Saturday morning at 0845 we find Eddie, Joe Campbell, and four other people having coffee and breakfast tacos at the Real Estate Investment Club classroom. They are gathered to listen to Rich Edwards discuss more ways to find Lease/Option/Shared Equity Appreciation deals.
With everyone seated at 0900, Rich Edwards started, “Hello everyone. I’m very pleased to see you here. I know that you are doing very well with our Lease/Option/Shared Equity Program. I also know that you are finding your prospective deals mostly on your own. That is admirable. Not only because you have learned how to do it, but also because you have now become assured and confident that you can do it. What I want to discuss with you today is how to find more prospective deals. Not necessarily by you doing more prospecting on your own, which is hard work, but by having other people bring you the deals. Wouldn’t that make life a little easier and more rewarding?”
Rich continued, “Now there are many types of people connected with Real Estate who can refer deals to you. The most obvious, in my mind, is Real Estate Agents (Realtors). Why? Because Realtors are connected with the majority of Real Estate on the market for sale. Now, all of you already know Realtors who are members of REIC. I recommend that you get to know them better and let them know what you do. These Realtors will bring you deals if you can show them that they are going to get paid their commission from any deals you do.
“Now as you know, at this time, we are in a depressed Real Estate Market. Values have decreased in many areas. We are in what is called a ‘Buyer’s Market’. Some of the results of this is that many homes on the market, even with Realtors, have very little real equity. In many other cases Realtor listings expire without the house being SOLD. Bearing this in mind, the methods I am going to discuss with you can be very profitable in this Buyer’s Market. However, they would not be as productive in a Seller’s Market, wherein there are more buyers than sellers.”
Remember, Realtors have to make a living too. Never try to cut the Realtors commission. If you do, that Realtor will reluctant to bring you more deals. You should work with the Listing Realtor; that Realtor who has the listing on the property you are interested in. In most ALL Realtor Associations the commission is equally divided between the Listing Realtor and the Selling Realtor. The most common commission arrangement is 6% of the selling price, 3% to the Listing Realtor and 3% to the Selling Realtor.”
Rich continued, “Therefore, you want to work with the Listing Realtor. That way that Realtor is going to get the Listing commission portion of the sales price (3%). This will endure you to Realtors who have properties listed that are going to be difficult to sell. Depending on the particular deal, you need to get as much of the commission as you can paid upfront. You need to discuss this with any Realtor you are working with BEFORE you actually get involved in a specific deal. No one likes unpleasant surprises; however, you have to keep in mind that you can only pay commissions from money you receive in the deal.”
“This is why I like to concentrate on expired listings. The Realtor will have access to the information pertaining to these expired listings. The owners of these properties which have been on the market but have not sold will usually be more motivated to sell their properties. The Realtor should be more flexible in working with you because selling these properties is somewhat like ‘found’ money for the Realtor.”
“So, you need to find a Realtor who is willing to work with you, and get paid as you are getting paid.”
“Now let’s take a break. After the break we will do some example deals to illustrate the points we have covered so far.”
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