They get paid from the proceeds of the sale at the closing, when you buy a home.
Because of this arrangement, it would be nice if you are loyal to the agent with whom you decide to work!
"Rent with an Option to Buy" usually involves an agreement between you and the seller with an agreed upon purchase price now, not later on .
You may buy anytime during the lease, or at lease end..................the seller must sell, but you don't have to buy.
You will pay non-refudable money for the right to exercise your "option" or not. If you do buy the home, the upfront money is applied to the purchase.......if you choose not to buy or CANNOT buy, you LOSE that money.
This upfront option money can be paid in a lump sum, or.....you can pay an amount OVER the normal rent price and that difference will be used as the option money.
Make VERY sure you will qualify for a mortgage before involving yourself in this kind of transaction.
Also make sure you have a contract that spells out all the specifics involved.....you might want to speak with an attorney, too.
Best wishes........do your due dilligence and make sure you completey understand all the pros and cons before you proceed!!
1) When hiring a Real Estate Agent, do you have to pay them to look for houses for you?
In California, buyers can choose the absolutely best agent because the seller pays the commission. In Oregon, buyers pay their own buyer agent commission, and it can be a negotiated amount that includes any of the following: an hourly rate, a retainer, or a flat fee, payable in advance, during the process or at close of escrow.
2) I am trying to find a home where I can have the option for rent to own. Can anyone tell me how this works?
True rent to own options are rare. To be honest, many ads with "rent-to-own" can be frauds. There are lots of options-in other words, everything is negotiable.
My best advice would be to locate an agent who has successfully negotiated this type of rent-to-own" agreement. I have a colleague who has done this and would be happy to share her info with you offline.
NYS Associate Broker
Keller Williams Landmark II
Serving Queens, Nassau and Brooklyn
As you can tell, you don't need to pay a Realtor for his/her time or help in finding you a great place to live, so my suggestion is that you find a great Realtor to help you look for a home.
More importantly, however, please know that living here in the Silicon Valley is still very much in demand, so there are not many or any reasonably priced "rent to own" or "lease with an option to buy" contracts or sellers out there right now. In fact, in a recent report from the California Association of Realtors, only Santa Clara County, parts of San Francisco and the Peninsula (in Northern California) are showing a resilient and robust housing market. Typically, the type of purchase you're describing tends to be occur in less healthy housing markets. You can certainly look to Gilroy, parts of the East Bay, Sacramento areas for lease with option to purchase and may be able to find something that not only fits your budget but is a great buy too!
However, to really find a great home, you'll need to start with a Realtor. Give any of the local agents below a call. I'm sure all can quickly help you find a great home and, more importantly, can explain the pros and cons of this type of purchase.
Area Pro Realty-People's Choice
It' important that you have a consultation with an agent so that you know the options available to you.
The commission is generally paid by the Seller or negotiated into the lease and purchase agreement.
The most important being is your loyalty. Agents/Brokers do not get paid until the deal closes. They put in time, gas and don't get paid unless it closes.
Carol, I am confused by your statement, and in the spirit of clarifying this for consumers reading this, I think MOST states allow agents to act as buyer's agents, not just CA.
I know in NJ we sign a form stating that we are working as a seller's agent (when listing a home)..or a buyer's agent...or disclosed dual agent, if the property is a company listing.
From what I read here on trulia, there are buyer's agents all over the country, and many even have clients sign exclusive agreements, too, so your comment about CA being the only state with buyer agency just isn't correct.
Maybe I misinterpreted what you said, but that's how it came across to me.
Just as another point of information....while many agents often state the seller "pays" the commissions, truthfully, the buyer is participating, too, as without the commission requirement, the buyer could most likely pay less for the same home..............so that's why I generally prefer to say the commission is" paid from the proceeds of the sale", rather than definitively saying it comes from the seller's pocket.....as the final price is certainly determined by factoring in the commission, which impacts the buyer as much as the seller.
It' important that you have a consultation with a agent so that you know options are available to you.
The commission is generally paid by the Seller or negotiated into the lease and purchase agreement in an increments.
The most important being is your loyalty. Agents/Brokers do not get paid until the deal closes. The work on a contingency basis meaning they put in time, gas and don't get paid unless it closes and they are the agent who wrote the contract. If you decide to make a change in your buying decision but you feel the agent is one your would recommend, then give them your referrals as well.
All the Best to you.
Sellers pay the commission for buyer and sellers in the state of California. A unique aspect in California is the buyerâ€™s ability to have buyerâ€™s representation. Buyers are represented by the sellerâ€™s agent in other states because the seller is paying the commission. State of California changed this practice and allows the buyer to be represented by the buyerâ€™s agent. Now buyers can have the benefit of having their agent represent them and have their best interests in mind.
Prudential California Realty
Typically, for the San Jose area, the seller pays the agents' commissions. However, in a rent to own, the seller may be working with an attorney and no agents are involved. You may want to consult with a real estate attorney to review any contract the seller proposes.
You can also enter into a buyer broker agreement that can state the way the agent will be paid, once they find a home for you. You can create an agreement between you and broker/agent in regards to how you pay the agent to find you a home.
Try sites like For Sale by Owner to help you locate a seller
I am sometimes asked who pays my commission if a buyer wanted to hire me to represent them if they buy a house. Normal protocol in California is the seller's hired broker agrees to pay the buyer's hired broker a split of the commission that the seller has agreed to pay the listing broker per their listing agreement once they enter the property in the MLS (Multiple Listing Service).
So if a seller hired a listing broker to sell their home for a 6% commission the listing broker can agree to split the 6% commission with the real estate agent representing the buyer. Sometimes the split is in half, sometimes it can be more or less. It depends how the hired Realtor wants to do the split or how much of a commission he took in the first place.
A lot of buyers don't realize that they can have their own representation when buying new construction. In most cases the builder offers a commission or referral fee to the agent that registers the buyer. The key with new construction though is the Realtor must be there on your very first visit or the builder will not allow them to represent you and get paid. If you bring a Realtor to register you make sure they are willing to go through all the important steps with you. (i.e. contract signing, design center, loan meetings, walk through, home inspection etc.) I always want to be there for my client to protect and advise them properly to the best of my knowledge.
In some cases if a buyer wants to buy a FSBO (For Sale By Owner) and the seller does not want to pay a Realtor whatsoever the buyer can choose to hire a Realtor and work out a commission with them. For example; I had a client that wanted to buy a house from an acquaintance. The seller refused to pay an agent and really wanted nothing to do with one. My client had worked with me in the past and wanted my representation to protect her regarding contracts, escrow, proper disclosures, contract time frames, and all her rights. We worked out a deal (commission is negotiable) so I would only represent her.
When hiring a Realtor to represent you in your purchase you should interview a few agents first. It's not only about finding a house. That's only the beginning. Someone that is full time, well educated in the area, very knowledgeable about contracts, buying "as is" , and contingency time frames is important as well. I recently had a client call me from Sacramento asking me to help her get her deposit back because her local agent (a friend) let her remove all her contingencies and then she couldn't get a loan. She was told she would loose her deposit. Luckily I was able to help her get her $10,000 back but I know many times consumers get ill advised and loose their money.
When a buyer goes directly to the seller's Realtor that is exactly what you're getting.... the seller's Realtor, Yes, they have a fiduciary duty to you but they also have a relationship already established with the seller's. I hate representing both sides because I love fighting and protecting to the best of my ability for my client. If I represent both sides I can only advise both buyer and seller and it's between them.
In any case in this market you should have an experienced Realtor working with you throughout the home buying process. The seller in most cases pays the commission so there is no reason not to. Some will argue you pay for it in the price but I offer this. The market keeps that in mind, that's why there is appraisals to make sure you don't over pay. Also if you have your own Realtor they can possibly negotiate the house down in price more than a seller or seller's Realtor would for you. We are in a very challenging market right now and chances are you need someone on YOUR side.
It is your money, you shoud keep it!
You not only do not have to pay up front to have a Real Estate Agent look for houses for you and you should not pay up front to have a Real Estate Agent look for houses for you.
I will never charge you so much as one penny to look for houses for you.
With respect to rent to own houses, there are very few available. The ones that I have seen in this market are ridiculously overpriced. In a depressed market like this one where we and many property owners are expecting Real Estate prices to increase, few sellers are willing to commit to a sale price unless that sale price is far more than the Real Estate Prices that we see today.
Also interest rates will probably go up substantially in the future. When you are ready to exercise your right to purchase, interest rates will probably be much higher and the interest rates may be so high that you no longer qualify for financing.
With a rent to own house (lease option) You pay the seller an amount of money to pay for the option to purchase to purchase the house. If you do not purchase the house, the seller keeps your option money.
Also you pay an amount for rent that is quite a bit more than the market rate for rent. You lose that money if you are not able to purchse the house.
If you are not able to purchase the house, the seller gets to keep all of that money. In my opinion, for most people "rent to own" Is not a good deal and is a very expensive way to buy a house.
There is not enough space here for me to really give you all of the information that you need.
I recommend that you call me at my cell phone at (408)509-6218 for more information that you will need to get a home of your own.
Many of my clients who originally wanted to buy a "rent to own home" discover that I can help them get a home of their own right now.
I do not charge you any money for my services, and I may be able to get you financing right now so that you can get a home of your own now while prices and interest rates are still low.
Remember, It is your money and you should keep it. It does not cost you any money to call me for more information.
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org