Ife Garey, Renter in Philadelphia, PA

I am looking for a property to make a lease purchase agreement in Northwest Philadelphia. Why can't I find an agent to work with me?

Asked by Ife Garey, Philadelphia, PA Thu May 6, 2010

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5
Timothy M. Garrity’s answer
Hi, Charles & Ife.

My advice would be to sit down and speak with a few licensed agents face-to-face to get all of your questions answered. You may find out that the option you're inquiring about might not be the best possible option for your situation.

If you'd ever like to fire some questions at me, please let me know by visiting my website. All of my contact information is there.

Lots of luck.

Tim
tgarrity@brownmckinney.com
0 votes Thank Flag Link Fri May 7, 2010
Two reasons:

First, Dp2 is absolutely correct. Most agents don't know how to do them, or how they work. And many have been told that they're bad, or undesirable, and been cautioned not to do them.

There's a second equally important reason. As Deep Throat in "All the President's Men" said: Follow the money.

In a sale, the commission is earned at the time the contract is ratified, and is typically paid at closing . . . which is usually 45-60 days after the contract is signed.

But in a lease-purchase or lease-option arrangement, the actual closing won't take place for years. An agent may be willing to wait 45-60 days for a paycheck. But not as many are willing to wait 2-3 years. And even then, a lot of lease-options (and even some lease-purchases) never get consummated.

So: You're an agent. There's a house for sale for $500,000. All commissions are negotiable, but let's assume here, just hypothetically, that the commission is 6%. You sell the house (or you represent the buyer in purchasing). That's $30,000 in commissions. Depending on the agent's arrangement with his/her broker, the broker may get none, some, or perhaps half of the agent's commission. Even split 4 ways (listing agent, listing agent's broker, buyer's agent, buyer's agent's broker), that's $7,500.

With a lease-option, the most that an agent may immediately see is his/her split off the rental agreement. Assume hypothetically (because it's all negotiable) that the house rents for $2,000 and that the commission is one month's rent. That's $2,000 in commissions split 4 ways--$500 to an individual agent.

Hmmm. Which would you rather have? $7,500 or $500?

Follow the money.

Now, IF the house sells 3 years from now and IF the agent is still with the same broker (because it's really the broker who gets the money, not the agent), then, yes, the agent gets the commission for the sale. That's a lot of "ifs" and a long time to wait.

Wendy Patton, a Realtor in Michigan who is something of a lease-option "guru," has come up with a partial solution. Some of the option fee that the tenant-buyer pays the owner can, in turn, be advanced as a portion of the commission. That substantially "sweetens the deal" for the agents involved. But it's still not equivalent to making the sale today.

So: Two pieces of advice.

First, as Dp2 suggests, contact some investors in your area. Some will have prepackaged lease-options for you. Yes, they'll make money on the deal, but it'll still work out well for you. You can find investors at investment clubs. Here's a link to the ones in Pennsylvania: http://www.creonline.com/real-estate-clubs/pa.html

Second, if you want to search for lease-options on your own or with a Realtor, here's a blog I wrote on how to do it: http://bit.ly/findaleaseoption

Hope that helps.
0 votes Thank Flag Link Thu May 6, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Charles & Ife, In this area, there are occasionally sellers willing to lease short term, and will sell to you at a later date. However, most lease-purchase offers come from investors who are leasing you the property and charging you some amount toward a future purchase. If you would like to explore your options in detail, I am located in your neighbor and would be happy to sit down with you to discuss full.
Kathleen Sheridan
Weichert, Realtors(R) - McCarthy Associates
6901 Germantown Ave, Philadelphia, PA 19119
215-843-1414 ext 230
0 votes Thank Flag Link Thu May 6, 2010
Charles,

Lease purchases are not easily found.....most sellers want to SELL their home and move on. In most cases the sellers require the funds from the sale of the home to be able to persue their future. Unless the buyer is prepared to make a sizable deposit (which is not normally the case) the sellers find themselves in a "no win" situation.

Additionally, even if the seller is interested in this option they are often reluctant to have this information disclosed because their desire is to sell it not lease it. The best way to encounter a lease option opportunity is by direct contact with an agent that has a listing and an awareness of the sellers needs and flexibility.

Most lease option situations are an "after thought" that materializes over time and often as a result of a buyer's courtship.


Best wishes,

Bill
0 votes Thank Flag Link Thu May 6, 2010
Many agents don't know how to do them; however, some who are also investors, or who have been around the block for a while, know how to do them. Regardless, if you can't find one, then approach some of the investors in your area.

Please feel free to contact me.
0 votes Thank Flag Link Thu May 6, 2010
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