Get Paid as a Broker

Speaker 1 0:00

Going over a couple of different ways to get paid . Obviously , the first way that we get paid is by being a broker , so that's negotiating commission on the buy side or on the sell side . Everybody understands how to get paid as a broker , right , it can be commission , it can be flat rate , it could be a graduated rate if you want . So the idea behind the graduated rate is sometimes people say if you sell it for X , I'll give you this much . If you sell it for X , I'll give you that much . The other one I want to talk about that you guys can maybe start using , or maybe use as your own , is this idea of an affiliate or a finder's fee . In the industry sometimes they're known as bird dogs and these are individuals that you might come across , or you yourself want to be in this position whereby you go and find a buyer or a seller for somebody and you get paid a commission from the broker . Hey , edward , if you want to bring me a CJ that I can list , I'll throw you 500 bucks to get it signed and then on the back end I'll pay you . Whatever it is , you know , whatever he's going to do , I'll pay another 500 on the back end , or I'll pay you a thousand dollars when we sell it , or if it's a pilot , you know , hey , you bring me a listing and when we sell it , I'll cut you in for 10% of the commission or half the commission , whatever it is . So you can be a bird dog , or you can utilize a bird dog and cut a piece of your commission to them to help you get more business . Any questions there ? So then , the final piece that we want to talk about is working with inventory guys slash wholesalers , slash investors .

Speaker 1 1:45

So now here's how this works . You're going through your market and you find an aircraft . Here's my beautiful aircraft . Okay , you find an aircraft . Mr Seller is willing to sell . So this is the seller . He's willing to sell for $1 million . Okay , mr Investor or wholesaler is willing to pay $1,000,000 .

Speaker 1 2:05

Down here you've got a guy we call him the End User is looking for this exact plane and he's willing to pay $1.5 million . So what do you do ? You found the plane . He's willing to sell for a million . Because you're a professional , you have access to guys that are inventory guys , wholesalers and investors . They're willing to pay a million dollars for this jet . You've got an end user that's willing to pay $1.5 million for this jet . So you got a couple of options . Option one would be hey , mr Seller , I've got a guy to buy your aircraft at a million dollars . Will you pay me a commission ? Yes , great , okay . So you make a commission here right Now . This guy might go off and find another seller . You never hear from him again .

Speaker 1 2:47

That happens , however , if you're like well , hey , I remember Bob over here , he's looking for this exact same aircraft . Hey , bob , we've got it for sale over here for $1.5 million . Let's just say for the sake of argument . He's like oh cool , I'll buy it $1.5 million , no problem . So now you can make a commission here selling the plane for $1.5 million from the wholesaler to the end user . How much commission do you make ? That depends on your relationship with the wholesaler . Could be a 6% for the sale . There's a $500,000 split here , though I've worked with wholesalers where they give me a commission . That's better than my 6% . So it kind of depends on how you would do that .

Speaker 1 3:31

Now this happens . There's nothing illegal , there's nothing shady here going on At $1.5 million . You know . The question is why would somebody pay $1.5 million for a million dollar jet ? Well , maybe the jet's actually worth $2 million and he's getting a deal , or maybe it's not worth 1.5 million dollars . Maybe he's like , well , I'll only pay 1.2 .

Speaker 1 3:54

Now you got to go back to the investor and negotiate that deal and negotiate that commission , this sale between the investor and the end user . It can happen one of two ways the investor can buy from the seller , fix it up , add value and then flip it to the end user , or it can happen at the same time . This is called a simultaneous closing . It's tough to do because , basically , you need this contract between wholesaler and seller to say X , and you need the contract between the end user and the investor to say the same exact thing , just changing the prices . If you do that , you can close all at the same time . Now what's the inherent problem when you're doing this simultaneously ? If you make a mistake , mr End User sees that Mr Wholesaler is buying it for a million dollars . Again , there's nothing illegal about that , but it's probably going to not make his day , and so what I recommend in this situation is that we exercise transparency .

Speaker 1 5:05

Hey Bob , listen , I know you've been looking for this jet . I found it for you . I know it's exactly what you're looking for . I know you already told me you're willing to pay 1.5 . The reason this jet is available is because one of my partners I have a wholesaler that has it under contract and he's willing to sell it for a profit . Well , how much of a profit . He's buying it for a million dollars . What I'm not paying half a million dollars for it . Bob , I'm with you 100% . We can go find another plane , but you know , we've been looking for a while and it might take a little longer . Or I can go back to this guy . You tell me what would you pay for this plane ? Well , I would pay 1.2 .

Speaker 1 5:44

So we go back to the wholesaler and say , hey , dude , like okay , we can flip this simultaneously for 1.2 . Well , I want to make $200,000 in this because , again , the wholesalers don't do this out of the kindness of their hearts . They need to make money . So they might say I don't want to do it for 1.2. , I'll do it for 1.3 , so that you get a commission too . And then you negotiate the deal and it all's well that ends well . The reason I'm bringing this up to you guys is one , just so you can think of different ways to make money , utilizing bird dogs . And two , working with wholesalers because we have these guys .

Speaker 1 6:18

So when you're going through your markets , if you find someone that's going to sell a jet cheap , let's talk to the wholesaler see if there's a play there . Alex brought up a point earlier . What happens if you're going through a market and you find a jet , you know it's worth 1.5 , and the seller tells you I'll take 1 million . What do you do ? Do you tell them ? Do you have to tell them ? I'm going to tell you , yes , because we're professionals and we value honesty and transparency . Okay , some brokers won't . Some brokers will just be like oh , you want to sell it for a million dollars . Okay , I mean , I'll see if I can find somebody . You know it's worth 1.5 in your head . I'll see if I can find somebody . It's probably really only worth 900 grand , bob . But you know , if I bring you somebody in that nine hundred to a million dollar range , like you know , maybe we can make something happen .

Speaker 1 7:09

Meanwhile , you know , you got a guy you call your buddy and he's like I've got a deal , we're going to buy it for a million dollars and we're going to put it on the market . Because we're wholesalers for inventory guys , we're going to add it to our inventory . We're going to put half a million dollars on top of this and we're going to sell . It's going to be a steal . Those are like real conversations that happen and all of a sudden , bob sells it for a million when he could have sold it for 1.5 .

Negotiating Commission With Sellers

Speaker 1 7:26

And the broker's not being honest . What would I do , or what I would like to see us do in that conversation , is basically say to the seller hey , bob , listen , I know you'll take a million dollars for it . That's a great price point . I think it's worth more . But of course , if I put it on the market and it's gonna be more , it's gonna take longer for us to sell it . You know you'll have my commission . It maybe you only walk away with with 1.3 .

Speaker 1 7:48

Do you want to put it on the market and try to get more money or do you want to sell it now ? No , tom , I need to sell it now . I've got a divorce going on . I'm not using the plane . I've got a big bill like . I just need to sell it for a million dollars right now . Great , okay , everyone's on the same page . You told him that it's probably worth more money . He's okay with that . He's willing to let you sell . Great . Now you can sell it to a wholesaler for a million . Now , based on your relationship with the wholesaler , you might make a commission for that first sale of a million . Based on your relationship with the wholesaler , when he goes to flip it can you make money . And that's a conversation with the wholesaler . So I just wanted to outline these two things again .

Speaker 1 8:26

Working with affiliates , working with bird dogs , slash , what do we also call them Finders ? Finders , yeah , like finders , feed guys . That's one way you can do business . And that's the same thing . When I'm calling through , if I'm talking to a pilot and the pilot's like , yeah , they might be interested in selling , you know , I will say to the pilot hey , look , I really think we can get this done . Do you need to get paid in the deal ? And I'll ask the pilot like , is he looking for something ? Because I've had pilots at the end of a deal ask me for money and I don't like that . So , so try to get up front . If someone's expecting money , get that up front . And then I wanted to bring this idea of these inventory guys , these wholesale guys . Any questions on that ?