All Forum Posts by: Chris Coughlan

Chris Coughlan has started 15 posts and replied 69 times.

Commission is based off of purchase price.

400K purchase price, 5% commission, 2.5% each side
10K listing agent
10K selling agent

If I want to give them 3K of my commission reducing the purchase price to 397K:
$9,925 listing agent
$9,925 selling agent - 3k = $6,925

I guess I'm not clear on how this would work?

Thanks,

Chris

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Hello,

I'm assisting my clients (friends) purchase their first home. I would like to give them a portion of my commission to help them out. I know I will need to contact my attorney and accountant but was wondering if anyone has experience offering commission rebates? It sounds like I have a couple of options.

http://www.justice.gov/atr/public/real_estate/rebates.html

My brokerage said that I can rebate a portion of my commission. They said that they will mail my client a check after the closing as long as I filled out a fee disbursement form detailing how much and who gets what. They said that I will not be taxed on the rebate portion.

"According to the DOJ and the Department of Housing and Urban Development (HUD), real estate agents may rebate a portion of the agent's commission under RESPA. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified. Real estate agent or broker commission rebates do NOT violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business."

Does anything need to be filled out on the HUD if an actual check is being mailed to my clients rather than being a credit? Sounds like they won't be taxed if it's a credit, but what about if they receive a check?

I have also read that some people have, "Reduced the purchase price of the home by the commission rebate - The commission rebate is noted on an addendum that both buyer and seller will sign."

If I want to give my clients 3K, reducing the purchase price of the home by 3K affects the commission of the listing agent (who won't be happy). How does this work?

Thanks,

Chris

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is anyone using stacey kellams probate letter? how is the response?

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Originally posted by Brian P:

cmc22

Or you could do what one new investor in my area did. He went to the owner of a deal I was doing and paid him $100 to give him copies of all the paperwork I used in the deal. He got years of refining and legal costs specific to the area he was going to be doing biz in.

Of course he could have just asked me and saved a $100 because the local investors in my area share if your not a jerk, but I know that may not be the custom elsewhere.

But we believe common forms promote our cause and makes our cooperating with each other much easier.. We don't however post them on the Internet, so check with your local REI group.maybe a few members will help you. Or god forbid you might pay a lawyer just to draft a specific clause after you have outlined what you want it to do and the purpose of it. I know money is tight but just see how tight it is if you screw-up.

Thanks for the advice Brian.

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Originally posted by Mitch Freed:

You can really use any contract you want...purchase and sales, option contract etc...once they accept you become a principal in the transaction and have the legal right to market that contract or the house in general to an end buyer.

The option contract usually works best because that contract can contain specific wording that gives you the right to market the property as the seller.

A purchase and sales contract technically does the same thing...you will definitely want to include and/or assigns on all purchase contracts.

I've got to run here but can go into more detail on how I've gotten these deals done and can provide some example contracts that I have used.

Thanks for the info Mitch.

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I agree with you Corey. I made some posts a while ago and have searched the forums but have not seen anyone actually offering their version of the contract for others to download/view.

My assumption is that they paid a lawyer some big bucks to have it drawn up and don't want to share with others for free, or they don't wan their competition to see what they are using. I guess it kind of makes sense.

I guess I'll have to contact a lawyer to get a wholesaling contract....unless someone wants to PM me one to look at.

I suppose I could make my own in MS Word using the same language from the MA Contract to Purchase agreement I have and just add in "and/or assigns" and a few contingencies.

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Originally posted by Stephen Sarocky:

Just wanted to thank everybody who replied. It solved the problem I was having understanding how to do this.

Stephen, how did you decide to handle the commissions?

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Originally posted by Mark Yuschak:

Stephen, I'm currently working one of these exact deals as a Realtor.

I'm the listing agent on the property. I found a buyer who is an investor and he put the option contract on the place and is curerntly negotiating with the bank. While he's negotiating his deal with the bank, I'm continuing to market the property. A Realtor in my office has found a buyer and wrote a PA. That PA is contingent on the short sale being approved with the seller (which he doesn't care what the price is - he wants out) and the lender. The property will double close since the end buyer is an investor too.

Since this is a small deal, the commissions are all a straight $1000. Even with 3% it'd be the same principal.

For the first transaction:
- $1000 payable to the listing agent
- $1000 payable to the buyer's agent
(both are me in this case)

For the second transaction:
- $1000 to the listing agent (me)
- $1000 to the buyer's agent (agent in my office)

I'd still be 12% if you added up the percentages.

I actually had a question regarding Realtor commission when using an option contract and double closing. A Realtor friend of mine sent me some listings that are short sales. I have contacted a few of the listing agents and will be meeting with them soon. This is sort of how I planned on structuring the deal:

On the A to B transaction, the listing agent "Sally" gets 3% and the buyers agent "Christine" (my friend) representing me gets 3%. The lender will be paying this commission so they may or may not try to knock it down.

Then on the B to C transaction where the original listing agent "Sally" is now listing the property for me, I was going to pay just 3% to whomever brings a buyer to the table. So if Sally is able to find a buyer for me then she has an opportunity to make another 3% on the B to C.

I'm under the impression that if the lender sees 6% going to the same agent (if the agent is representing both the seller and buyer in the A to B) then they will try to cut that down, so using a separate buyers agent (my friend) on the A to B will decrease that likelihood.

Let me know what you guys think. Should I be offering 1% to the listing agent on the B to C?

It's sort of like 2 transactions for one deal. S

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Originally posted by Justin Schnettler:

I have never done a shortsale flip but I have four that are close to happening. My title company does know how to do a double close but they are telling me they can only do the flip if the end buyer is using cash or hardmoney. I know people have flipped when the end buyer has used financing. Have the rules changed in the last month or should I get a new title company? I understand that I cannot flip to an FHA buyer. Thanks.

FHA requires 90 day seasoning. I've been told that you should push your end buyer to using a conventional lender to avoid the title seasoning issues. Of course a cash buyer would be easiest. What type of contract are you using? Are you recording a memorandum/affidavit?

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Originally posted by Sol Christopher:

I wanted to know if there was an advantage to contracting on agent properties that were already short sale approved, instead
of doing that work myself? (of course if it' listed at a great price)

This would be to double close- the only advantage initially if there is one, no haggling with the bank on the SS. Any help would be greatly appreciated! Thanks

Chance are if the short sale is already approved then the listing price is either the approval amount or pretty close to the approval amount. So there will not really be any room for you to negotiate and discount the property in order to create a spread for yourself. The key to "flipping" a short sale is to negotiate a discount in order to create room for you to mark up and resell.

I'm in the process of doing my first short sales as well.

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All Forum Posts by: Chris Coughlan

Chris Coughlan has started 15 posts and replied 69 times.

Post: Commission Rebates

Post: Commission Rebates

Post: Probate Buys

Post: Wholesaling Basics/Contracts

Post: Wholesaling Basics/Contracts

Post: Wholesaling Basics/Contracts

Post: Realtor Short Sale Leads

Post: Realtor Short Sale Leads

Post: Shortsale Flip

Post: Short Sale Realtor Listings Help