Brokers--Impediment to No Money Down? - Posted by Kim


#1

Posted by PBoone on November 13, 1998 at 18:47:06:

Kim,
This process took some time to establish our name as a “player” in the market. Many of the realtors out there are living from check to check and cannot look at investing themselves or do not have the kind of knowledge it takes to become a successful investor.
We ask all brokers the question the first time we meet. There are many who will, so when one tells you no just keep going until you meet one who tells you yes at that time take them to lunch get to know them. These brokers will be a big part of your success. They probably have an understanding of creative financing and can help you with searches in the MLS and making good offers. you both will make a lot of money
Pat


#2

Brokers–Impediment to No Money Down? - Posted by Kim

Posted by Kim on November 13, 1998 at 10:53:52:

I have a newbie type question, but I imagine others have run across this before. When trying a no-money down deal where a broker is involved, the commission become an issue, doesn’t it? If no money down at close, how does the broker get his/her commission? How do I overcome this?

Thanks all.


#3

Re: Brokers–Impediment to No Money Down? - Posted by Justin

Posted by Justin on November 14, 1998 at 07:24:41:

Asking an agent to take back a note is a great creative financing idea. I know if I were in that position I would consider it. Justin


#4

Re: Brokers–Impediment to No Money Down? - Posted by Doris E. Shanks

Posted by Doris E. Shanks on November 13, 1998 at 17:38:37:

Kim - I am also a newby but it seems to me
that if the buyer is getting his own
financing, the old mortgage - if there is one

  • will be paid off and the difference or
    equity remaining will be enough for the seller
    to pay off his broker. In fact that will
    happen right at the closing and the seller
    will only get the balance after all expenses
    are deducted. Whether or not you made a down
    payment is irrelevant as long as the fnancing
    was accepted on that basis. If the property
    was clear and the seller agrees to hold the
    paper himself and did the deal with no cash up
    front (deposit) (a no money down deal) – then
    it is his problem to come up with the money to
    pay the broker - not yours. Now if you got
    lender financing - and the seller is holding a
    note in lieu of a down payment - then he will
    have all his equity funds at closing and again
    his broker will be paid at the closing. Or am
    I all wrong here? I am still learning myself
    and would welcome a more experienced investor
    telling me if I am on track or not. Thanks
    Doris.

#5

A Solution to the problem. - Posted by Mark R in KCMO

Posted by Mark R in KCMO on November 13, 1998 at 11:20:21:

Kim,

One thing to consider about a No Money down deal is that it does not necessarily mean that no money changes hands, it just means that none of YOUR money is involved in the deal.

But the answer that I like to give the best is, Oh I thought that was covered in the listing agreement, I bet they are going to have a tough time selling thier property if they don’t want to pay for thier help huh!!

Just show me properties that the owner plans on fulfilling THIER obligations of THIER contract.

Hope this Helps

Mark R in KCMO


#6

Re: Brokers–Impediment to No Money Down? - Posted by PBoone

Posted by PBoone on November 13, 1998 at 10:58:32:

Kim,
Many times the broker will take their commission in the form of a note. Many are opposed to this especially if the broker does not know you or doesn’t trust your ability to repay.
Pat


#7

Re: Brokers–Impediment to No Money Down? - Posted by Gary

Posted by Gary on November 13, 1998 at 22:12:04:

Kim,

Someone suggested that you ask the broker to receive their commission over a period of time. Couple of things that you need to be awaire of. Most brokers have their listings sold by their sales people (licensed real estate agents). A typical agent usually splits his or her commission with their broker (50/50, 60/40)so they would most likely have to give something to their broker at the completion of a sale. I happen to be a REALTOR with RE/MAX. Most RE/MAX agents receive 100% commission at closing. I have to give 5% of my commission to my broker, no big deal to me. If I had a property listed that you would want to purchase no money down and all was fine with the seller, I would have you pay me my commission some what like this:

This is only an example

$50,000 sale price of home
6% commission = $3,000
15% simple interest over 18 month period
$3,000 * 15% = $450
$3,000 + $450 = $3,450
$3,450 / 18 months = $191.67 per month due in my office on or before the first of each month

I don’t do discounts or take less on the interest but, if you make those monthly payments on time, lets do some more business.

You have to make it worth it for the broker and most brokers will not take installments on the commission. Their in the business to make money to support their families and their business like every one else that works for a living and operates a business and want the money up front. For them may have to take a cash advance on your credit card.

If you have bad credit, I wouldn’t do it either.
Good luck,
Gary


#8

Re: How do you get that done? - Posted by Kim

Posted by Kim on November 13, 1998 at 14:33:12:

How do you get a broker to take a note? Is that my idea, or the sellers’?

Thanks


#9

Re: How do you get that done? - Posted by Rob FL

Posted by Rob FL on November 13, 1998 at 18:59:40:

Although I have never tried this, Carleton Sheets says that if the broker refuses to take a note, then you suggest to the broker that you will be forced to use a buyer’s broker to represent you. This will cut their commission in half and might make them listen a little more.


#10

Re: How do you get that done? - Posted by PBoone

Posted by PBoone on November 13, 1998 at 15:09:27:

Ask the agent if they would be willing to take a note secured by the real estate for their commision. We generally pay about 12-15% interest
Pat


#11

Re: How do you get that done? - Posted by Kim

Posted by Kim on November 13, 1998 at 16:59:00:

Have you done that and had it work? I’m curious as to your experience at that–what’s the broker’s incentive?