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.
“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.
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…