Can I use a strait option involving a realtor? - Posted by Dan-IN

Posted by John (Rome) on July 03, 2003 at 16:02:32:

fro what it’s worth…ehm…older couple?..isn’t the US chock full of litigation hungry lawyers just waiting to get their choopers on someone’s butt?..I’d keep that in mind as well…you don’t want to be on the recieving end of a lawsuit so make sure your paperwork is in order…perhaps a read of Kaiser’s the best darn document article is called for too…older people have a hard time reading/understanding what’s going on…often this comes up very conveniently…for them…

Can I use a strait option involving a realtor? - Posted by Dan-IN

Posted by Dan-IN on July 03, 2003 at 07:52:23:

Hi guys,

Does anyone know if it is possible to use a strait option with a property that is listed with a realtor?

Here is what I was thinking;
Purchase a nice listed house from a (motivated)seller at $35,000 using an option, and then assigning it to my (less than perfect credit, motivated)buyer for $65,000(MRV) where I could carry back 20%.

I know this will work when dealing with the seller directly, but if the property is listed, I’m ignorant of the rules.

The real estate agent I use is also my partner, if that matters.

Dan-IN

Re: Can I use a strait option involving a realtor? - Posted by Joe

Posted by Joe on July 04, 2003 at 02:10:39:

Just get the seller to exclude you and your buyer from the realtor’s listing. That way you are competing with the Realtor. First one to sign-up the buyer wins.

Re: Can I use a strait option involving a realtor? - Posted by Len

Posted by Len on July 03, 2003 at 10:49:01:

Hi Dan,

Maybe I’m missing something here, but if you assign the option, why/how would you then carry back anything? Once it is assigned, you own nothing. And besides that, do you know that your less than perfect buyer will qualify for a loan? What if your sellers won’t agree to a carry back of 20%?

I realize this doesn’t answer your realtor question–that’s been covered already. Just something more to think about.

Cheers,
Len

Re: Can I use a strait option involving a realtor? - Posted by Ben (Ohio)

Posted by Ben (Ohio) on July 03, 2003 at 09:11:20:

I don’t know if this is possible, but what about having some language in the option that gives you the ability to market this home on your own while they try to sell–a right of first refusal (whereby if the house sells, you get your option $ back) or something like that so if you find someone within your option period, and you can get them to sign the purchase contract before they do, then you get the deal. If you have this motivated buyer who can close, then you have the deal–if you don’t “win” the race, you’re out the option money at worst. The deal would have to close at a price high enough to cover commissions and your profit.
If they don’t have much equity and just want out of their house, you could consider turning this into a L/O for your imperfect/poor credit buyer, making payments and letting the seller walk while you stay in the middle in a sandwich lease option.
I’m pretty new, so I may be talking about something that’s impossible, but I have used options to tie up properties for a short period even though there was a realtor involved, and then went into contract after I liked what I saw. Also, you can take time to run ads and see who you can find to buy. Longer option period is better for you, but without some kind of escape clause, the seller and realtor may not go for a long period without substantial option money. I used $10 in option money for a 2 week option with a motivated seller on a $280k estate and then went into contract and I’m trying to sell my contract and/or delay closing, so far so good.

Re: It’s not up to the Realtor - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 03, 2003 at 08:43:35:

It is up to the owner. The Realtor will expect to be paid a commission and rightfully so, but that is the sellers expense not yours.

Now let me see what you are proposing. Hey mr. seller you pay the commission and get rid of the Realtor, while I find a poorly qualified buyer who is willing to pay roughly double the asking price for your property. Now while I am doing that I will expect you to sit and wait on me to do this while holding your price at sub wholesale. Then if during the option period I can’t work this miricle, I just walk away and you still have your house, great huh? You have lost the time involved in my attempt, and the Realtors fee. Oh well you can’t win 'em all.

Don’t you think, mr seller; that this is a great deal?

Re: Can I use a strait option involving a realtor? - Posted by Marcos

Posted by Marcos on July 03, 2003 at 08:38:41:

First off, you don’t find many motivated sellers on the MLS. So, this may all be moot.

If you’re going to do this, then why complicate things with an option. Why not just use a normal contract? Then, you execute a double closing with a reliable title company. I’m not sure exactly why you would choose an option over a normal purchase contract. What are you trying to avoid, or what are you trying to gain?

Theoretically, this should work. In the real world however this is rather difficult. Finding the motivated buyers and closing them, can take months. Ask me how I know this?

Good Luck.

Marcos

Re: It’s not up to the Realtor - Posted by Dan-IN

Posted by Dan-IN on July 03, 2003 at 09:18:18:

Ed,

It sounds like you are suggesting that I am stupid.

I am not trying to work any miracles but just wanting to help a motivated seller and a motivated buyer (who both happened to come to me) and make a profit.

I would simply like to know, since this particular property is listed, can I use a strait option involving a realtor?

Do you know?

Dan-IN

Re: Can I use a strait option involving a realtor? - Posted by Dan-IN

Posted by Dan-IN on July 03, 2003 at 09:27:03:

Marcos,

Thanks for you input.

I would choose an option over a normal purchase contract because I don’t want to finance the property in my name just to flip it. If I could assign my normal purchase contract to my buyer, that would be great. That still leaves my question unanswered; can I assign my option (or purchase contract) involving a listed property?

Dan-IN

Re: Not me - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 03, 2003 at 11:34:53:

I usually don’t make suggestions of that sort. I usually say what I think.

Now since you have provided more detail it does look like you have a buyer and a seller who are very poorly informed. Sounds like they may be just dumb enuff to pay the commission and give you a bundle too.

Good luck, go for it.

Don’t try to walk on the Realtor, just pay him it works better. (I mean get the ultra stupid seller to pay the Realtor).

Looks like you are dumb, like a fox.

Re: It’s not up to the Realtor - Posted by Kristine-CA

Posted by Kristine-CA on July 03, 2003 at 09:31:58:

Dan: I don’t think Ed is suggesting you are stupid. But I think your seller would be stupid to take such a deal. Why would the sellers take it off the market with not even a purchase contract in sight?

You can make any offer you want through an agent, including an option. If your sellers will go for it great. But the agent will still have to be paid even if you bring a buyer to closing. Probably even if you exercise your option to buy and bring a buyer to closing after the listing expires, the agent will need to paid. Something to think about.

Sincerely, Kristine

Re: Can I use a strait option involving a realtor? - Posted by Marcos

Posted by Marcos on July 03, 2003 at 09:29:32:

Depends on your contract. I make every contract I sign, assignable. Not that I usually assign them, but I always want that option.

From what you say, I would just use a standard purchase agreement, and then assign it, or at least do a double closing. I doubt that assigning it would be exactly what you are looking for.

HTH,

Marcos

Re: It’s not up to the Realtor - Posted by Dan-IN

Posted by Dan-IN on July 03, 2003 at 09:41:08:

Kristine,

The sellers are an older couple who moved to Florida and owe nothing on the house. They just want to get rid of it and are willing to take any offers since there has been none in the last six months. If they’re stupid for taking me up on my offer, that’s their business. We both know people do stupid stuff all the time.

Thanks for answering my question.

Dan-IN