Explaining Options to Buyers? - Posted by Frank

Posted by Frank on May 03, 2006 at 10:02:03:

Oops, what a hosehead I am. I should have made the titile of the thread “Explaining Options to Sellers.” Sorry about that.

Thanks for your advice, I just wanted to get other viewpoints just in case I was missing something, seems in this case my gut was right about what to say to the seller.

Explaining Options to Buyers? - Posted by Frank

Posted by Frank on May 02, 2006 at 11:43:32:

I have an opportunity to buy a house on an Option. Without going into all the details, the seller understands I’m not a real estate agent and understands that I only get paid if I find a buyer before he does within the next 6 months. He also agreed on a price that will leave me enough profit to make it worth my time.

My question is, when I sit down with my option agreement/purchase and sale agreement and tell him how an Option works, should I go into explaining what a Double Close is and how it works as well? Or, should I just keep it simple and cross that bridge if/when it?s time for the closing?

Re: Explaining Options to Buyers? - Posted by DaveD (WI)

Posted by DaveD (WI) on May 02, 2006 at 13:01:46:

Record your option.

Tell your buyer “I have an ownership interest in this house. I need to sell.”

Arrive at a price. Arrange the closing. Your name will pop up in the title paperwork. Let the title company handle your interest any way they want. They may want to double close. Or, they might view you as a lien (like a loan) to be paid off, in exchange for your signed off paperwork “satisfying” your interest. Have done it both ways. Keep in mind lender seasoning issues.

Re: Explaining Options to Buyers? - Posted by DoubleJ

Posted by DoubleJ on May 02, 2006 at 12:49:35:

K I S S

But disclose everything in writing prior to closing.

Re: Explaining Options to Buyers? - Posted by Frank

Posted by Frank on May 02, 2006 at 18:31:38:

I understand what to say to my buyer, but I want to know what I should discuss with the owner of the house when I meet with him. Should I go into explaining what a double-close is and how it works when I’m sitting down with the owner of the house explaining what I intend to do?

Re: Explaining Options to Buyers? - Posted by Frank

Posted by Frank on May 02, 2006 at 18:55:08:

The thing I’m not sure about is if explaining a Double-Close to the owner will scare him off or not right from the get go.

My gut tells me that how I finance the deal is really not his business. Whether I get the money from my uncle, boss, or it falls from the sky isn?t going to matter to him as long as he gets the price that we agreed on. However, since this is the first Option deal I have done, and even though my gut felling seems logical to me, I just wanted some advice as to whether or not I should even bother telling him all the ins and outs at all. When I?m getting set to write up the agreement and have him sign it. What do you think and why?

Re: Explaining Options to Buyers? - Posted by DaveD (WI)

Posted by DaveD (WI) on May 03, 2006 at 06:53:29:

Ugh, OK, your post was titled “explaining options to buyers.”

Giving the seller a lot of free education is counter-productive. Tell him what he needs to know. “You’ve given me the right to buy your house at my option. I won’t be moving into it. Someone will. I need access to show it to my buyer. We will close within the time specified. You’ll be responsible for some of the closing costs, so will I. When the time comes, you’ll need to meet me at the title company to approve the final docs and pick up your check.”

Nowhere in that conversation does double close or any of your other intentions enter. That’s your business, and the seller doesn’t care anyway.

Re: Explaining Options to Buyers? - Posted by DoubleJ

Posted by DoubleJ on May 02, 2006 at 20:52:00:

I would just explain it in laymans terms as much as possible. Theres no use in trying to educate him on how to structure the deal. And your guy is right that he is more concerned with his bottom line anyway.

Besides, chances are you would be talking over his head in the first place. This would lead him to frustration, and he would probably end up going with someone that made it seem more easy.

Just my .02