All Forum Posts by: Alexander Gonzalez

In a buyer’s market I would use the words “lease option” and I

would also say their commission is paid “in full” versus “up front.” It

is not as strong, but still very positive.

After I started to send out this type of letter, the deals started to

come in. The commission was no longer a stumbling block issue for

the Realtors—they didn’t have to worry about waiting for years to be

paid for the work they were doing then.

In a weaker market or a buyer’s market, I don’t pay the entire

commission up front—I might only pay part of it, say 1 to 1.5 percent

versus the 3 percent I would pay in a seller’s market. They would then

have to wait until closing for the remainder of their commission. In a

weaker market they realize that they might not get paid at all if their

listing doesn’t sell. At the same time, I am getting less from my buyers

in these markets. Remember, a slower market for sellers means a

slower market for buyers; less money for sellers translates to less

money for buyers. Realtors understand that when business is slow for

them, it is slow for me, also.

Here’s an example: I offer $200,000 in a seller’s market and I pay

3 percent of the listing portion of the commission up front. This is

$6,000. I would owe $194,000 when I pay off the seller (when I exercise

my option). However, if I don’t exercise my option, I would not

get that money back. I am fronting the seller’s expense for the real estate

commission.

HOW TO GET REALTORS TO HELP YOU DO LEASE OPTIONS

Sequence of Events When Working with a Realtor

The Realtor gets paid when I put someone in the home—in other

words, when I get money from someone else. The sequence of events

is as follows:

1. The Realtor gets a listing.

2. The seller says the four-letter word, “rent,” and the Realtor

shares it with me.

3. I look at the property.

4. We negotiate it through a proposal.

5. We agree on the terms.

6. I write up a full offer.

7. The offer gets signed.

8. I find a tenant-buyer.

9. I pay the commission or a portion of the commission to

the Realtor.

10. The tenant-buyer moves in.

11. Closing happens at a later date.

A part of Wendy Pattons

"Investing in Real Estate with Lease Options and “Subject-To” Deals"

Not at all a professional, but Wendy Patton has a chapter in her book that explains paying the Agents Commission up front in a Lease Option. Not too sure, look into it more cause I'm interested in the correct way as well.