Posted by mattc670 on June 03, 2003 at 10:15:18:
NT
L/O homes listed through realtors?? - Posted by mattc670
Posted by mattc670 on June 02, 2003 at 10:07:07:
Anyone have success creating a L/O deal with homeowners
that list through a realtor? I have been starting out
by approaching FSBO sellers, but there are more people
selling through realtors.
One thing I did was to send around 5-6 letters out to the
home address for homes listed today. I am hoping to work
a deal with the seller, and then come up with something
for the realtor on the back end of the L/O deal. Anyone
have any recommendations on this - things that have worked
like this for you?
I have made a start, and have done some calls, and letters now, which feels good.
Thanks in advance,
mattc670
Re: L/O homes listed through realtors?? - Posted by Mark-Chgo
Posted by Mark-Chgo on June 03, 2003 at 07:40:58:
Matt,
Your best option, to begin with, is to pursue homes that have been listed for an extended period of time. This will help the Realtor to be more motivated to deal with a L/O, as they may be looking at an expiration and no commission.
To handle the commission end, the seller can pay a certain amount at the inception of the lease (in our market, 1 month’s rent is the usual lease commission). At the closing of the sale at the end of the lease, the agent can then receive the balance of the sales commission (their percentage minus the 1 month already paid).
Mark
Re: L/O homes listed through realtors?? - Posted by Curious(MO)
Posted by Curious(MO) on June 02, 2003 at 17:45:50:
I posted this same question on another real estate forum about doing lease option deals with realtors. They suggested that I approach realtor, first. Then once you explain the lease option concept to the realtor, and they understand how you can help them get paid a commission; Then you and the realtor go together and approach the seller about doing a lease option deal. To compensate the realtor you could give $500 for each l/o deal they bring you, and you sign up, and give the realtor 7-8% commisson note off the back-end once T/B buys the house. This is just one variation how you might do it…
Cheerz
Curious(MO)
Re: L/O homes listed through realtors?? - Posted by Brent_IL
Posted by Brent_IL on June 02, 2003 at 13:17:17:
Many agents receive mediocre training, so they aren’t too much of a drawback. The right ones can be an asset. Folks with listed properties that accept L/O?s do it because they can?t sell for cash. They wouldn?t have listed if they wanted to hang on to the property. The only substantial difference within the L/O context is that your deal must accommodate the agency commission; more cash up-front is required. You can try to negotiate with the listing agent to take some now, some later, when the deal is closed out.
are most realtors willing to share data…?? - Posted by mattc670
Posted by mattc670 on June 03, 2003 at 10:19:06:
Mark,
In your experience, are most realtors willing to share
data on listings that are near expiration?
I would think some would, as it then increases the probability for them to get something out of the listing, versus just lettting it expire.
mattc670
have you negotiated this with realtors before? - Posted by mattc670
Posted by mattc670 on June 02, 2003 at 13:53:27:
Brent,
Thanks. Have you negotitated something like this with
a realtor before? How did it go? Did you make your deal
with the homeowner first, then approach the listing agent?
I would think it would be hard to give them a 6% commission upfront, but maybe this could be negotiated
down as you said, especially if the listing is nearing the end.
Re: are most realtors willing to share data…?? - Posted by Mark-Chgo
Posted by Mark-Chgo on June 04, 2003 at 18:33:30:
Matt,
Most Realtors probably won’t divulge the future expiration of a listing, as they’d probably expect you to just wait out the listing period and then deal directly with the seller.
It’s best to approach agents with 60, 90 or 120+ day market times and make an offer, assuming that at least a few agents/sellers are nearing expiration and will be motivated enough to work out a L/O.
Mark
Re: have you negotiated this with realtors before? - Posted by Brent_IL
Posted by Brent_IL on June 02, 2003 at 19:12:26:
Unless I’ve been feeding them copiously, I’ve never had much luck getting a broker to take payments. They have bills to pay, too, and only get paid for the done deals.
When you consider RE commissions, it?s good to view them over the entire term of your ownership or control, and not just as more cash outlay at closing. Look at the big picture.
I buy on terms. Within reason, I don?t care about the selling price. My goal is to lower the present value of the purchase. The timing of the payments due is what’s most important to me. This affects my viewpoint on paying RE commissions. Consider; I have few problems with RE agents because I show them where the money for the commission is coming from.
I buy in a way that eliminates monthly payments, and then I?ll sell at closing via a CFD held in trust to get rid of the ownership expenses and get a backend. I can’t go into details, but in general, the middle of the acquisition cost bell curve currently ranges from 91% to 108% of actual value. I used to shoot for 81% but it’s more difficult in today?s interest rate environment.
It?s the buy-for-100-times-FMV-at-a-dollar-a-month-and-control-the-property-forever gambit.
My objective is to hypothecate the cash flow for the time I’m not making payments, and call the CFD before the payments kick in. Between about 17% to 24% is paid to the sellers at closing and the remaining future balance is paid sometime between 25 months and seven years afterward. The agent’s commission comes out of the initial payment that consists of about a 6% down payment and the rest for other agreements and the no-payment concession. The third party buying the cash flow provides the funding.
The synergy of the deal outweighs the expense of making sure that the seller gets enough cash to pay the listing agent?s commission.
Though they don?t really understand the deal’s parameters, and may, in fact, suspect that I?m screwing their client over, the week before the listing contract ends on an overpriced house, many REALTORS® decide that I?m their best buddy.