Creative financing AND deal with Realtor's %?! How? - Posted by Maggie

Posted by Paul_NY on March 11, 2000 at 02:08:01:

…due and payable when you resell the property. I assume you won’t be using a broker when reselling

Creative financing AND deal with Realtor’s %?! How? - Posted by Maggie

Posted by Maggie on March 09, 2000 at 21:30:10:

I posted a message earlier re. a motivated seller contacting me about needing to sell her home b/c she’s moving in two weeks. I forgot to mention that it is already listed with a top area Realtor.
How can I possibly do any creative financing deal with her and work around the broker’s fees? Should I or could I work around them? Granted, his listing of the property did nothing in attracting me to it, as she contacted me, but I assume the listing agreement will cause problems if we do anything other than cash. For instance, taking the property subject-to or even owner financing would delay any commissions, let alone L/O.
Thanks for any additional help.

Re: Creative financing AND deal with Realtor’s %?! How? - Posted by JPiper

Posted by JPiper on March 11, 2000 at 06:29:35:

It?s called negotiation.

If you deal directly with the agent rather than through another agent, you already know that he could conceivably accept half the total commission?.he would do that anyway if there were another agent involved. You present this idea in front of the seller AND the agent when you present your offer?.thus putting the agent in a predicament of having to appear ?greedy? if he requires ?more?.

If your deal can?t stand a 3% commission, then let?s face it Maggie, you really don?t have a deal. By the way, sellers have been known to come out of pocket for commissions?it?s certainly cheaper in some cases than continuing to pay the payment.

It?s all about negotiation. And the number one rule of negotiation is ?don?t be attached to the outcome?.


Re: Creative financing AND deal with Realtor’s %?! How? - Posted by Judy Miller - American Note

Posted by Judy Miller - American Note on March 10, 2000 at 12:17:48:

We work with motivated sellers and buyers of properties that are listed with realtors, and the realtors goal is to MOVE THE PROPERTY, however they have to do it 1) for the benefit of their client, and 2) for their own benefit to receive a commission THEY ARE ENTITLED TO RECEIVE FOR PERFORMING THE SERVICE THE PROPERTY SELLER ENGAGED THEM TO PERFORM!

There is no need to try and cut them out. If you have a motivated property seller where time is running out on his/her personal needs to move on, he/she is going to be flexible. The realtor has to take every offer to the seller. While the realtor’s commission may be less if you offer a lower price, they are use to a little give and take.

Your threshhold issue is getting the seller to sell the house for less, and perhaps even taking back the financing which they can sell right at escrow, which will be an additional discount as well. That is a lot to ask. If you want to get into the property with little money down, and ask the motivated property seller to take less, I suggest you pay close to the sales price, and have the seller only take their discount from the sale of the note. In this way the realtor gets close if not all of his/her full commission, and you are in for less money. True it would be optimum to pay less for the property AND receive owner financing. But is that realistic? Is the seller that needy?

My suggestion is to make the realtor your ally, showing how he/she is going to get the full commission because you are paying asking or close to asking, but only if you receive owner-financing, showing how that can be cashed out at closing. In this manner, you should be expecting to pay a higher interest rate, but you are avoiding all the cash down and hassles of a conventional loan, and you are into the property primarily for cash flow purposes if it is an investment, but at least you are into it.

Be realistic. There is give and take in these negotiations, but we have never treated the realtor as our enemy. We make them our ally. Recognizing their goal is to get their commission, you would be amazed at all the seller-financing offers they recommend that their clients accept, even from people with horrendouse credit, never disclosing how bad the credit is, which is another ethical issue for another conversation.

Realtors can be our friends. Let’s treat them well.

Judy Miller - President

Re: Creative financing AND deal with Realtor’s %?! How? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on March 10, 2000 at 08:11:37:


I don’t recall your previous post, but in general, I don’t make offers on listed properties precisely because of the problems you have identified.

However, there are always exceptions to everything! Having said that, I have a meeting in an hour with a broker to make some offers on a property he owns, and has listed! While I would be hesitant to use Darin’s suggestions, unless you want to find your reputation trashed among your local agent/broker community already, I will admit to using at least one of them myself in the past (although I am not an agent - big difference).

The BEST solution, IF you’re certain this is a motivated seller and a good deal, is to simply make sure the broker gets paid. I might try to negotiate it down a bit, however. If there’s enough profit at closing, great! If not, maybe he would consider taking a note for part of the commission, which is ideal if this agent is also the broker/owner. Or, if it’s a L/O, make sure he understand he will get paid when the option is exercised. Granted, they might not like the idea, but if they understand the alternative is NO sale, hence NO commission, sometimes they can suddenly see things in a different light. However, it’s also true that sometimes you’ll run into an agent whose best function is to kill deals. In those cases, it may be more trouble than its worth, and your best option is to walk away.

Brian (NY)

Re: Creative financing AND deal with Realtor’s %?! How? - Posted by Darin

Posted by Darin on March 09, 2000 at 22:30:18:

Realtors do get in the way. Sometimes they are like a goalie standing in front of a net blocking all potential sales.

Some options are, which I have done and been successful, yet hesitent to advise.
1-Submit your offer, what ever it is and pay the commission or negotiate it down, or make defered payments or payment. Remember, there are two commissions, you should only pay one side and negotiate the other side down.
2-Call potential seller and ask them to call agent for a unconditional release.
3-Find out when it expires and date your contract for a day after and have a private deal in between. Though there is a protection period.(considering motivation and what your intentions are)
4-If you say you found it without seeing advertising, again, call the seller and ask them to fire the agent.
5-Have seller tell the agent that they have decided to rent vs sell so they wont need the services of a realtor any longer.
6-The one thing that has worked best for me, and as a realtor, I have access to all the forms, which alls you have to do is get them from your local board of realtors, is a status change form or an unconditional release, fill it all out, have your seller sign it and get it over to the AGENTS BROKER FOR THERE SIGNATURE. I usually bypass the agent. The broker is the one who actually has to release not the agent.

If there is a magic forumila for getting rid of agents that have properties listed that the seller is motivated and will wheel and deal with favorable terms where profit can be realized, I would like to hear it myself.

I am working a deal myself right now where I have a motivated seller and a retart agent getting in the way.

Is this seller financing freely assumable? - Posted by David(Ca)

Posted by David(Ca) on March 10, 2000 at 13:33:57:


If I were to buy in this fashion, could I then resell the property and have the new buyer assume the loan?

Thanks in advance, Dave.

Hey Darin - How’s this for #7 - Crack open the Code of Ethics - Posted by Bob H

Posted by Bob H on March 10, 2000 at 24:20:28:

It’s obvious you’ve never read them, much less applied them to your real estate practice.

As a Realtor, using the techniques you confess to above, you deserve to have your license revoked -

I don’t know where you are from, but in my state, we would have you for lunch.

Listing agent IS broker/ owner of agency! Ugh! - Posted by Maggie

Posted by Maggie on March 09, 2000 at 22:39:03:

To complicate it, or simplify it, the listing agent is the broker/owner of the company. Also, he is the top agent in our area. This could go either way.

Re: Is this seller financing freely assumable? - Posted by Judy Miller - American Note

Posted by Judy Miller - American Note on March 10, 2000 at 15:02:21:

Generally speaking, investors like to see that these are non-assumable notes so that they know who they are dealing with as they go down the road. In other words, if you have good credit, and your subsequent purchaser does not, an investor doesn’t want to be saddled with a poor credit borrower. This is the same in most mortgages today where lenders want to see “due on sale” clauses.

However, if a note investor sees a note without a “due on sale” clause, certainly they can decide then if they want to take the risk into the note that the note might be assumed by someone else. Usually it is not a major issue in their purchase evaluation since people can sell on “wraps” or “contracts for deed” all the time, and just keep the underlying lien in place.

The true answer is that the terms of your own down payment, current credit, etc. under which you purchase this property will tell whether the note in its entirety is marketable as written, whatever that may be. If a “due on sale” clause is NOT included, since it is a simultaneous closing you are looking to accomplish, that may or may not be acceptable to the particular note investor that is considering the purchase. If it is NOT included, then YES, you can resell the property and have the new buyer take over payments. I’m not sure that the term “assumption” in its legal sense applies. Certainly the note investor has YOU signed on the note and has no incentive to have you released legally unless they approve of the new buyer…which an investor just might do! So while a new buyer of the property might be paying directly to the note investor, you may still be liable. However, if there is enough value in the property, and realistically, the note investor, in case of default, really only looks to the property and not to the personal guarantor for any loss. But it could affect your credit if the investor reports to a credit reporting agency.

Short answer: Yes, under certain circumstances as outlined above, the buyer could take over payments on the loan. Hope this helps.

Judy Miller, President

Re: Hey Darin - How’s this for #7 - Crack open the Code of Ethics - Posted by Ed Copp

Posted by Ed Copp on March 10, 2000 at 07:00:32:

I wonder if Darin ever considered just cutting a few throats…it worked for O.J. The seller signed a contract with the listing broker (and it appears that the signature on a contract means nothing here). So when someone gets to go to court it will be the seller not Darin…Ho Hum,who cares (just so I get what I want). I hope the local board of REALTORS knows that Darin is offering thier copyrighted forms to the entire cyberworld (no dues or fees…Ho Hum…who cares.
If anyoue ever wonders why people are hesitant to do “Creative” transactions they should read Darins’ post.

Thats even better!! - Posted by Paul_NY

Posted by Paul_NY on March 11, 2000 at 02:13:06:

You say:
“the listing agent is the broker/owner of the company”

That makes it easier to ask for the broker to take a note. The listing agent/selling agent are one person.

Imagine if you had a sales and a broker. Easier to convince one than two!

Just my 0.02 cents


Re: Listing agent IS broker/ owner of agency! Ugh! - Posted by Darin

Posted by Darin on March 09, 2000 at 23:05:36:

If he is a top producer, he may just release and walk away. In the other hand, if it is priced right and he knows it is a definate sale, I doubt you will get anywhere. If there is room for profit with paying a comm. full or half, dont screw with it and do the deal.

Sometimes you just have to walk away. Dont get so attached to the result. Move on, search for non listed properties. Why try for something if it is not there, you will beat yourself silly and get nothing but discouraged.

Go for it, if no result, chuck it and move on.

Re: Hey Darin - How’s this for #7 - Crack open the Code of Ethics - Posted by Darin

Posted by Darin on March 10, 2000 at 09:13:52:

For what ever reason, I may have made it sound like I go around pi**!&g off realtors, which is completely the opposite. I am well known and well respected. It is all in the way you handle the listing realtor.

It as not though I do it every day. As an investor, I foucs on un listed properties and if I do come across one that is listed, I usually have a conversation with the listing realtor before I do anything.

If the realtor is then getting in the way, or if they are new and inexperienced, for what ever reason, If I belive they are blocking the best intrest of the seller because there is no room for commissions, then I will proceed to getting them out of the way. I have yet to be taken to the board.

It is very seldom I have run into a problem, or bumped heads with another realtor on a deal. No, I have not cut any throats.

Re: Hey Darin - How’s this for #7 - Crack open the Code of Ethics - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on March 10, 2000 at 10:56:45:

Hey Darrin,
You might want to re-read your list of options in your previous post. #3&5 are fraud in my state and will get your license suspended or revoked (at least) and this is as it should be, in my opinion.
As far as unconditional releases go I have never had a seller ask for one who did not have a deal lined up, on the side. So the commission is the only reason that a broker would be asked for an unconditional release. Most brokerage firms are not in business to locate good to excellent deals and then give them away. I know that I am not. If I have a seller who needs to have a property taken off of the market, for a good reason I will usually allow the listing to expire quietly for the convenience of the seller, I will not grant an unconditional release…sorry. If you want to buy a property that I or one of my agents has listed it would only be proper and ethical for you as an agent to work through my office. Like I said I do not know what state you are in, I also do not know what kind of listing that is being used here. I usually use an exclusive right to sell, listing. As for the board of realtors, they have NO authority in my state as far as real estate license law is concerned. The board of realtors, and your local assn. of Realtors is in essence a private club; the only way that I know of; to get in is to pay the dues…ED (licensed real estate Broker, 29+ years)

Appreciate the wide range of responses, but… - Posted by Maggie

Posted by Maggie on March 10, 2000 at 11:09:52:

The reason I like this board is because everyone usually watches out for inaccurate advice being handed out as solid.

I did have questions about how feasible some of Darin’s suggestions were, but I am too new at this to recognize ethics issues for Realtors (or I just wasn’t thinking). Either way, I feel the quickest thing to do is work through the seller, but not try to outright burn the broker.

As I mentioned before, the seller contacted me (flagged me down while I was driving and she was jogging), so she’s asked me to call HER if I’m interested. The house is listed with the leading owner/broker in our area, so he’ll certainly know his way around the laws regarding his commission. I am still not sure what to do.

It appears that a subject-to deal is best here, but the broker’s commission is still a question for me.

Thanks for the help, albeit muddled along the way,