OK... I need some advice. I have a property that has been listed by a realtor. No more than a week into the contract I get a potential lease option deal on the same house. This was not through the realtor. What can I do in this situation? I do not want to create a bad relation with my realtor, but also don't want a lead to get away. I thought of standard rent for 6 months (end of contract obligation) but the tenant doesn't want to leave when the house sells. Should I walk from the deal and hope for a sale later?
If you care about your relationship with the Realtor, then talk to the realtor. Good realtors are very pragmatic people whose talent should be to figure out reasonable solutions to situations like this.
If you don't care about the realtor or your business reputation generally, just take the house off the market and tell the realtor you decided to rent due to unexpected financial problems. They are not going to know it was a lease option. I doubt that is the first time that happened.
But you do have to decide who you are. There is some cost to being a jerk. Is it really less than whatever arrangement the realtor would be willing to make with you? And being frank with the realtor will build that relationship. Short term $$ is not everything if you are in it even for the medium term.
I know this is pretty late now, but any time there is a lease in place with a tenant - the tenant has "tenant rights" and those stay with the home (usually even if a bank forecloses) - so you will want to talk to your agent or the tenant if you buy it and potentially offer the tenant "cash for keys" to move. One of my favorite strategies is working with Realtors to do lease option deals.
As long as your Realtor or the listing was not the procuring cause of your L/O deal, you should tell your realtor you have decided to rent it and cancel the listing. Then do you deal.
A L/O is sale arrangement entering into an agreement to transfer title, your agent would be entitled to the commission if they were the procuring cause, having it listed, it would be difficult to show your optionee never saw the listing, IMO.
You don't really need to tell the agent there is an option, unless the listing or their efforts brought this potential buyer to you.
Some listing agreements have lease clauses, read you listing agreement.
There are advantages to having your agent work the option and sale side, the transaction is insured as to errors and omissions, agent's responsibilities, disclosure and settlement and they may guide the buyer in financing.
If that's a thought, I'd probably cancel the listing, do the lease and then call the agent back on dealing with the option. :)
If you have a yearning to understand "procuring cause" see
@Bill Gulley may want to comment.
I'd guess the matter has come before the courts here about 20 times in ten years, considering the number of agents here, it is rather rare, but does happen. Brokers don't like suing past clients, it's bad PR. Doesn't mean demands aren't made, doesn't mean if an investor stiffs a Realtor that the investor can select any Realtor he wants in the future either.
That is also Florida, each area will have their interpretation of continuous over time. All listings may not be exclusive and the option granted within the contract period has a bearing as well, communication is no longer necessary over an option period.
I'm not a lawyer, but I do know of this situation of a seller doing an installment sale or option and then coughing up a commission. Listings have protected periods, some for the like term of the listing, a 6 month listing is protected for 6 moths after it expires.
Commissions aren't due under a standard listing until title passes which concludes the sale, but you can have other agreements. I have had Realtors compensated on options and installment many times.
Here, long past, Realtors wouldn't do options or CFD installments, brokers wouldn't because title doesn't pass. I suggested a contract addendum to compensate the Realtor upon executing an installment or option contract, it was reviewed and adopted and they began warming up to these deals, since they could get paid.......ah, money as a motivator.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.