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Who pays for the deferred commission in the final analysis? It is negotiable. If the buyer can strike a nothing down deal with the seller paying the commission over time, is all the better. In many cases the buyer himself assumes the seller’s obligation (Technique No. 11) and pays the deferred commission. Occasionally they share.

The whole point is that the flexibility of the realtor may be an important factor in whether the deal comes together. Since the commission is usually the largest cash obligation of the seller in a transaction, the power of this technique cannot be overestimated.

There are examples that illustrate how “Borrowing the Realtor’s Commission” works in practice. In one Albuquerque transaction we heard of recently, the seller of an 8-plex arranged to pay $3,000 of the commission on a note, the balance being paid in the form of a real estate contract invested in the deal by the buyer’s partner. The two notes not only constituted the entire commission, but the entire up front cash needs as well. In another deal, this time in St. Petersburg, Florida, a 35-unit motel and restaurant were acquired using, among other approaches, the technique of borrowing $30,000 in commissions ($15,000 in the form of a personal unsecured note signed by the buyer, and $15,000 in the form of a third mortgage on the buyer’s home). Similarly, a note for the commissions was instrumental in closing a deal on two duplexes acquired by an investor in Homestead, Florida. This technique is very frequently used. As a matter of fact, our research among the Robert Allen Nothing Down investors shows that as many as 20% of the transactions involve some degree of realtor carry back of commissions.

4. THE RENTERS

In nearly every real estate transaction involving rental property, the renters are instrumental in helping the buyer with the down payment. Of course, they are not aware of it. And few buyers are conscious ahead of time of how important the role of rents and deposits is to their success in reducing the cash down payment.

Technique No. 20 Rents

Since rents are paid in advance, a buyer who closes on the first of the month when rents are due stands to receive the gross rental income for that month. The first mortgage payment is generally not due until thirty days after closing so the buyer has a thirty-day breather. His

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