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).

Rent to Sell

When it comes time to place a rent to own buyer in a home, sometimes the home owner or the lease option investor feel pressured to get someone in as quickly as possible.  This usually happens because the mortgage payment for your home has become a financial burden.

Even if that is the case, you still need to make sure that when you screen your rent to own buyer that they meet the criteria on your qualifications list (by the way, you should always have your qualifications list in writing).  Failing to make sure that rent to own buyer meets these qualifications can cause you problems for two reasons:

1. It could be a violation of Fair Housing Law - trust me, you don't want to go there.

2. You could end up placing a bad lease option tenant and have to evict them later.  Don't go by gut feel.  Approve a person because they meet the criteria on your qualifications list.

Want to learn more about rent to own buyer selection?

If you are a lease option investor read, "Investing in Real Estate with Lease Options and Subject To Deals"

If you are a real estate agent or home seller read, "Rent to Sell"