One of the most recent trends in Real Estate Investing involves building new rental properties and flips instead of searching for distressed real estate to rehab. It’s a strategy that works but as it relates to flipping, building a new property means your fixed costs will be known in advance along with the negotiating commissionsfinal selling price should you decide to flip.

Your builder can provide you with a solid cost to construct, give or take a few changes along the way, and your agent can tell you what the final selling price will be. It’s a relatively simply model of subtracting expenses from the sales price to arrive at your profit. It’s rather cut and dry in most instances. So if the cost to build is known and the final selling price looks reasonable, how can you increase your profits on any single transaction?

If subtracting costs from the selling price equals your profit in order to increase that spread you will need to either raise the sales price or reduce your expenses. Your agent will tell you whether or not you can reasonably expect to sell a property above market. And your cost to construct is also a known quantity but you don’t want to cut corners on labor or quality. Are there others involved that you may negotiate a discount?

When you speak with an agent about joining your team, ask for a better commission structure in return for your continued business. There is no standard real estate commission and an agent has the authority to negotiate the commission structure. Don’t simply think that a standard 6.00 percent commission rate applies everywhere. If an agent isn’t involved with a sale, then a “standard” commission won’t apply.

In your market where you have to keep a keen eye on the list price and there is no such thing as a “bidding war” in your town, by promising more commissions in the future, you can lower your selling expenses, increasing your bottom line.