Posted by Natalie-VA on July 13, 2011 at 15:19:39:
I would argue that someone who needs you to hold a note for 80% of the purchase price was not necessarily ready, willing, and able.
–Natalie
Broker commish and carry back mortgage - Posted by Ben (NJ)
Posted by Ben (NJ) on July 07, 2011 at 10:37:10:
In this climate of selling REOs I am often forced to carry back a large chunk of the purchase price in paper in order to consummate a sale. My question is what is customary for the broker to accept in this situation? It doesn’t seem fair to pay his entire (and sizeable) commish out of my pocket when he brought me a buyer who (best case scenario) will dribble in payments over the next few years, and worst case, will default entirely. I can also see his point though that it’s my choice to take the risk of the buyer defaulting, not his. What say ye?
Re: Broker commish and carry back mortgage - Posted by Natalie-VA
Posted by Natalie-VA on July 11, 2011 at 12:51:31:
I’m surprised you didn’t get any more feedback here. I have no direct experience with what you’re doing, but I would try and get the broker to take his commish in a note that only pays as his buyer pays. Maybe give him some cash up front, directly proportional to the amount of cash you receive up front.
–Natalie
Re: Broker commish and carry back mortgage - Posted by BTI
Posted by BTI on July 08, 2011 at 10:27:13:
Ben
You ask what say ye? Well I think you got your answer, the only one that answered was greedy Jack. What else would you call a guy that gets full price and 15% down and then cuts a already discounted commission in half?
At least cheap people are generally cheap upfront, greedy people just keep sticking their hand in your pocket as often, and whenever they can.
So if your going to have mental problems carrying paper then have enough class to discuss it upfront with your agent before you agree to do business.
But if your going to have a case of lenders remorse each time, then make it easy on yourself and don’t do it at all.
Re: Broker commish and carry back mortgage - Posted by Jack
Posted by Jack on July 07, 2011 at 16:59:24:
I had a situation a few years ago where I carried back a mortgage for a buyer that my listing agent found. The listing broker fee was 1%, the buyer broker fee was 3%. If it was a cash buyer I would have let him have a total of 3% (just the buyer broker fee) for his commission, but since I was carrying the paper we agreed to a total of 2% commission. We agreed on that before signing the purchase contract. The buyer was paying full price, 15% down and a 1% loan fee.
Re: Broker commish and carry back mortgage - Posted by Ben (NJ)
Posted by Ben (NJ) on July 13, 2011 at 13:36:54:
Makes sense although I’m sure brokers won’t go for it. Then again what if buyer simply can’t afford to come out of pocket to pay the commission? The whole idea is for it to come from proceeds of the sale.
Re: Broker commish and carry back mortgage - Posted by Ben (NJ)
Posted by Ben (NJ) on July 13, 2011 at 13:51:45:
It may not be a matter of being cheap but just not being able to come out of pocket with a commission
that was simply not generated by the proceeds of the sale. I thought of another potential issue, what if broker brings me a buyer who offers full asking price but wants me to carry 80% of the purchase price. I refuse but broker argues he brought me a “ready, willing and able” buyer and is entitled to his fee. Hmm. As you suggested, I will be taking these up in advance to avoid problems down the road.
Re: Broker commish and carry back mortgage - Posted by Natalie-VA
Posted by Natalie-VA on July 13, 2011 at 15:24:33:
I made an assumption that you would be collecting enough of a down payment to use some for the commission. Example, sales price of 100k, buyer wants to put 20k down and for you to hold a note for 80k. Let’s say the entire commission for two brokers is 6k. If you don’t want to pay them the 6k and reduce your 20k in proceeds to only 14k, the brokers should only get 20% down also. So, if each earned 3k, you could give them each 600 down and pay them the remaining 2400 each as you receive your payments (and contingent on you receiving your payments).
I’m rambling now, but hopefully it makes sense. I don’t know if those numbers would work for your scenario.
–Natalie