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A good real estate broker can serve as a valuable resource in the sale and acquisition of investment property. There are times, though, when a broker or agent may do even more. For example, take a $100,000 listing by a broker who receives six percent commission. What if you, as a purchaser, could somehow use that $6,000 fee as a down payment at closing? Borrowing the broker's commission is sometimes possible, but before you approach a real estate professional about a loan, find out if the agent controls both the listing and selling sides of the transaction. If the person you're working with is only the selling agent, then he or she will have to split the commission with the listing agent and will not be in a good position to make the loan. When conditions were right, Oregon broker Jerry Corn has loaned his commission to a buyer or delayed payment of that fee. "I'm not willing to risk myself for someone looking to get rich quick," he says. But, he is willing to help knowledgeable, credible investors like you who have long-term goals. Experience makes a differenceCorn looks for a seasoned investor with a track record and a good reputation--someone who won't walk away from a property and leave him empty handed. "If they're not risking anything, why should I?" he says. Be very straightforward when approaching a broker or agent about a loan. Explain clearly that borrowing the broker's commission may be just what's needed to put a sold sign on a property that is distressed or has been on the market too long. A loan on this property could put you in a good position to buy other properties--transactions that would also benefit the broker. Keep in mind that the broker many times works for the seller and, if so, must answer to the seller first and foremost. Since broker and buyer become partners in a sense, it can appear in a given situation as if the broker has switched sides. That's why the seller must be informed, as well as all lenders. Terms of agreementIf a broker agrees to loan all or part of the commission to the buyer, the loan will be secured by a note and possibly a mortgage as well. Corn says that in the short term he might agree to 30 or 60 days interest-free, or simply delay the commission while the buyer awaits the receipt of other monies. For longer terms, brokers will expect to receive a reasonable rate of interest, a larger lump sum, or one to two percent more in commission. The term length should not be left open-ended. There must be a definite payoff date for this arrangement to work. Partnering up with an agent or broker can be beneficial to everyone. The seller reduces one obligation. The broker earns a commission. And the buyer gets in with little or no cash.
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