LO Question - Posted by Mark Chicago

Posted by JohnBoy on January 21, 2001 at 15:09:25:

Once you sign a L/O agreement with a seller, they CAN NOT sell the property to anyone until after your L/O expires! The ONLY way a seller could sell his interest in the property to someone else is if that person buying the property is willing to buy it knowing they would HAVE to honor the existing L/O agreement. Now WHO would offer MORE for a property that would require them to sell it for LESS to someone who already has an option on it? No one! Any buyer would have to buy it for LESS than YOUR option price if they intend to make any kind of a profit should YOU decide to exercise your option!

Also, DO NOT, only L/O a property for just ONE year! You should always get as many years as you possibly can. 3 years being the minimum.

If you L/O for one year and you find a tenant/buyer to L/O to 60 days later, then you could only give them 10 months on a lease and 10 months to exercise their option since your option would expire in 10 months! That isn’t enough time for you!

You can L/O in one year terms with the right to renew your L/O for another year 2, 3, 5, or 10 more one year terms. That way you only remain on the hook for 12 months at a time and could walk away after any 12 month term by not exercising your right to renew for another year. If things are going good then you just renew by exercising the option to renew for another year. But NEVER just L/O a deal for only one year! Unless, of course you KNOW that you intend to BUY the property yourself!

LO Question - Posted by Mark Chicago

Posted by Mark Chicago on January 21, 2001 at 04:20:35:

First, I’d like to thank all of you for being so helpful and friendly. Much appreciated! This really helps a newbie like me feel comfortable (almost comfortable enough to start making offers!)

That aside, here’s the hypothetical situation: I signed up a seller with a LO for one year, get a TB in 60 days later. What if the seller finds a buyer while I have my TB in the property? How do I handle this now ANGRY seller that gets an offer HIGHER than the below FMV that I LO’d him on?

The seller wants to sell, but I collected a fee from my TB and I can’t kick him out until his option expires.

How do I handle both parties in this situation?