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readily as the seller had hoped (a “lemon”). The new package of property-plus-cash is then offered in exchange for any acceptable package on the market with the cash sweetener added, the lemon is supposed to become more palatable to the marketplace – “lemonade.”

3. THE REALTOR

The third major source of down payment capital is the realtor. By convention, most people assume that the real estate commission for listed properties is a fixed cash element of a transaction and that a seller is responsible for paying it. In fact, the commission is not fixed in any of its dimensions: rate, form, or source.

Like almost anything else, the percentage rate for calculating the commission is negotiable. Indeed, there would be legal problems if the real estate industry were to publish uniform fixed rates. Moreover, there is nothing written dictating that one must pay a commission in cash and cash only. Of course, almost all real estate professionals would prefer cash. It makes a deal clean and tidy and allows one to buy bread for the family table.

However, most informed agents know that some transactions may involve commissions in the form of paper – promissory notes that may provide for monthly payments or a single payment balloon note at the end of an acceptable period. Generally the time involved does not exceed a year or two. Occasionally the commission may be in the form of a share of ownership, with cash emerging upon sale of the property down the pike. Still other possibilities include commissions paid in personal property. In Technique No. 14, the agent received a beautiful 0.81-carat diamond for his services. He was delighted, as are most agents who are shrewd enough to realize that a commission in an alternative form is better than no commission at all.

One of the important techniques available to the buyer who is interested in reducing the cash down payment for a deal is the technique of “Borrowing the Realtor’s Commission” (No. 19).

While it is true that according to current agency practice, the seller pays the commission, the buyer is at liberty to negotiate alternative arrangements with either the listing or selling agents (or both). If the buyer can induce the agents to defer the commission, the down payment can be reduced by the same amount because the seller’s immediate obligation is relieved.

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