Real Estate Commission on a lease purchase

?

Good question...
I would think that since the seller pays the commission, their agent will either have an agreement with the seller for a sum upon signing the L/O or has agreed to a delayed commission based on the sale price at closing.
I know years ago, when my Mother was an agent, she did get delayed commissions so it might still be going on. I'd just talk to your agent to see how they handle it.

Keep us posted with the answer please

Andy Sager
DG's AndyS
CFIC member

Very interesting, I hope you get the answer and let us know, I will be watching your posts, thank you in advance...................

yes, you can talk to your agent about the commissions. they do take delayed commissions, but most are not willing to do that. also, they have to ok it with their broker. if they leave that broker before the deal is closed and commissions paid, the broker may keep it and the REA might never receive it. they have to see what the broker's policy is on that. they are not entitled to a full commission until the property actually sells and closes. you might be able to work something out that gives them a percentage or set sum up front when the L/O goes through (like $1000 or 10% or whatever you work out), and then you want that amount to be credited toward the commission. might be a selling point with the sellers if you pay that out of your pocket, or you could tell them you are "loaning" it to them and then it will come out at the close of escrow and be repaid to you. everyone has to be flexible when you work with REA's on these deals. hope that helps.

the agents (both seller and buyer agents) take 1% each at time when the lease option is initiated and opened in escrow, and 2% when escrow closes at a future date.

Hi sphi99 ,

Did you write that yourself ?
Whoever did was so deeply beautiful. I am around negitive people 24/7 and it really is uplifting.

Today will never come again. Be a blessing. Be a friend. Encourage someone. Take time to care. Let your words heal and not wound. Today will never come again.
Live life, make mistakes, learn lessons, but ALWAYS keep moving forward.
Just when you think there is no hope, God reaches down and says, "Take my hand and let me lead the way. Be still and know I am God and we can do this together."

That's my concern. I don't know how she will feel about it if it is delayed. We haven't actually discussed it. We usually communicate via email. I'll let all know how it turns out.
Thanks,
Shirley

which doesn't matter to REAs at all... but it seems they would want to take a delayed commission as opposed to having it possibly listed for 3 months with no sale. As far as coming out of my pocket before closing, that won't happen (not at this point in my REI career), but I'll certainly find out if she will take a delayed commission. But that is a good point to consider.
Thanks,
Shirley

Does the seller pay 2% upfront out of pocket and then get it added back to purchase price when option is exercised? Have you done these before?
thanks,
Shirley

I'd like to take the credit, but no I didn't write it myself. I don't remember where I read it, but I thought it was beautiful too.. enough to repeat.

Shirley

Shirley,

no, I haven't done one yet, but that's the information my agent gave me recently as an option if a property I have on the market doesn't sell. She has done it with other homeowners though; I believe the 2% commission would come out of the option fee? and I would assume that if there wasn't enough in the option fee, it would come out of seller's pocket?

Maybe Karen will see this thread and provide us with her expertise on this subject, or you could send her a PM if you need this info soon

This is not something that is set in stone. It is negotiable. The contract with the REA is between the seller and the agent, so you are not obligated in any way to pay a percentage of the commission.

If you want the agent to be consistently funneling deals to you though (and that can work out to be very lucrative for you) you will need to compensate her in some way. The rule of thumb is to give her either 1/2 or one full month's rent out of your option fee. Whatever the two of you work out.

Karen

One of the things that Agents are trained to do is to be negotiable. If asking the question " How would you handle this situation....?" would put off your agent then you may need to be working with a different agent Nothing says that it's you doing the deal. It could just be you asking for someone you know or just a fact gathering mission. But in all honesty, THIS should not put off your agent. He/She may not want to do it, and that's fine, so you would know from the start that you would need to find an agent that will for this type of deal. Once again tho, the commish comes from the seller so why wouldn't your agent be willing to do the deal if there is very little time or effort involved on their part?
As mentioned tho, you want to take care of your agent so a token of your thanks for their patience in getting paid would not be out of line at all or I'm sure, go unnoticed

Hope it all works out for you,

Andy Sager
DG's AndyS
CFIC member

Thanks, that sounds like a plan! This would provide incentive to her to actually look for those properties too!

Thanks again!

You're right...Why wouldn't she?? I believe she will be glad to do it if I do offer her something out of my option fee too like Karen suggested.

thanks,
Shirley

As Dean even said a few "wisdoms" ago, you won't know until you try.
The worst case scenario is that your agent will balk and give away the fact that they aren't really the right agent for you. The best case scenario is that they will be fine with it and help you achieve your goals. I don't see a loss here on your end

Keep us posted

Andy Sager
DG's AndyS
CFIC member

I actually sent her an email as an addendum to the one I sent before (telling her what my investors and buyers are looking for). As Karen suggested, I offered her the equivalent of one rental payment but only up to $500. I am waiting for her reply. It will be interesting to know if this is incentive enough.

Shirley

Keep us posted

AndyS

My REA hasn't answered my email yet.... don't know if she's thinking it over or what because we have been emailing each other about my last offer... hmmmm... might have to jog her memory if she doesn't respond to it soon!

She might be checking with her broker to see if he/she will except this type of deal OR checking to make sure she CAN take your offer of money without a closing??? (Those darn RE ethics you know...LOL )I wouldn't read too much into it for a day or so HOWEVER, nothing beats the old fashioned way of a phone call if she doesn't get back to you in a day or so just to make sure you are still moving forward. You'll get so much more info from a voice than an email. (Can you tell when someone is withholding info from an email? You usually can from their voice inflections I'm just sayin'...)

AndyS

On the purchase,the seller pays the commission. When I sell a Lease option with a Realtor I do it a couple different ways. I recently sold a property 3 hours away on a lease / option. I was not going to drive 3 hours to show the property so I offered the listing agent a fee of $500.00 if she shows the property for me to one of my clients that purchases. If she brings a buyer from her marketing/mls I pay her 1 months rent and 10% of the option collected. Other times I will pay amount equal to 1 months rent plus 10% of the option and also pay a selling commission when the tenant /buyer exercises their option .
Good luck
John W

Okay, I talked with my REA and she said she didn't mind future commissions, but she also said that everything had to go through the company...meaning that I could not give her anything (or really she would not take it) outside the realm of the contract or the agency. She is afraid she could lose her license. She didn't say or presume that I was trying to do anything shady... she just wants to make sure there is no problem. She said sometimes they (the owner) would give the REA a % upfront in those transactions. So, I think she's on board with this and will actually try to find some rent to owns for me. I have had no problem finding them lately myself however, because I think more and more sellers are catching on to the "rent to own" wave. They know there are actually people out there that can afford a nice down payment and monthly payments but cannot get a bank loan.

Shirley

See Shirley,
You never know until you ask.
It sounds like this was a good outcome. 2 Thumbs up for you

AndyS

I got a lot of valuable info from DG. family on this subject thanks sphi99 jcwp,AndyS

Seems like there are several ways to go about it, all depending on what's negotiated.

Great info for everyone! Kudos.