How Much Should You Pay An Agent To Find A Lease Option Buyer? - YouTube

Hey, it's Joe.

Here's another question.

This one is from Dan.

His question is, "Hey, Joe.

My question is how much to compensate a real estate agent if you use them to sell a property

in a rent to own deal.

Do you give them a commission?

Should you give them a flat fee?"

If they're an agent, they're used to working on commission so giving them a commission

is not a bad thing.

Giving them 20% of the deal or 30% of the deal would be normal.

If they're a straight up partner, give them 50% of the deal - that would work.

One of the things that I find is difficult is getting an agent to work consistently,

to make sure they follow up with the leads and to go through with that whole process,

and a lot of times its easier and cheaper to get an hourly paid person to do that work

for you.

So what I do most of the time (and I've done both ways) but what I prefer to do is to get

an hourly person who will do that stuff who I pay $8 or $10 to show that property, to

be friendly and maybe close the deal.

We can get somebody who's good on the phone, and most of that work can be done on the phone,

and then you can have your boots on the ground, a different person, who actually shows up

at the property and shows the property if that's necessary (if it can't be shown with

a lockbox).

Vacant properties can be shown with just a lockbox without anybody there with them; we've

had very good luck with that.

So if you're working with an agent, you have to find somebody who's going to follow through

with your leads (because you're going to get leads coming through) so make sure all the

leads that are coming from your Craigslist ads, from all of your signs, from all the

marketing that you do - make sure they come through your office first and they get distributed

to the buyer agent if you're using an agent to help you sell that property.

That way, the person who's the virtual assistant who's going to do the distribution are going

to ask for lead sheets to come back from that agent to make sure that those people got contacted.

You'll also want to do some spot checking, maybe to call some of the buyers to make sure,

'Hey, did Fred get ahold of you about the property that you called about?' and find

out if he's actually making the calls.

If you're not selling properties, he's not making the calls.

Make sure that you have a way to check on them to make sure it's getting done, and I

find that it's hard to keep agents on board with this stuff.

I don't know why that's the case, because they can sometimes be the best people to sell

your properties, and intuitively it makes a lot of sense to have them sell the properties.

But I think that they feel that maybe they can make more money listing properties and

selling properties and getting a commission and doing it that way doing it conventionally

than they can by just taking a cut off of your deals and making $1,000 here and $1,000

there.

They're used to $1,500, $2,500-$3,500 or $5,000 paydays like you are as an investor, not used

to $1,000 or $1,500 or whatever it is that you're going to pay them.

So, let me also, before I stop, talk about hourly paid.

If you're paying somebody - let's say you made $3.000, a low lease option fee on a $100,000

property.

You've got $3,000 coming in and you're giving a third of it to your buyer's agent.

So you're giving away $1,000 of that income and you're going to keep $2,000 of it.

If you had hired an agent or a non-agent, somebody hourly to do that for you, to make

those calls for you and pay them $10 an hour, and it takes on average, five to ten hours

of dealing with buyers before you can find a property, usually less than that, but let's

say it takes ten hours, that's $100 that you have to pay that person versus $1,000 that

you have to pay the agent.

And it's probably going to be less than ten hours so I would definitely do the hourly

if you can afford it up front.

A lot of people feel, 'Well, I can't afford it up front.'

But it's going to eat away at your income later on and if you build your business around

it, it's not going to be as exciting.

So maybe at the beginning, you make the calls, you talk to the sellers, you put the deals

together and as soon as you put together one or two deals, set aside some of that money

to pay an hourly person and do it that way.

Alright, I hope that helps.