Real Estate Agents - How to get Paid in Lease Options

I did a post yesterday on lease options and finding the seller's sticking point. In response to that post I received a comment from a real estate agent who said that their sticking point was how do they get paid in a lease option sale. This is a very legitmate concern for real estate agents, after all everyone wants to get paid for their work.

The unfortunate reality is that conventional sales are difficult right now. It isn't enough to just get listings and put them on the market, because most of them aren't selling. This means that it's a lot harder to earn commissions than it was during the boom years. If you want to keep succeeding in this business you MUST ADAPT.

Let's look at one of your listings that has been sitting on the market for a while. Odds are the seller is starting to get frustrated with the lack of results. At this point, if you only stick to conventional sales, one of three things will happen:

• 1. You get the seller to agree to a price reduction
• 2. The seller switches agents
• 3. The seller decides to rent their home

This means you have a 1 in 3 chance of getting paid your full commission. I'm not too wild about those numbers.

With a rent to own, you still get your full commission (and maybe more) plus the seller gets a better price for their home instead of having to do a price drop. This means more for your seller and more for you.

There is a string attached, which is that you'll only get part of your commission up front (paid out of the option fee) and the remainder when the tenant-buyer closes on the home. This partial up front commission is going to be more than you would make if the seller just rents the home. And certainly more than if you lose the listing.

Is this ideal? Of course not. Obviously we don't want this, we'd much rather just have a conventional sale. But that isn't always working right now. This gives you and your sellers an alternative. We all know this isn't our first choice, but it is a good option for homes that aren't selling conventionally.

If you want to learn more about how to earn your whole commission doing a lease option (and maybe even more than the full commission) see my book, Rent to Sell. It's a hands on guide for home sellers and real estate agents on selling with rent to own. There is an entire section dedicated to real estate agents (including a whole chapter on how to get paid).