How do you "Sell" an Option - Posted by GregNorman

Real Estate Investing
1

Posted by Nate on February 05, 2001 at 13:54:25:

Rather than answer your question, I will give you a valuable piece of free advice:

SKIP THIS ONE.

The spread is simply too narrow for you to make any money.

Sorry,
NT

2

How do you “Sell” an Option - Posted by GregNorman

Posted by GregNorman on February 05, 2001 at 12:46:58:

I have been hesitant in the past to sign up an option b/c I’m not sure how to ‘sell’ the option.

I have a seller who is willing to give me an option on a home for $150k. He is selling it himself for $154k. I think the property could sell for $159k if he marketed the home properly.

Unfortunately, the property has a sign and brochures listing the price at 154k (as FSBO)… People seeing the brochure or talking to the owner will want to deal with the owner (vice me w/ a higher sales price).

  1. How do you sell the home at a higher price?

  2. I was thinking about having a USP (Unique Selling Proposal) that would make purchasing the home from me ‘better’ than buying it at a lower price (i.e. pay all closing costs, special financing). Any other special ways to sell it to make it more attractive to the buyer?

Keep in mind that the owners don’t have any equity beyond the $150k (so they can’t do owner financing) and the house probably wouldn’t appraise much higher that $159k (maybe 165k… but it’s not something I would want to count on).

Thanks for the input in advance.

GregNorman

3

what about a L/O? $20,000+ profit? - Posted by George

Posted by George on February 06, 2001 at 24:24:00:

Let me tell what I would do. However, do not take my word, check with other experts here…

  1. Get a 1-3 years lease option for the balance ($150,000)no money down.
  2. Ask in the contract for the right to sublease or sell
  3. Place an ad in the paper “non qualifying lease option”
  4. Get $5,000 to $10,000 non refundable option deposit (check what your market bears)
  5. Charge at least $100 more than your payments, if it is possible, if not, just forget the deal.
  6. Ask for a price at the end of the L/O of about $170,000…(you say the home maybe worth $165,000 right now)

I see a possible profit potential between $5,000 to $10,000 in the front end, plus at least $100 cash flow per month plus another $10,000 or so at the end of the option.

Let’s hear what other experts say…

4

Re: How do you “Sell” an Option - Posted by John Burley

Posted by John Burley on February 05, 2001 at 16:41:30:

Hi Greg,

In reading over your details I think this deal is far to thin to go after. Your competition is the owner. With him openly advertising and marketing the property at $154,000 (and him willing to take $150,000), the odds of you getting more are slim and none. And remember any incentives such as (closing costs, points, etc.) are hard costs that come right off the bottomline.

Whenever I take out an option I place the following in my offer:

  1. Any existing signs to come down and marketing to cease.
  2. Right to show the property in privacy to potential occupants.
  3. I disclose that I am an investor.
  4. I add and/or assigns (or nominees down under).
  5. I have the seller agree to sign off on any required documents at closing.

In regards to selling an option, there are several methods, I prefer the Assignment of Contract.

Good Investing,

John Burley