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From time to time you will come across a property listed by a broker that is being offered for a 10% down payment. Typically the seller is asking for the 10% to cover the broker’s commission as well as closing costs.

Brokers’ commissions are generally 5% to 7% of the purchase price. If a broker both lists and sells the property, the broker receives the entire commission. If another broker is involved, then usually this commission is split 50/50.

Borrowing a portion of the commission or giving the broker a portion of the ownership in lieu of all or part of the commission is sometimes possible, especially when dealing with a listing broker. If the listing broker is also the selling broker, the commission will not be split and the broker will be in a better position to loan part of it to you.

If you find some initial reluctance from the broker, you might try to make the proposition more attractive by offering to give the broker a note for an amount larger than the commission. For example, if the broker’s commission is $5,000, you might consider offering a $6,000 promissory note of 1% per month. In other words, every month you would make a payment of $60 to the broker.

At the end of the year you would have reduced, or amortized, the note by 2% or $120. The note could become due and payable in five to seven years. Generating all or part of the down payment in this way is a inexpensive way to do it.

Before approaching an agent or broker about borrowing commission, it is important to understand how the commission is determined in a real estate office. When a seller lists a piece of property with a broker, the broker’s compensation is spelled out in the contract. It is usually computed as a percentage of the total selling price. Similarly an agent or salesperson has an agreement with the broker that sets the amount of commission received by the sales person when a transaction is completed. The rate of a broker’s and salesperson’s commission is always negotiable.

Another way of doing business is the Re/Max method and is one of the best ways to exercise this creative financing technique. Re/Max is a nation-wide brokerage firm that rents office space to its agents. In addition to rent, they also must pay a fee for the benefits of advertising done by Re/Max.

The agent receives 100% of the commission on property sold. These agents and brokers are usually more receptive to lending all or a part of their commission to you than the more traditional agents and brokers. Check with your brokers to find out about the commission arrangements for his or her sales people.

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