Home Selling in 71226>Question Details

Sylvia, Home Seller in 71226

Can a realtor charge a commision on a lease with option to buy?

Asked by Sylvia, 71226 Fri Jun 11, 2010

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7
Hey there Syliva....

If the Realtor has worked to put this deal together for you or with you, then they (as any commission based service provider) should be paid for their time and effort.

There are many ways the Realtor can get paid: (as I don't know exactly what arrangement you have with them)

~You can pay them for time and marketing effort.
~You can have the Realtor take their payment back as a note.
~You can allow them to take a percentage of their commission out of the upfront option consideration that the tenant/buyer has paid. (If their take is 6%....the Realtor gets 2% now and then 4% if/when the deal closes)
~You can give them the equivalent to one months lease payment upfront and then the total 6% commission at the close of the deal.
~You can offer them some of the monthly cash-flow (if there is any) throughout the entire length of the lease in addition to commission if/when it closes.
~They can be give ANY other consideration, such as a boat or usage of a boat, $1000 in Waffle House Gift Certificates, etc....etc. You are only limited to you and your Realtor's imagination.

It all depends on how creative you want to be and how flexible/willing the Realtor will be with his/her payment structure.

Darin
Lease-to-Own Professional
Independent Consultant
2 votes Thank Flag Link Sat Jun 12, 2010
Darin and Dp2 have it right. In fact, I too was going to cite Wendy Patton--she has a specific strategy (which Darin and Dp2 describe) to address that issue.

The issue is one of timing. And, as Wendy points out, it's also one of how much of an option fee can be obtained up front (that, in turn, is available to be passed along to the Realtor).

Three reasons Realtors generally don't like lease-options is that: (1) they may have to wait years for their commission, (2) the sale may never close, and (3) In the intervening years, the Realtor may change brokers (and the commission is actually owed to the broker, not to the agent). So, to ease those concerns, paying a Realtor up front for at least some of the commission will persuade more Realtors to assist with lease-options. Often it's done by using some of the option fee, but Darin lists a number of other good techniques.

Hope that helps.
1 vote Thank Flag Link Sat Jun 12, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Darin, you know I'm a fan. :)

Sylvia, Darin summed it up nicely. I'll simply expand a little on one of his points.

The issue isn't whether or not to pay an agent a commission; rather, the issues is WHEN to pay it. This is negotiable. Although one technically pays the commission via the proceeds at closing, lease-options present an interesting case depending upon how one structures them. Some investors will use a single closing, and others (myself included) prefer to use something similar to a double closing. Wendy Patton, a Realtor AND investor who specializes in lease-options, gives some recommendations, and I tend to operate in a similar fashion. Sometimes, she'll offer to front the entire commission (especially during a hot sellers market); other times she'll offer the agent a note for the commission (especially during a buyers market) that's payable upon closing. Occasionally, she'll also offer 1% (or so) upfront, and pay the rest at closing as Darin suggested. The point is that there's not a "one size fits all solution here".
1 vote Thank Flag Link Sat Jun 12, 2010
Sylvia - Realtors can charge a commission for a rental, and a lease is no different. Of course they have to have an agreement with the homeowner that they will be paid X for bringing them a tenant.... and then they will be paid XX when the option is exercised.
1 vote Thank Flag Link Sat Jun 12, 2010
Alan May, Real Estate Pro in 60201
MVP'08
Contact
I have a house in Fayetteville and if a realtor would find me a tenant buyer I would be happy to let them have their 3% of the purchase price (coming out of the tenant buyer's deposit money). If they found a real tenant buyer, screened the applications, had a relationship with a mortgagor to go over the finances to know there is a good chance of them closing within the time frame agreed upon. Making sure the realtor gets a decent amount of consideration seems fair to me.
Sometimes it has to come down to "thinking outside the box". I loke to make sure the realtor gets paid for their efforts upfront. To me it seems like a win/win to not make the realtor wait to get paid.
0 votes Thank Flag Link Fri Jan 17, 2014
If converted to a sale the answer is probably yes. I have had several of these in my career, one of which will eventually work out.
0 votes Thank Flag Link Tue May 15, 2012
Yes, an agent can ask for commission for a lease with an option to buy--keep in mind there is work involved in bringing the deal to fruition--and commissions are always negotiable between you and your agent--choose your agent with care.
0 votes Thank Flag Link Sat Jun 12, 2010
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