L/O and realtor - Posted by JVC

Posted by Jim IL on December 06, 1999 at 21:45:19:

JVC,
If the REALTOR is the one who called, then “WHY”, would you want her out of the picture?
You may have just stumbled on a good Realtor.
And believe me, finding a Realtor/Agent/Broker who will actually entertain the idea of anything creative is a good thing, and far and few between.

She is open to the idea, otherwise she would not have called you.
If you are concerned with how the realtor will get paid, then talk to her about it.
Be honest, and tell her you can do the deal, but that she will not get paid until the option is excercised, or you find a T/B’er with enough cash to pay the comissions.
or
The seller may even have enough to cover that.
Paying the realtor is for the seller to do anyway.

You just never know until you try.

Good luck,
Jim IL

L/O and realtor - Posted by JVC

Posted by JVC on December 06, 1999 at 19:52:29:

Sent out some letters to expired listings and got a call from a realtor today whose clients are expressing some interest…(the home was relisted the day after expiring). How do I deal with the realtor in the middle? I would definitely like to have her out of the picture, but it sounds like the people are asking her advice and opinion…

Thanks,

JVC

Re: L/O and realtor - Posted by Carmen

Posted by Carmen on December 07, 1999 at 16:43:55:

In an L/O, the realtor has the possibility of getting paid twice - once upon Lease, and once upon sale. The Listing Agreement the company I have my license with states that the Seller will have to pay the equivalent of “10% of the Lease amount” if the house gets leased as opposed to sold. As an example, if it’s a $70K house, and it leases at $700/month for 12 months, the Realtor would get $840 now (10% of $8,400). Then, when the option is exercised, she would get the commission on the sale ($4,900, or 7% of $70K). If it were me, I would even offer to split this $840 with the seller (out of my new T/B’s money, of course) rather than lose a deal. Of course, it depends what her listing agreement says.

Why would a realtor go for this instead of an outright sale? I think you kind of answered this one already - the listing expired. The realtor has probably been trying really hard to sell this house for about six months, and it’s not moving. Chances are, she won’t be able to sell it this time either - at least not quickly, especially as we head into winter. So $840 is better than $0 - and she can eat this month (bird in the hand theory).

(For the sake of simplicity, I’ll let the realtor and the broker fight over their commission splits in this example)

Re: L/O and realtor - Posted by B.L.Renfrow

Posted by B.L.Renfrow on December 07, 1999 at 08:53:20:

Believe me, I would LOVE to hear from an agent/broker who actually understands how a L/O can benefit them and their buyer. In my experience, most of them - wait, make that ALL of them - with whom I’ve dealt, have no idea. Their eyes glaze over, they stop returning calls and you never hear from them again, if you mention anything “creative.”

As the guys said below, I think you’re approaching this from the wrong angle. You would be doing yourself a big disservice by trying to get her out of the picture.

Of course, the agent’s concern will be how the listing broker will get paid on a L/O. Perhaps the seller has the funds to pay the commission. If not, will the deal allow for enough option consideration from your T/Ber to pay it out of that? Granted, it’s not your problem, and the broker’s commission typically would not be due until the option is exercised anyway, but if you can find a way to make it worthwhile for the agent/broker, I’m sure the longterm benefits will be well worth it.

Brian (NY)

Re: L/O and realtor - Posted by M.T.(CO)

Posted by M.T.(CO) on December 07, 1999 at 06:53:13:

JVC, Jim is correct on this one, the price of the home is not effected as the sellers pay for the commision on the agent. Keep in mind that this agent might be a needle in a haystack as far as creative thinkers go.(no offence to any agents)You may be able to TAP this agent as a good source for more such deals, she may even become a funging partner, giveing her commision as help for down payments , etc. This might be your break, she has got information that you dont have access to, and she is willing to give it to you(the MLS)…hey it sounds good to me…good luck

Todd