Posted by osirus on July 20, 2002 at 14:18:11:
the performance mortgage has to be satisfied if you did record it. If the seller did try to cut you out she would not have clear title because of the performance mortgage.
If owner sings, it is all over! - Posted by Michael Murray (CO)
Posted by Michael Murray (CO) on July 18, 2002 at 22:31:55:
I have an expensive house that I can get an option on for a price below market value. I want to use Ron LeGrand’s technique of raising the price above market and offer seller financing by carrying back a second. My question is how do I keep the owner, who lives in the house, from knowing how much I will make on his house, and how do I keep the owner from spilling the beans to my buyers when I bring them to the house to show it? He wants to be present during showings. If he should happen to mention to my buyers how much he is selling it to me for, things could get sticky.
Thanks,
Michael
Re: If owner sings, it is all over! - Posted by Gerald-DC
Posted by Gerald-DC on July 19, 2002 at 18:23:31:
I have tried to do two straight option deals and what I have learned is that it is difficult to do an option with a property that is occupied.
In June I went through the very fact pattern that Joe Kaiser warned about. I had an option on the property, I had a buyer, JohnBoy taught me how to do a performance and I was all set to make all of $8,000 on a little option deal. I thought I was helping the seller out because I normally wouldn’t do this type for so little profit.
Imagine my surprise when after I have a contract signed by the buyer ready to take to the seller, I get a call (she left a message) stating “Thanks for your time, but I don’t won’t to sell my house anymore.”
Despite the fact that I told her upfront that I was going to make a profit by selling the property for as much as I could above the option price, I trully suspect that she got wind of what I was selling the property for and had a problem with me making some money or maybe she was just a “bee itch”
If you are going to do a straight option on an occupied property, I suggest you listen to LeGrand’s CD’s a couple of times to make sure you didn’t miss anything (he states that he doesn’t like to option occupied properties either) and print out Joe Kaiser’s comments.
Best Regards
Gerald
Up front - Posted by Judd
Posted by Judd on July 19, 2002 at 24:32:10:
Be completely up front with the seller. Explain the benefits to him of what you are doing, so they know the deal has to work for you and him. This is spelled out very well in the Multiple Streams of Income book available free at www.resultsnow.com. I downloaded this book and now plan on working lease options using these techniques.
Good luck,
Judd
Re: If owner sings, it is all over! - Posted by JoeKaiser
Posted by JoeKaiser on July 18, 2002 at 23:02:42:
Here’s what I’ve learned and how we approach these things nowadays . . .
Keeping secrets is problematic and way too much to worry about. If you’re in a position where you have to keep people from learning about the facts, or your intentions, or meeting someone else, you’re carrying around way too much stuff.
If I do a deal like this (I don’t, btw, but if) I’d write it all up and tell the seller of my plans in very general terms. Once it’s signed off and we’re good to go, I’d continue the conversation and let the seller know precisely how things work from here. I’d describe my exact game plan to the point of telling him point blank what I intend to do next and exactly how much I plan to make. I’d tell him the entire story, down to the last detail.
What screws up deals like yours are surprises, misunderstandings, and the feeling like some hot shot investor has pulled the wool over the seller’s eyes. The seller doesn’t care if you’re going to make a profit, he just doesn’t want to feel like you took advantage of him or misdirected him when you failed to describe your true intentions. Forget about your big secret or the fear that the seller will now flip since he knows how to work it out himself and no longer needs you. That sort of thing just isn’t going to happen. Of course, it could happen and if that were a possiblity, I’d like to learn about it right here instead of a month later after I’ve found a buyer myself and am committed on the other side of the deal.
A step further . . .
If this was a regular kind of thing for me, I’d figure out all the ways the seller could get sidetracked or disgruntled and I’d write up a “disclosure” form where I describe the problem areas. It would result in a document that talks about each aspect of the gameplan and I’d have the seller initial each item as we go down the list. It’s easier than it sounds and saves soooo much trouble and so many misunderstandings down the road. It also eliminates virtually every defense he may later try to whack you over the head with.
This notion that “things could get sticky” becomes completely moot and there are no “hard feelings” (we spell that “lawsuit”) later on.
Finally, once we’ve signed off on any kind of purchase agreement, the seller gets a followup letter within a day or two that restates our understanding and allows the seller the opportunity to voice any objections. They never do but by not responding, it forecloses their future ability to do so.
It’s the surprises that create havoc. Avoiding them and doing whatever it takes to eliminate them from later cropping up is the key.
Joe
Re: If owner sings, it is all over! - Posted by osirus
Posted by osirus on July 20, 2002 at 02:02:10:
Did you record your performance mortgage?. If so, you may still have some leverage if she trys to sell behind you.
Thanks Joe, and others - Posted by Michael Murray (CO)
Posted by Michael Murray (CO) on July 20, 2002 at 15:41:26:
Thanks for the learned replies and great advice. I appreciate your help and will put your ideas to work.
Michael
Re: If owner sings, it is all over! - Posted by CurtNY
Posted by CurtNY on July 19, 2002 at 12:00:54:
Great Post Joe, I like the follow up letter idea!
Thanks
CurtNY
Re: If owner sings, it is all over! - Posted by gerald-dc
Posted by gerald-dc on July 20, 2002 at 10:54:47:
Unfortunatley, I tried to get option consideration from my buyer first but that just didn’t work. So thanks to JohnBoy I developed a performance mortgage.
After drafting the performance mortgage and having a signed contract from my buyer, the seller pulled her act.
I could sue her over the signed option agreement, but since the amount is so small, I won’t bother. I’ll chalk it up to experience.