Getting Paid After Matterport Scan?3726
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mike02h private msg quote post Address this user | |
| So I have a guy who would like to (instead of paying a fee) integrate my MP as a value add to his brokerage. He'd like to pitch it to devs and then after the home is sold, pay me a part of the commission. I don't know how to feel about this deal... on one hand a piece of commission is greater than the fee, they other, how long would it take to even sell a house? Am I running around an entire city scanning for hours on end hoping that the house I scan gets moved? In addition he wants a lead gen system to help him move properties. He's got a substantial inventory already. What are your thoughts? What would your stipulations be? |
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JonJ private msg quote post Address this user | |
| If you were a plumber and a house needed a new toilet, would you defer plumber if/when the house sold? You are providing a service and should be rendered payment once the service has been preformed. |
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mike02h private msg quote post Address this user | |
| @JonJ Very good point, it sounded great in theory: he'd get lots more homes to sell, etc. But now the more I run it through my head it sounds like it more or less benefits the latter rather than myself in every possible way. | ||
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 WGANStandard Member Bon Secour, Alabama |
Chemistrydoc private msg quote post Address this user | |
| Maybe you could propose a discounted rate that would cover your basic costs, and ask for a % that would give you a nice windfall when the places sell. But, I would get it in writing, whatever you do. Developers are notorious for forgetting informal arrangements, IMO | ||
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mike02h private msg quote post Address this user | |
| @Chemistrydoc I had not considered that, it might be worth thinking about. This whole deal would have been with an agent. His idea was to charge a flat rate to volume builders and a greater fee to non-volume then when the house would sell, I'd get paid a chunk of the fee. How large, I have no idea. I'd ask for a minimum 30% that's for sure. I'm not very patient so if someone puts me to wait a while, it better be good lol. | ||
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Louisville, KY |
JohnLoser private msg quote post Address this user | |
| MP is a value added. You provide a service. You should be paid, whether the real estate agent sells the property or not. As much as we don't want to admit it, a REALLY GOOD MP Tour is only a part of the agent's marketing of a property and sometimes, they just don't sell during a listing period and the listing is not renewed. Then the seller goes to another agency and starts the process again. In the mean time, you have done work... risked your livelyhood... and lost along with the real estate agent. @Chemistrydoc has a good idea; it's similar to an actor taking a low wage for acting in a movie and then accepting a percentage of the back end. Whatever you do...GET IT IN WRITING - and signed. |
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grmngrl private msg quote post Address this user | |
| @mike02h You could make a contract with him. I would include that he needs to pay you in the case that he looses his listing. Something like that the payment is do at the end of listing no matter if property was sold successfully and a guarantee to do a tour for every listing that he has no matter of size of the property. I would do this only for a high producing realtor. | ||
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mike02h private msg quote post Address this user | |
@JohnLoser Thank you John, I definitely see your point. I hadn't even considered him losing the sale in the first place, which I imagine with a lot of inventory is very possible with just one person. I can completely understand how an MP tour is only part of the marketing, I wouldn't want to overcharge anyone on the service. At the same time, I'd need to cover my expenses and my time (which to me is very important given that he'd want a ton of scans done). Definitely will make sure anything I get with anyone will be in writing  .Just as an add-in: the 30% fee on his commission is a deterrent more-or-less. I know it's a high fee, but if I have to forgo upfront paying contracts for his work, I need compensation for making me wait. There are bills to pay after all! @grmngrl That's a really good idea! I was almost thinking of making the deal if it's say for example: a custom home - something that will sell for a lot (1mil+) (since those are not volume, and would take up far less of my time). Of course my gas and all that would need to be covered but other than that, I could handle doing a few "wait till it sells" here and there. But volume would definitely just be a clog the system. He seems to be high producing... or at least with tons of inventory. He has good connections with devs as well, a lot of them. But having the homes and having the prospects to move them are two different stories. |
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jfantin private msg quote post Address this user | |
| Always bear in mind your opportunity costs. If the client has a large stock and your opportunity cost is low (I mean, you have not 2 or three properties per day in your agenda), then it doesn´t hurt to scan a few properties while you have free time. In any case, I would go for a 50% in advance and 50% when and if the property sells. |
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LetMe3D private msg quote post Address this user | |
| It is your call. My two cents is "No Deal". Contracts are good but getting paid when the work is sometimes harder than you think and you will probably chasing hime down to get paid after the fact. Don't take the easy way out, it has been my experience hard work pays off not empty promises. He is getting the benefit of looking like a big shot and you are left hanging around for crumbs. Don't be a sell out you don't need him he needs you. Pound the pavement and do the work instead of taking a promise of future work from a guy that will probably want a cut of the $$$ somewhere for his connections. |
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DSPhoto private msg quote post Address this user | |
| All of the extra work involving contracts, tracking and more plus the stress of following up and enforcing the contract just isn't worth it. If he is willing to offer a percentage based on the final sale price what happens when they lower the price? Why should your rate be reduced because they aren't able to get the asking price? My advice, find out what percentage they are offering and match your pricing to it. As long as it is what your market is bearing. DO NOT BE THE CHEAPEST IN TOWN BECAUSE YOU WILL ALWAYS BE THE CHEAPEST IN TOWN. Don't offer terms upfront. Payment at the shoot or upon delivery. Once you deliver the files (MP tours excluded) you can't take them away. They can use a credit card if they don't have the cash. Use a mobile payment app like Square. If they don't like it thank them, move on and put them in your email and call back list. Good luck! |
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justinv private msg quote post Address this user | |
| @mike02h How busy are you without that business? If not very busy, tell them you need % upfront because you have to make a living. Just make sure it is enough, if you never get any more money, you are fine with it. Does he just want the link to market it or does he want single property websites for all scans? Still shots? You said something about lead generation? Does he want you to do this or him? Do you have any experience on lead generation? If I took this on, everything would have my logo and number, in hopes of getting business that paid on a little more timely fashion. If you are already up and going, I would offer to do a handful of homes you think will move fairly fast. That way you can see how the process works and if you get paid? Where I am from, it usually takes at least 30 days to close but is closer to 45. That is for a smooth transaction. I honestly would only do it for someone I knew personally. I have one that I do that for but she is my wife's best friend. I do lead generation for her because not very many realtors understand it or have the proper system in place. |
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Viewing private msg quote post Address this user | |
@mike02h You've opened a lovely can of worms here  Personally I think the fundamental decision on the road you take comes down to how quickly you want to build your brand/name/reputation. You've got two tried and trusted payment scenarios: 1. Charge fully up front. 2. Charge a percentage up front. All well and good but this is a new industry and there are no rules. There is a third option but it all depends on your cash flow situation. If you've got some financial security to see you through 3-6 months, you could charge the realtor a percentage of their commission after the property exchanges. Their commission correlates with the price and usually the square footage of the property. There are exceptions such as a smaller penthouse suite in a major city but that's beneficial to you because it's a smaller/quicker space to scan. The other exception is the opposite where a larger rural property in the middle of nowhere may sell for less and take longer to scan but it's swings and roundabouts and a little dependent on the radius you're willing to travel also. But let's say you could hold out for a few months while you wait for these properties to sell. 1. You could set your percentage on their commission to achieve a higher figure than they would have paid had they paid up front - this could be marketed as a risk factor to warrant the higher end result. 2. Your time spent scanning is usually correlated with the price and therefore usually the size of the property. So perhaps no need for a tiered pricing structure based on size because the end payment is nearly always relative anyway. 3. The more properties you scan, the quicker you can build your brand and be in prime position before competition arrives. 4. Give the realtor the option to pay up front if they don't like it. Perhaps something based along those lines anyway if you can afford to do it like that. It can't hurt. So long as you add in a clause that the realtor must pay after a certain date a predetermined amount regardless of when it sells. Or you could adopt the win some lose some approach. Depends on your personality and financial position I guess |
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jfantin private msg quote post Address this user | |
| @mike02h regarding pricing, you should consider a few variables and play with them For example: 1) you already have a target price for your service. Let's suppose it is $0.30 per sq ft 2) Average price of properties in your market. Let's suppose it is $ 400 per sq ft 3) Average commission that the agent usually gets. Let's suppose it is 3% (that is $400 x 3% = $12 per sq ft) 4) Average time in the market for the average property. Let's suppose it is 3 months 5) Your financial cost (at what interest rate you borrow money in the market if you need to pay for your needs until you get paid - for example, your credit card financing interest rate). Let's suppose it is 18% (that is 1.5% per month) 6) Average success rate of that particular agent (that is, Number of properties sold/Total number of properties listed - you can take his historical average or the last 12 months average). Let's suppose it is 65%, that is, for each 100 listings this agents closes only 65 deals). This is the same as a 35% failure rate (we will use this figure for our calculation) With all this information (or assumptions) on hand, let's calculate your price: p= 0.30 (1/1-0.35)* {1+[(18 * 3)/1200]}= 0.4823 This means that your price should be a 4.02% of the agent's commission (0.4823/12) This percentaje is taking into consideration: - Your market price - Commercial risk (properties not sold) - Time risk (time you will have to wait to collect your fees) Of course, you should adjust this numbers to your reality. I have only used some figures to illustrate my point. There is nothing bad with financing your services, as long as you can be sure that: - Your client has good credit - You consider all your risk factors in your pricing With this price scheme, you will be collecting the same amount as if you were charging $0.30 per sq ft for all the listed properties, only that the agent will don´t know it. He will preceive that he has a variable cost equal to the 4.02% of his variable income. I hope this helps and please check the math because I could have make a mistake using my fat fingers in my phone's calculator! |
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pmjacoby private msg quote post Address this user | |
| I don't know the laws in other states but here in NJ paying anything that is or could be considered a commission on the sale of a home is to anyone who isn't a licensed RE agent by anyone who isn't a licensed broker, is illegal. Paying fees for services such as photography for a home that will be for sale is not considered a commission but, paying any amount for a service based on whether or not the home sells is considered a commission. |
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JC3DCX private msg quote post Address this user | |
| I had the same sort of deal and decided to walk away, as the realtor was not prepared to even pay a very small fee up front. | ||
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gulmer123 private msg quote post Address this user | |
| I agree with pmjacoby. There are laws against paying a commission to an unlicensed person. | ||
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jfantin private msg quote post Address this user | |
| But if you set up the price as a fixed amount (calculated as a percentage of the original selling price of the property) and in a contract you stipulate that the payment will be completed if and when the property is sold, I believe that there are arguments to justify that it is not a commission. In fact, it is not a commission but a price calculated on a percentage of the value of the property scanned. The MSP will not be involved in the sales process and hence his job could not be considered as subject to the rules and regulations of the real estate business. Any lawyer in the house???? |
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WGAN Standard Member Bon Secour, Alabama |
Chemistrydoc private msg quote post Address this user | |
| J Fantin you are correct as I see it. Of course, I'm in a state where such things are not highly regulated. | ||
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WGAN Standard Member Bon Secour, Alabama |
Chemistrydoc private msg quote post Address this user | |
| To the real issue at hand: I love deals like these on a LIMITED basis, because they can build lifelong bonds of trust if they work out. Up and coming folks will always remember when I shouldered a bit of the risk with them. That said, I would never take any deal where my out of pocket costs aren't paid up front. My time is not an out of pocket cost! | ||
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justinv private msg quote post Address this user | |
| The more I have thought about this over the last few days as my emails receive new post, this idea sounds worse and worse. I know there is a way to get to get paid at closing but it is done in a shady kind of way. It would be coming from the home buyer but without them knowing. How does he have a substantial inventory with no marketing in Place? It makes me wonder if he is pitching this idea to the builder in hopes of landing the account. Does he pay for photography on homes now or just use phone pictures? I am not sure what account you have, but I have the 11 scans a month until I get going. You would blow those out within the first week. Then you would get hit at $20 a scan after that. He would be the one that would expect you to buy the floor plans telling you that you are going to make so much money and it is so worth it. This sounds like a pyramid scam. He would pay you enough to keep you going. I think you will make more just waiting on paying customers, at least you will not be paying to work. |
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WGAN Standard Member Bon Secour, Alabama |
Chemistrydoc private msg quote post Address this user | |
| Not either/or - think both/and! You only can make money when the camera is spinning, so maximize that! | ||
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pmjacoby private msg quote post Address this user | |
| @jfantin, I'm not an attorney but, I am an agent and as far as I know, if the fee is based on a whether or not a sale closes, it will likely be considered a commission in at least some states. The agent or broker would be the one who would be in trouble paying anyone who isn't licensed a commission. It's possible the recipient could also be at fault but, less likely as they haven't engaged in any interaction relating to a sale of real estate with the general public (the RE licensing laws are present to protect the general public). | ||
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gulmer123 private msg quote post Address this user | |
| I can only speak about Florida where I am a broker and the law is clear. You can not be compensated for more than $50 based on a real estate transaction as @pmjacby stated. I don't think I would opposed to a commission structure with the right Broker. (and provided you are licensed) There could be significant upside to it. It would take more follow up and watching on your part to follow the property and if/when it sells. | ||
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mike02h private msg quote post Address this user | |
| Thank you everyone so much for your replies, I've been away for a bit contemplating all of your advice in regards to this. She and I have agreed that a bill will just be paid in regards to services rendered. I agree that not only is the commission idea complicated but legally, it's becoming a bit too difficult to track down the legalities where I live so I'm happier to just go on the safe side of things. I'm actually working on getting my license but I won't have it for at least 6 months. @DSPhoto & @Letme3D - definitely going with this. Keeping track of everything is definitely a tough point to argue with. Pay per service is just simpler. @Baxter - it was totally worth it to read all these fantastic replies, it's always worth seeing what kind of great ideas we can all cook up and evolve our businesses Thank you very much for your reply!@jfantin - I very much appreciate your breakdown that you did there. My current going rate for scans is running at about 0.15 per square foot so it's reasonable enough in my market. I'll be taking into consideration what @pmjacoby and @gulmer123 were saying, I definitely might need to talk to my lawyer if I do decide to go on the commission route as it can be quite lucrative with the right REA. |
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