"No Charge"?

[MichaelC 160]

I enter every deal with an expected amount of option consideration to be made. For example, with the median price in my area at around $365K, I want $7K for my part. Now let's say that I am having trouble getting that amount and I find a t/b who is only willing to put down $5K. I accept. To the homeowner, that means his net price just increased by $2K. Think he'll be upset when I tell him?

If the opposite occured and a t/b surprised me and laid down $10K, now I have two choices. Either I surprise the homeowner with an early gift of $3K nonrefundable cash, or I tell him we may have a t/b but the net price we expected is going to be $3K less. In today's market, I can assure you that $3K difference is of no consequence to the homeowner. Either way, though, the deal gets done, and the homeowner is aware of everything that is happening and the numbers involved.

[Dan (SoCAl) 0]

You tell the seller up front you want room to negotiate with the buyer for an up to $4,999 assignment fee for yourself?

I never get into specifics about my fee with the homeowner. I keep the conversation focused on his net, his profit, his timeframe, his property, his tenant/buyer. I talk about how, what and why here, but I am not a walking tutorial for Mr. Homeowner. He needs to be clear on his part, not my part. I've had one guy in three years look at the (proposed) gross sales price to the T/B and say, "So if this flies, you'll make about $15,000, is that right?" Very sharp guy, and he didn't object.

 

That said, and Doug has commented on this many times, if you have a seller who is fixated on the size of your fee and how you make your money, 99% of the time it's best to kill that deal in the first minutes. No need to go further, he's not going to sign, he's going to pump you for information -- and probably report you to the real estate commission

 

If the T/B offers you more move-in money than you're asking (it happens more than you think!), then the seller gets a piece of his net up front, in cash, which he was not expecting. You're a hero! If you accept less than your asking price, you can either add the difference to the sellers net (he makes more money than you promised him) or you can adjust the T/B gross price which has no effect on the seller's original net.

 

Dan

Freedom Creek LLC