Jump to content
The forums have been archived and are now read only. Years of great info saved for your reading pleasure. Thank you! Visit us on Facebook: https://www.facebook.com/NakedInvestor/ ×
The Naked Investor Forums
baron14

Realtor Says Owner May Consider Lease Option

Recommended Posts

Hi All, I asked a Realtor if their seller would consider doing a lease option and the Realtor told me that the owner may consider doing a lease option. The Realtor also asked about my credit, pre-approval, etc., so she seems to think it's for me and I will be living in the property.

 

How do I approach this deal with the Realtor? I know many in this forum recommend doing some lease option assignments first before doing a sandwich lease option. Not sure if this is s good fit for a SLO or not yet. If I go the lease option assignment route, should I just tell the Realtor that I'm a property management company and I have some pre-qualified tenant/buyers that may be interested in the property and they have agreed to make on-time payments and take care of the day-to-day maintenance and repairs during the lease period?

 

I can think of a variety of angles depending on SLO or LOA route to approach it, but I would like to hear the best approach from the pros here to keep things simple and smooth. It would be greatly appreciated. Thanks in advance for the help!! -baron

Share this post


Link to post
Share on other sites

Unless you will be the one living in the property, be honest with the Realtor what your plans are. Honesty is always the best policy.

 

Lynn (FL)

Share this post


Link to post
Share on other sites

You need to be upfront with the Agent at first contact. Otherwise you are wasting your time and her's. I wouldn't tell her you are a property manager because this requires you to be licensed and I'm sure she'll ask you about this. Instead, just tell her you're an investor and lease options are one way you invest. If she's not interested, better to find out in the first two minutes so you can quickly move on.

Share this post


Link to post
Share on other sites

After find out from the Realtor that the owner would be interested in doing a lease option on the property, I would then tell the Realtor:

 

"I specialize in lease purchasing and I can do a long-term lease where my company will lease the property for a specific period of time and have the right to purchase the property during that time at a pre-determined price.

We’ll guarantee the rent payments and cover the day-to-day maintenance and repairs during the lease term. If the numbers don't work for us to lease the property ourselves, we are currently working with several pre-qualified families that are looking for a nice house in your area and may be interested in leasing your house with the right to purchase.

If this is something the owner may consider, then please contact me and I'd be happy to discuss it with you."

 

I was thinking if I was doing a SLO, the first part of the message would give the Realtor my plans and if I did a LOA, the second part of the message would show the Realtor that plans for a LOA. Any thoughts on this? Thanks!

  • Like 1

Share this post


Link to post
Share on other sites

This seems more like a mailing opportunity. Send your information and what you do directly to the seller and suggest they contact you. If the agent thinks you are trying to take her/his listing it will be a lost cause.

 

Love SLOs

Share this post


Link to post
Share on other sites

Hi Steve.... In my initial contact with the Realtor, I already mentioned to the Realtor that she would get her full commission. So I should just mail the seller and tell them their Realtor advised me the seller may consider doing a lease option and then give the seller the general overview of the process or should I let the Realtor know that I'm contacting the seller as well. I don't want to give them the details and mechanics of the business but the benefits and general overview of what will happen in the deal. What do you think? Thanks.

Share this post


Link to post
Share on other sites

Well, MC is right that you need to be upfront with the agent that you are an investor. I would always try and speak with the seller directly. An agent cannot explain or represent what I do as well as I can. How are you thinking you are going to arrange to pay the commission promised? I am sure that peaked the agent's interest.

Share this post


Link to post
Share on other sites

Hi Steve, The word "investor" has a negative connotation in this area, so where I referenced 'my company' I would use my company's name so they will know this is a business and also stop them from pulling my credit report and background check every time I inquire about buying a property because it will be 'my company's name' signing the contract.

 

Most of the sellers that have listed properties in this area will tell you "go talk to my agent" when you contact them, so you end up right back with the agent anyway. Most of the time the sellers will not discuss anything with you. I will send the seller the information so they will have it in front of them to review and we'll see how it goes.

 

I was thinking the option money can be used towards the commission to help the seller pay the commission since the commission is paid by the seller at closing. Thanks!

Share this post


Link to post
Share on other sites

Baron, yes I understand the connotation of the word investor. I don't use it myself as I don't invest anything with L/Os; because we don't have to. :) I guess I was meaning to be clear on what your intentions are to the agent and the seller. I think sending info of what you do directly to the seller is a good idea. It couldn’t hurt. And like any seller, it all depends on their motivation. If they send you back to their agent, unless they are clueless, they are probably just not motivated enough to kick the agent to the curb and speak with you. And unless you are going to pay the agents commission, as you mention, I doubt the agent is going to try and talk the seller into it.

 

The one thing I do have issue is that you are giving up your front end profit to pay a commission? If you do a SLO you should get monthly cash flow and unless it is a larger than normal percentage, I am not sure if the risk to reward would be worth it. Instead, I would offer the commission to the agent when the property is Sold. Let the seller pay it from the proceeds of the sale. This way you can get the front end profit and receive the monthly passive income. You may need to collect a smaller back end to cover the agent’s commission, but that’s icing on the cake. And the agent may not even remember a year or two down the road anyway.

  • Like 1

Share this post


Link to post
Share on other sites

Steve is right. An Agent adds an unnecessary layer to the mix. A layer that usually makes the deal unworkable for us. How did you end up going through the Agent in the first place?

Share this post


Link to post
Share on other sites

Hi MichaelC,

 

I tried for many months now to contact FSBOs & FRBOs on Craigslist & Forsalebyowner & Kijiji & Backpage & FSBO basically asking would they consider doing a lease option.

 

The FSBOs showed zero interest. There were two FRBOs that showed interest but when they found out I would not be living in the place they were not interested and the other stated they were not interested in doing lease options with a third party.

 

I read that John Jackson had some success dealing with listed properties so I decided to give it a shot and see if any properties that were not selling or about to expire or landlords that would like to be free of the typical landlord and management hassles.

 

One Realtor told me that there was not much interest in lease options in this area. Another Realtor had a house for rent & for sale. Bingo...maybe a lease option deal. This Realtor said yes, the owner would consider doing a lease option.

Share this post


Link to post
Share on other sites

Jackson goes directly to homeowners with listed properties. He doesn't deal direct with the Agent. If the homeowner expresses interest in working a deal, they are advised to notify their Agent. The homeowner can cancel their listing or they can continue to try and sell.

Share this post


Link to post
Share on other sites

Hi MichaelC,

 

The way I understand it, John Jackson sends out a couple thousand mailings to listed properties. My budget will not allow that now, so I contacted the Agents to see if they had any homeowners that may consider doing a lease option deal.

 

I will then contact the homeowner let them know their Agent said they may be interested in a lease option. Then I will give them the normal lease option explanation: who I am, what I do and the benefits to the homeowner and advise the homeowner to notify their Agent.

 

I'm not clear on what happens if the homeowner continues to try and sell with listing Agent and we then strike up a lease option deal (SLO or CA) with the homeowner and put a T/B in the property on a lease option? Is the listing the cancelled and the Agent is paid when the property is sold or is the Agent paid as a leasing Agent as if the property is rented? Thanks!!

Share this post


Link to post
Share on other sites

As you can already see, contacting an Agent directly only serves to muddy the waters. You need to contact the homeowner. If they are interested, they need to work out some sort of understanding with their Agent. You have nothing to do with that relationship.

Share this post


Link to post
Share on other sites

I'm not advocating contacting agents directly, but Wendy Patton teaches doing this. She's a licensed agent herself, and will usually give the seller's agent her part of the commission, to help sweeten the pot.

 

Lynn (FL)

Share this post


Link to post
Share on other sites

×
×
  • Create New...