How does a realtor get paid on a land contract or lease purchase option (rent to own) sale?
Posted on April 17th, 2010 by admin
I’m a realtor, and I’m used to getting paid my commission at the closing table, when all the funds are being moved around. But I’ve got a client who’s desperate to sell, and they want to tap into the market of "unfinanceables" who are looking for a land contract or lease purchase deal. I know that would bring offers from would-be buyers, but since theres no six-figure payoff going on at closing, demanding my 5% is pretty uncomfortable. Hope someone out there has experience. Jane.
I’m under the impression they would not get paid until the Purchase or Sale portion of the contract was enforced. Otherwise it’s just a rental agreement, and MAYBE the realtor gets a finder’s fee…
April 17th, 2010 at 3:36 pm
I’m under the impression they would not get paid until the Purchase or Sale portion of the contract was enforced. Otherwise it’s just a rental agreement, and MAYBE the realtor gets a finder’s fee…
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April 17th, 2010 at 3:58 pm
I believe you get paid at closing, whenever that is.
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http://www.TheresNoPlaceLikeHome-MD.com
April 17th, 2010 at 4:22 pm
that is up to the broker and the seller in most cases the commission is disbursed at time a loan is closed but cases may very
a good way to handle this is to have the buyer put % down to cover all commissions title fees and taxes and such so that is out of the way up front then when they get the loan the title company or attny already has the funds in this case it is possible to collect your commission when buyer recieves equitable title (contract)
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Fellow REALTOR IL.
April 17th, 2010 at 5:09 pm
Hello, don’t make any plans of running to the bank with any checks just yet… It is true, you do not get paid until ~~
and if~~ there ever even is a closing. You will spend allot of time, "looking" with your clients, the market is so slow & dead & pleantyful ~~ and then good luck getting an approval from a lender, then working something out with both landloard & "hopefully owner" , if they do not close by your contract date, then they can re-do another contract, with out you, and you lose…
Allot of time spent, not much chance of getting any $$ ~
2 or 3 years down the road… sorry…
Good Luck ~~~
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I am a Realtor ~~ Cocoa Beach, Fl…
April 17th, 2010 at 5:42 pm
When I was an agent and did land contracts, I usually agreed with he seller to take 1/2 the commission when the land contract was signed and the other half in monthly payments over 3 years as the seller got the land contract payments.
A word of warning. It is hard to get title insurance on land contracts. When I was doing this only Chicago Title would issue title insurance.
Also, land contracts are in invitation to a law suit. I recommend that as the agent you get legal advice from a real estate attorney.
Some of the problems are:
What happens if the seller dies before title is transferred?
What happens if the seller can not be found when all payments on the land contract are made?
Does the buyer have any equity if the payments are not made.
Can a lender call the loan that has a due on sale clause if the property is "sold" with a land contract.
What is the agents liability if something goes wrong.
Good Luck
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April 17th, 2010 at 6:13 pm
Jane, we’re in rural northern NM and most of our sales are land/realestate contracts and we do take our commission on time most of the time. We do it by taking the same percentage the seller gets from the downpayment, we create a promissory note at the same rate the seller does from the seller and we escrow the note with escrow instructions that from the payment received we get the payment on our note first and the balance to go to seller. If the buyer defaults the seller is still obligated under the note. All titles as you know are escrowed waiting for the performances of the parties and the instructions are such that no matter what happens there are instructions to cover it.
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