From Broker to Consultant
Does anyone have experience going from a broker to consultant? I am currently helping some foreign investors invest into some RE projects. The thing is, those projects are not offering a commission and have said I need to arrange my compensation with the investors. Has anyone dealt with this before? How much do you charge? These investments will easily be over $500K.
[{"id": "fzeyqzx", "text": "For small stuff I have an hourly rate. \n\nMight be worth packaging 10 hours a week for X.", "replies": [], "depth": 1}, {"id": "fzf51hf", "text": "Thats how I work. Im an investment broker for family and friends. I dont do enough volume to drum up my own listings. Most brokers who do get listings want to try to get both sides of the transaction first (called a pocket listing), and if they cant do that, they put it out to the open market offering a co-op commission. The co-op is usually 1.5% or 2% where I am. Deals under $500k would probably be 2.5%.\n\nSo if theres a co-op I just write that commission into the contract and get paid at closing by the seller. But I still want my buyers to have a shot at \"pocket listings\", so I tell brokers they can have both sides of the deal and Ill just consult. Then we write a small consulting fee into the contract for me (between $25-50k), paid by the seller at closing, and the sellers broker gets the full commission at closing.\n\nBut I have an agreement with my buyer before we start looking that I always get a set fee. So the co-op or consulting fee reduces what they owe me and then they just write me a check on the day the deal closes. We take this added cost into account when making our offer.\n\nMy fee is pretty simple:\n\n$0 - $2m: 2%\n\n$2 - $7m: 1.5%\n\n$7+: Ive never closed at this range but it would just be $100k or so\n\nPersonally, I think commercial real estate brokerage is a bit of a shady business because of all of this. But thats how it is so you just have to find a way to make it work without killing the deal.", "replies": [{"id": "fzf7lvf", "text": "You\u2019re undercharging.", "replies": [{"id": "fzfbaqw", "text": "You just posted saying your biggest deal ever is $3m. You dont know what youre talking about", "replies": [], "depth": 3}, {"id": "fzffr6r", "text": "How much should be charged?", "replies": [{"id": "fzgw952", "text": "Don't list to him, I'm a principal (as part of a group) who's been involved in 3 deals in the $5m-10m range in the past 2 years. If a broker tells me he wants 2.5% on a 10m contract I will tell him to go pound sand. I'm not paying *anyone* $250,000 to put some listings on loopnet/crexi/whatever and screen inquiries for a couple months. No broker adds that kind of value to any transaction of that size. I'm not giving that much to a consultant either.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fzfg10h", "text": "This is a great response, I appreciate it very much. Definitely gives me a starting point.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fzfr64h", "text": "It might depend on the scope of your involvement. A fee for origination or sourcing the deal might be different than if you were helping them find properties to purchase and hold and then providing ongoing assistance as an asset manager. \n\nYou said that there isn't a commission offered (I'm assuming to real estate brokers) are they participating as equity partners in a development project, purchasing LP interests, or buying securities?", "replies": [], "depth": 1}]