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How Do I Get Paid if my Clients Offer Owner Financing?

I thought this was a great email addressing concerns that real estate professionals sometimes have when dealing with owner financing situations:


I was just on your page “Dispelling the 5 myths of owner financing“.  I am an agent in Chicago currently working on a owner finance deal for the first time.  I get the process, but I am not sure about one thing.  When do the agents get paid their commission???

We have asked the seller to hold the note for 12 months.  Do we (realtors) get paid when the seller and the buyer have agreed on terms and transaction is signed off or do we get paid in 12 months when the buyer’s note comes due and they re-finance into a conventional mortgage and the real closing happens???

My broker says he believes it’s when in 12 months when the real closing happens, yet I have had other agents in the office that have done these type of deals in the office and they have gotten paid once the deal was put together.

Not sure???  Can you shed some light?



Dear Sylvia,

Glad you found me, and yes, you should get paid at closing out of the down payment that the buyer brings to the table.  An owner financed transaction IS a “real closing”.  A bank loan does not a “real” transaction make.

If there’s a small down payment, not enough to cover closing costs (including your commissions) then you have to ask yourself 2 things…

  • Is this a good deal for the seller?  Small down payment = greater risk of default
  • Would I be willing to receive my commission in monthly installments?

A couple other things… 

  • Are you sure the buyer will be able to refinance in 12 months?  The short 12-month term could potentially be a problem.
  • Would your seller like to be able to get more cash at closing?  Sometimes if structured properly, the seller can sell a portion of their note, or a small first with the seller holding a larger 2nd.  It all depends.

I am frequently a consultant in these types of situations to:

  • Help mitigate risk for sellers and buyers
  • Reduce liability for Realtors involved in owner financed transactions
  • To preserve real and paper assets for the seller
  • To help more deals come together by properly understanding owner financing and the secondary note market

Hope this helps!  Put that deal together and GET PAID!

I hope you’ll stay tuned for my online training that is getting ready to launch at Owner Financing Club.  There’s material there aimed specifically at Realtors.

To your success,


P.S. If you’re a Realtor, have you even taken your commission on an installment note?  Leave a comment below if you’re a real estate professional that has been involved in closing a transaction financed by the seller… would love to get your feedback!

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