Posted by JohnBoy on January 22, 1999 at 09:02:16:
It depends on what the listing agreement says. Some listing agreements state the commission is due in full if the seller lease-options the property. Some listing agreements may not say anything about a lease-option taking place.
If the listing agreement doesn’t specify how the commission is to be paid in the event the property is lease-optioned then it’s all negotiable between the seller and agent.
In my opinion a fair way to handle the commission if the listing agreement doesn’t pertain to a lease-option is to pay a percentage of any option-consideration up front, 6%-10% of the monthly rent as the rent comes due each month, and any balance of the commission owed would be paid when and only IF the option is exercised.
Some may argue that the no commission is due until the option is exercised. What happens if the option doesn’t get exercised? No sale? If a commission is paid prior to the option being exercised and if the tenant/buyer never exercises the option, then the seller would have paid a commission on their home that never sold. When the seller list the property again they would have to pay another commission. Should the seller have to pay two commissions to sell the same property once??
If you can get the realtor to agree to a fair percentage of the option-consideration and the monthly rent, with the balance due when the option is exercised, then the deal could be worked out so everyone gets what they need to make it work.
Before you plan on what way to go, you should read the listing agreement first. Then you can decide which way is best that will work for you and the seller.