The Basics of Buying and Selling with Lease Options or Rent-to-Owns - Part 2

Advantages for the Realtor
In part 1 we learned how lease options or rent-to-own can help home buyers and home sellers. Now we need to take a look at how lease options or rent-to-owns work to the benefit of real estate agents as well (in a nutshell—how do we get paid!). As much as we like to help our home buyers and home sellers we still need to get paid for our work.

Not only can you still get paid, you can actually get paid more! I’ll get into that in just a minute. But first, let’s look at how you get paid. When the seller and buyer agree to a lease option or rent-to-own the buyer will pay an option fee. This reserves the right for the buyer to purchase the home at a later date for an agreed upon price. The option fee is paid to the seller, however, when you represent a buyer or seller in a lease option or rent-to-own transaction you would have them sign additional addendums for the lease option, part of which states you will be paid part of your commission upfront out of the option fee. I typically get 1 to 2% of the sales price upfront, split between the buyer and seller agents. The remainder of the commission is paid when the buyer purchases the home at the end of the option period. This creates revenue for you in the beginning as well as at the end.

While this isn’t as ideal as receiving all of your commission upfront the way you would in a conventional sale it’s a whole lot better than:
1. Turning away a potential buyer that can’t qualify for a mortgage;
2. Having your seller just rent their home out because they can’t sell it;
3. Losing a listing because the seller blames you for their home not selling.

Those are all scenarios we as Realtors deal with regularly, particularly in down markets. Think about how much more you would make if you turned all of those into lease option or rent-to-own sales instead of turned away buyers and lost listings?

Additionally, as a listing agent you are providing a premium level of service for your sellers. Very few agents know how to do this and this will put you head and shoulders above the pack. It is not unreasonable, therefore, to ask for additional commission as part of this premium service offering. If you would normally list for 6% commission, when you agree to list the home as a lease option you may want to ask the sellers for 7% commission if it sells as a lease option.

Getting paid extra sure is nice when you would otherwise have lost the listing.

If you want to stay in this business this is the time to get creative. Ask yourself—do you want to be in the business for 5 months or 5 years? Conventional methods are nice when they work, but you need alternative “tools” too. Adapt to the demands of the market and you’ll not only survive, you’ll thrive.

Wendy Patton is one of the nation's leading experts in lease option or
rent-to-own real estate. She has trained thousands of real estate agents,
real estate investors, home sellers and home buyers in doing lease options
or rent-to-owns.