make money with the cousin but for how long?

"pigs get fat,hogs get slaughtered"Greed is a wonderful thing.

If the attorney hasn't had much experience with this he knows nothing.The agent will be able to find you the deals.

Try having an attorney negotiate a short sale that has never done one before,that should be fun to watch.Just like realtors there are competent ones and then there ar eone where you wonder how they ever recieved there liscense.

This sounds like a "partner" that I had at one time. As time went on and we were talking about things he shared with me that when his daughter got sick (long term) in Kentucky he took her out of the partnership.
Lesson learned--when someone is willing to cut out a relative where do you think you stand?
At least I got all my initial investment returned after he was able to leverage it.

You have a simple choice. Go with the guy who has helped you in the past and can in the future or go with the guy who wants to make a quick buck at your friend's expense. Are you going to trust him down the line not to screw you too?

Thanks for all the replies. I guess I was a little greedy as well. Its just so hard to turn down 12000 dollars and take 3 grand. I'll still stick with my friend the realtor, maybe just let the lawyer do the title work.

Thanks everyone.

Your friend and agent "shares the commission" with you? Is this legal in your state? I know that rebates are becoming more common but if I shared my commission with a buyer and my broker found out about it I would be in deep doodo.

I assumed he was cutting his commission to the seller and the buyer taking advantage of it with a lower price. If he actually received it and gave it to the buyer that is a NO NO.

Mikeman,
How about a clarification on this--if your friend is just giving you cash back after closing then your decision could be very easy as your Realtor friend might not have his license much longer.

Unless your state has some really odd statutes.. a brokerage can and often do share commissions with principals of the transaction... that is what negotiating commissions is about and required by federal law. Brokerages do not have to agree to share but can, but only with principals, the buyer or seller and not 3rd parties.

I think some of the newer agents get confused over this issue.

Realty Check,
I have reduced my commission many times to get the deal done and while this does allow the buyer/seller to walk away from the closing table with more money in pocket I have never closed a deal and then handed my client his "share" of my commission check--might be legal here but don't plan on finding out the hard way.

Mike, wait, hold on, stomp on the brakes right now!

If you're seriously doing "deals" where the buyer's agent makes $12k and you only make $3k, you need to throw those worthless deals away and find better ones.

If these are the deals your realtor friend is bringing you then either he's not really your friend and he's just lining his pockets while you take all the risk. Or he's simply incompetent when it comes to real estate investing.

Unless you're doing zero risk contract flips that take all of a couple of hours to complete. You should be making at the very least 2 to 3 times as much as both agents combined. For most real investments the agent's commission is a minor expense and well worth it if the agent is bringing you great deals and/or eager buyers.

RealDealer,
As usual you have missed the target completely!
Where did you get the idea he is only making 3K on the deal????????????
Better reread the original post and try again!
He is getting $3K credited back from the Realtor. $12k would be the Total Commission.

Paul, there's no mention of how much he's making in the first post. But he is obviously upset about the HUGE commission his agent is making. And again in the post I quoted, he's making a big issue about how much his agent is making "Its just so hard to turn down 12000"

My point is that the agent's commission should be almost irrelevant in traditional investing which is what he seems to be doing (buy and hold).

RealDealer,
You were the one that jumped to the conclusion about what the poster was making on the deal. The post was on the portion going to the agent who brought him the deal!

The whole point of this is the rat lawyer(cousin of the agent) who wants to cut out the agent that has always helped this poster in the past and has even rebated part of his commission back to the client. Too many attorneys think because they can do some of the same things as the agent they are qualified to do it which is most often not the case. I recently bought a 12 unit building and the sellers attorney was trying to kill the deal he was telling his client that the building was worth more than I was offering. I looked at the attorney and said ok if you feel this way You buy her building! I got up and walked out of the room. She can running after me while I waited for the elevator. It seems that her attorney would not put his money where his mouth was! I went back in his office and told him to confine his coments to the legality of the transaction or I would withdraw my offer and walk! The agents commission is just a cost of doing business for an investor. Maybe not for you as you dislike agent so much but many of us deal with professional agents who know what they are talking about or we are experienced agents that are also experienced investors that bring their clients good deals.
The point is a Good Investment Specialist is well worth their commission.

Too many attorneys think because they can do some of the same things as the agent they are qualified to do it which is most often not the case. I recently bought a 12 unit building and the sellers attorney was trying to kill the deal he was telling his client that the building was worth more than I was offering. I looked at the attorney and said ok if you feel this way You buy her building! I got up and walked out of the room. She can running after me while I waited for the elevator. It seems that her attorney would not put his money where his mouth was! I went back in his office and told him to confine his coments to the legality of the transaction or I would withdraw my offer and walk!


I will have to use that one sometime,good one!

Paul, I think you need to go back and reread my comments but this time without the tainted glasses.

You're arguing with me over the same point. The agent's commission should be only a minor cost of doing business if the agent is bringing the investor great deals. The fact that he's making such a big issue over the commission suggests that the deals are crap.

Me pay commission? You keep telling me buyers don't pay commissions.

Wow, this got out of hand quick. My realtor is the broker himself. No middlemen. The 12k would be MY cut, not a commission. Thats IF I went through the lawyer, opposed to my cut from the realtor, at 3k.

I didnt want to get into detail about properties and what not, I know what im buying and I know Im not getting ripped off because the property will pay off. I stuck with the realtor simply because he knows better, and i'd rather get 3k back at closing, and a huge return once I sell, than to take 12k now and risk not making any money in the future on said property.

No need to get into this legal mumbo jumbo, we're not doing anything wrong, and I understand the legality of realtor/client issues as well as realtor ethics code.

Either way, thanks for all the replies, my question has been answered

Wow, this is interesting. After, reading all the replies (including all the side issues) and now the original posters clarification, I absolutely know less about the question now than I did when it started. And you know what, I don't care. I'm moving on. I'm not beating dead horses that I don't know for sure are horses let alone dead.