Option Fee

[Mastamike6 1]

I am working with a homeowner now who is agreeing to do a CA but is fearful that I have no incentive to have the tenant-buyer close on the purchase and wants to work in my compensation to the closing of the purchase. I plan on explaining to him that we collect the application information, qualify them, and then present them to the owner for approval before assigning our contract. However, I was thinking of counteroffering to him if I could get a larger piece of the option money. I want to be careful and not accept a commission at closing (I am not a licensed agent), but if i can work a larger payment and work with the tenant-buyer as I would anyway to get it closed then even better. Any suggestions on how I should work this?

[MichaelC 160]

Mike, what is your current deal with the homeowner with regards to the option money? Are you keeping it all, or is there a split of some kind?

[Mastamike6 1]

I had agreed to give the homeowner $1300 (equal to one months rent) of a $5000 option fee. I may go back to him and ask for his portion to be held in escrow and credited back to me upon the exercising of the option. A little extra incentive for me and he doesn't give up much to ensure I have skin in the game (even though I don't) Is there as better way to structure this?

[MichaelC 160]

One month's rent, (in this case, $1,300), is a very fair split of the option consideration. If the homeowner is concerned and wants you involved to some extent, I think your idea is a good one: he pays you back that $1,300 if/when the t/b exercises the option. The problem with this is being seen as brokering without a license. Perhaps an agreement on the side, a Promissory Note calling it a finder's fee, would be an easy way to protect your interest.