How Do You Get Paid On a Lease Option Deal as a Licensed Real Estate Agent or Broker?

A LeaseOptionPro Reader asks…

“How are you compensated when you do a deal?”

I’ll keep it simple:

When I represent a seller and find them a tenant-buyer, my commission is 3% of the agreed sales price. This is typically paid when the TB (tenant-buyer) moves in. In most cases it comes from the down payment option deposit.

Sometimes however, there isn’t enough money to cover my commission. Whatever I do not collect up-front is due when the TB purchases the property.

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“Could you please give me a real life step by step case study scenario as to how the lease to own process works for you money wise. How much are the typical down payments? How much of it do you get? How much does your broker receive?”

First, I don’t work with any TB’s that have not been pre-screened. They have to fill out my free online application, make enough money to qualify for the monthly payment they are looking for and have at least 3% or more of the purchase price for a down payment Option Deposit.

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For Example, I have lease option property listed for $200,000. I find a TB who is able to put down $8,000.

Before the TB moves in, they deposit their Option Deposit, First Month’s Rent plus set fees to the Escrow Processing Company.

The owner get’s 1st month’s rent plus $2,000.

Then the Escrow Processing Company sends a commission check to my broker (RE/MAX Metro) for $6,000 (3% of the agreed purchase price)

Now, because I am on a 100% plan, my broker will cut me a check for $6,000.

Hope that helps…

Good questions, let me know if you have more below…

Comments

  1. Leighton says:

    What is the $2000 for that you give the owner?

    • Hi Leighton, sorry for the late reply…not sure how this one slipped by…

      The $2,000 that goes to the seller is the overage from the Tenant-buyer’s down payment option deposit. For me fee, I only charge the owner 3% of the agreed sales price (in this case it was $6,000) so since the TB put down $8,000…the balance goes to the owner as a non-refundable option deposit.

  2. Hi

    I have been reading your information on LO, with your products, plus your website (which appears to be fantastic) will someone like me, a private investor be able to utilize your LO methods without becoming real estate agent?
    Thanks!

    • hi Esther, the lead generation & conversion methods would certainly be useful for investors, the dynamics of the transaction would be different though. As an agent you are representing clients and getting compensated a commission for your services. As an investor, you are a principal in the deal and often assigning your interest for a fee.

  3. I’m a real estate investor that recently obtained his license. So I know how to put together deals as an investor. But what docs do you use as an agent? I’m looking to work as a transaction agent, working with both buyers and sellers.

    • Will Velazquez says:

      hi Steve, it depends on what state you are in. When working with buyers I use a lease agreement with option for purchase that is provided by our real estate division. As for the listings, I just use a standard listing agreement with an addendum which addresses compensation, exclusivity and term. You can get access to my listing agreement by submitting the info in the free bonus box to the upper right of this page.

      Thanks, Will

    • Kevin Lackland says:

      Steve are you still investing?

  4. Will: When you contact a seller about doing a lease purchase listing, do you agree to put the listing in your MLS? Also, what fees are incurred to buyer and seller at the escrow co.? THANKS!!

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