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I know, we should not be targeting homes that are listed with realtors. But, Jack himself did admit that he did alot of business doing just that. Jack mentions in his options course of subordinating his option to the listing contract. I am a bit unclear as to exactly how this structure would pay out, does the seller still owe the real agent a commission and jack his profit.
I need some clarification of this technique
Hi Nathan,
In the example Jack gave at the Advanced Options Seminar, the seller needed to move quickly and their house had been listed for some time but no offers. The seller may have also needed payment relief.
Jack’s option was negotiated directly with the seller of the property… not the listing agent. Because there was a realtor listing he subordinated his option to the listing ( did not try to go around the agent)
The option basically gave Jack the right to step in to the seller’s shoes and negotiate with potential buyers.
When the property finally sold, Jack was paid the difference between the strike price of his option and what ever the house sold for — MINUS Real estate commissions paid to the listing agent and the agent who actually found a buyer.
If you remember, Jack got a lot of flack from the real estate commission on this type of deal. But because he subordinated his option to the listing agreement, he got off.
Realtors are having a hard time making money these days because most of them don’t know any creative real estate strategies. If they think you’re trying to steal a deal from them, they will turn you in to the real estate commission in a heart beat.
Instead of dealing with listed properties, it would be better to find a motivated seller, get an option for 20% below market, then hire an agent to sell it offering them a 10% commission. They will be all over that kind of deal. And you’ll make 10% profit on a house you control without ownership.
Jackie
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