How are commissions typically paid on lease with options to purchase?

This is a Lease Option to Purchase within 39 months. The Seller/Lessor refuses to pay a commission on the lease portion. If the option is never exercised, does that mean I do not get paid any commission for providing a valuable service that resulted in a successful transaction benefiting the Seller/Lessor?
In Buying Property - Asked by Tony F. - Dec 3, 2011
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Answer(s)

Marc I.
Broker/Agent
Mount Laurel, NJ

You can be paid monthly as the rent is paid. If the commission is 6% of the rent, you get that paid monthly. If they exercise the option you stop getting paid. If they dont exercise, you continue to bill your commission monthly.
If he says you are getting paid twice, you are not. You get paid a commission on the value of the rent he collected and then paid on the sale.
You can be paid out on the lease up front, and if they exercise the option, you reduce the sale commission by the un-amortized prepaid leasing commission. If they pay half way thru the lease, you reduce the sale commssion by half the leasing commission.

Dec 4, 2011
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Jay R.
Owner/Investor
Fort Wayne, IN

I am an investor and this is how I work with realtors who bring me a lease option candidate that fit our guidelines. The total amount they will be paid is 3% of the purchase price. They will receive one month's rent as a lease up fee to be credited towards the total 3% when the candidate signs the documents. The realtor will be paid the balance of the 3% at the time the candidate exercises their option and obtains financing. The bottom line is the realtor gets paid for services when I get paid. The realtor gets paid up front for bringing me a renter and filling the property, the candidate has not purchased the home yet. When the candidate obtains their own financing, I get paid and the realtor gets paid at the same time. In our situation, the realtor is not managing the property, we manage internally so their is no management fee involved.
In my opinion as an investor, the seller should pay you for filling his property with a renter. The balance of your agreement should be paid at the time the tenant exercises their option and is able to obtain their own financing.
Jay Redding
www.InvestmentPropertyMadeEasy.com

Dec 4, 2011
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marco o.
Broker/Agent
Saugus, MA

You must be paid for your original work from Seller/Lessor unless you signed something agreeing to this always get paid at lease signing and if property is sold you should collect your agreed fee % minus the remainder of lease term. If tenant decides to exercise purchase in 39 months you are intitled to percentage of 39 month lease ( you brought the deal ) plus percentage of sale and if tenant decides not to exercise option to purchase you are intitled to your fee on the 39 months the tenant will probably stay as a tenant. In closing if landlord had a better deal for this property he or she would have taken it .

Dec 4, 2011
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marco o.
Broker/Agent
Saugus, MA

I sold a restaurant in Malden mass. And was paid commission by tenant and landlord stated to me " get me a new tenant and I'll pay you 5% of first five years of lease " well landlord stiffed me and I gave them a great tenant w/10 year lease and found out former tenant stiffed landlord rent for 18 months in restaurant and an apartment . I got the landlord out of a bad situation and he stiffed me but I didn't get it in writing so shame on me. If its in writing all is good !

Dec 4, 2011
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marco o.
Broker/Agent
Saugus, MA

I sold a restaurant in Malden mass. And was paid commission by tenant and landlord stated to me " get me a new tenant and I'll pay you 5% of first five years of lease " well landlord stiffed me and I gave them a great tenant w/10 year lease and found out former tenant stiffed landlord rent for 18 months in restaurant and an apartment . I got the landlord out of a bad situation and he stiffed me but I didn't get it in writing so shame on me. If its in writing all is good !

Dec 4, 2011
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