% of rent toward purchase price each month? - Posted by Batpro

Posted by John Nader on June 26, 2008 at 04:18:35:

I’m an Ohio Broker. Again… what does your contract say … you are probably going to have to pay him. Listing agreements are not designed to allow you to market the property on your own and NOT pay a commission.

You are saying he didn’t work …did he? You have no idea… you never really answered my question as to what his responsibilities are based upon the contract you read and signed. Many agents don’t work, that is reality but you signed a listing agreement and did the work yourself. His fault? Not really.

My advise is to lick your wounds and know better next time. UNLESS, he failed to advertise it, list it in the MLS…etc… what he was contractually obligated to do.

% of rent toward purchase price each month? - Posted by Batpro

Posted by Batpro on June 24, 2008 at 12:57:06:


I have a house listed for sale for $95,000.

I have a guy who makes like $75,000 a year with credit who would like to do a lease purchase.

Rent is $650/mo.

He wants to do a lease purchase for 1 year becuase he was transferred to a new position and he wants to make sure things work out well there before he buys the house.

Currently the house is listed with a realtor. I would have to ask to get out of my contract.

What percent rent should go toward the lease purchase on average. Also please advise on minimum to maximum normally allowed going to purchase price.

Re: % of rent toward purchase price each month? - Posted by Pat

Posted by Pat on June 25, 2008 at 19:23:59:

Make sure you’re covered on your deal by spelling things out painly in writing. I put an addendum as the last page of my lease/option docs which makes it clear that the option price is non-refundable; that the monthly amount toward purchase is a CREDIT to be applied upon execution of the option; and that failure to pay on time will jeopardize the deal. I make sure that the tenant knows that the amount towards purchase is a credit so that in the event that he decides not to buy, he doesn’t try to deduct that amount from the rent.

Re: % of rent toward purchase price each month? - Posted by John Nader

Posted by John Nader on June 25, 2008 at 05:25:46:

First off why would you have to ask for a release from your listing agreement. If the person who wants the lease option came to you because of the Realtor (sign, advertising, etc), the Realtor should be paid.

As to the amount to apply, a good rule of thumb is what are your expenses? If it is NNN ( where he pays all expenses, note this gives you a higher yield since you have no maintenance now) then take your profit (anything above and beyond you DS) and apply an appropriate 5-20%.

In todays market he is benefitting from the lower selling price than what the market will be in the future. Don’t be surprised if the LO is longer than 12 months though.

Re: % of rent toward purchase price each month? - Posted by batpro

Posted by batpro on June 25, 2008 at 09:06:16:

The person did not arrive to me from any advertising or sign placed by the realtor. The person called on another house that I had up for rent and I told him about this house and showed him this house myself. He had no idea it was even listed. That brings up another point. I showed it to a different couple the other day that called on my newspaper rental ad then afterwards they really liked it and wanted to do a contract for deed. However my realtor wants the 6% commission up front off the of the 10% down. I really do not think this is fare because, I found the person, I showed the house. The realtor did nothing, in fact they have had the house for 2 months and have not even showed it to anyone yet. Why should the realtor get anything? Has others ran into this scenerio and what do you do about it?

That is, when you have a house listed with a realtor and you find your own buyer, you do all the work, and the realtor has done nothing? The realtor should still get 6%???

Re: % of rent toward purchase price each month? - Posted by Dave T

Posted by Dave T on June 27, 2008 at 06:09:14:

I am guessing that you signed an “Exclusive Right To Sell” agreement with this real estate agent, because that is the agreement that 99.99% of sellers sign with an agent.

The language in the listing agreement says that you will pay the sales commission REGARDLESS of whomever finds a buyer. Does not matter that you found a buyer yourself, you will still owe the agent a commission if you go through with the contract for deed.

Re: % of rent toward purchase price each month? - Posted by John Nader

Posted by John Nader on June 25, 2008 at 18:41:03:

It sounds as though you should have never listed your home with a Realtor. This is a VERY typical problem in real estate… “the Realtor has done nothing …I have done it all myself” is probably the most common complaint I have heard. The fact that you are running an ad for rent basically duplicates the sales man’s effort, even on a different property when you bring the subject into play.

Did you list the house only for sale? Many contracts have a lease/sale clause. Is there one in yours? Did you advertise or have the agent advertise owner finance or lease option?

It is obvious that there is hostility emerging here between yourself and the agent. Sailor is 100% correct… what does your contract say? Did you negotiate a lesser commision if you found a buyer yourself? When you say that the Realtor did nothing, is it advertised? Is the home on the MLS? Who determined the price, you or the agent? Did you offer owner financing possible in the contract? Has he met his fiduciary responsibility in the 2 months?

Without all the info it is impossible to say if he agent deserves to get paid or did he fulfill his contractual obligations? It sounds as if you are an experienced investor. You signed the listing agreement, what are your rights contained within? Marketing it yourself, wether verbally from another property or not…your doing the agents job and he still gets paid like it or not. I would try to negotiate a lesser commission but make him work, have him handle the paperwork at least or be there for inspections if there are any. At the least break up the commission over 12 months so he shares the risk of the lease option.

Re: % of rent toward purchase price each month? - Posted by Sailor

Posted by Sailor on June 25, 2008 at 18:03:18:

Depends on your contract.


Re: % of rent toward purchase price each month? - Posted by dan

Posted by dan on June 25, 2008 at 22:07:05:

Sounds like you are a Realtor or agent. So what’s the problem.
Commission or not. NO work No C…?