Re: I need a “Straight Option” Course… - Posted by Dave T
Posted by Dave T on July 06, 2002 at 10:55:16:
The purpose of an option is to gain control of a property for a finite period of time with a small investment (option premium). If you fail to exercise your option, you only lose your option premium.
You accomplish the same thing using a standard purchase agreement with a small earnest money deposit and an extended settlement date. Your purchase agreement would contain language that limits the seller’s liquidated damages to your earnest money deposit in the event you default.
In both instances:
- You can purchase the property yourself.
- You can assign your contract or option to another buyer.
- You can walk away from the deal entirely and limit your loss to the earnest money or option premium you have invested.
Seller’s are already familiar with a traditional sale agreement, but may need to be convinced to enter into an option agreement.
What additional flexibility would you gain from an option that you can not find in a purchase agreement?