Factoring Realtor Commissions

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Posted by Jess on November 07, 2001 at 18:54:17:

Hi John,

Working my way through your books and video tapes. Just one problem -
there's too much information! =) But seriously, so far I love it. I'm like a
sponge just absorbing as much as I can. By the time I'm through with
your stuff I'll be ready to develop a marketing plan and get going.

Listen, I wanted to run something by you and get your opinion. No rush
to reply to this, if you even want to reply at all. It's not really pertaining
to anything in your course (at least I haven't come across it yet) so I
understand if you're just too busy to reply to this type of thing.

I've been doing some serious brainstorming, and what research I can,
on factoring RE agents' commissions. There are a few people I have
talked to who are apparently quite successful doing this, and there is
even a company called Commission Express who has a franchise
opportunity. I would love to see what their systems are like, but since
I'm not considering this as a full-time business I don't think it would
be worth their franchise fees. I'm mostly looking for a good way to
invest some of my own money and I'm curious what you think. I'm
just looking for a little niche in addition to "regular" notes.

From what I've read and the people I've talked to, it seems you can
realistically achieve about a 60% yield with this. Generally they
discount the commissions by about 5% per month. So if the closing
is 2 months away they might give the agent 90 cents on the dollar.

Supposedly the RE agents and brokers love this concept, and these
few people are doing very well with this concept. AND what's better,
it seems like a GREAT way to get one's foot in the door with these
agents and drum up some note business down the line. When you
approach them with something they can easily relate to i.e. cashflow
problems and how it can be solved with commission factoring, it just
seems that's the beginning of a perfect relationship with that agent.

The one guy I spoke to who is actually doing this now on almost a
full-time basis said that about 75% of his business is repeat. The
agents just keep coming back to him. AND they tell their other
agent friends about him, etc. etc. It just seems like a great idea.

Heck, a person could even borrow money at 15% and still make a
tremendous yield with no money of their own. Do you see anything
wrong with this concept? Am I missing something? It sounds almost
too good to be true. Incredible yields, low competition, built-in repeat
business automatically, the agents are actually paying me to market
to them about the note business down the line, etc. etc.

Would LOVE to hear your thoughts on this if you have a few minutes.

Thanks,

Jess



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