Posted by Leon on June 03, 1999 at 01:19:53:
Please bare with me on this question. When you say “getting the deed” what is this? I’ve heard it mentioned too many times on this site and have to ask. Are you assuming a non-assumable loan by using something like the PacTrust?
Option Consideration Question - Posted by Rod
Posted by Rod on June 01, 1999 at 14:05:26:
Is the option consideration amount deducted from the final sales price
of the house, similar to a down payment?
for example
Option Money: $3000
Sales price: $100,000
amount owed to me when option is exercised: $97,000???
thanks
Re: Option Consideration Question - Posted by JohnB_NJ
Posted by JohnB_NJ on June 01, 1999 at 14:28:35:
Rod,
Yes, that is the way I do an option. When I exercise my option, the option consideration comes off the sales price. The only thing I do not do, is option a home for 3k. For 3k, I want that puppy under contract with “weasel clauses” to get me out if I can not find a buyer. My usual option consideration is $100. Why so low. why not! I am marketing the home at my expense, there is not a risk to the seller. He/she may sell it before I do and I am out of the deal. If they want to list it, I ask that they give me atleast 30 days first (but shoot for 60 to 90 days), then after that, I ask to be excluded from the listing so that I may continue my marketing program on that home. See, with no risk to the seller, they should have no problem with $100 bucks as consideration. I just do my homework to make sure I am optioning the property at a price that leaves me enough room to profit. I only option high priced homes and I need to make atleast 15k in order for me to take on the job of marketing and selling the home. Selling retail is a big pain in the butt and you should get paid well for it.
I usually don’t option homes that are occupied, unless I have a really really motivated seller. The home shows better with furniture in it but sometimes the sellers can get diarrhea of the mouth.
Best of REI success to you.
Sincerely,
John
PS: Optioning a home is my last choice, but it is one of my tools.
Re: Option Consideration Question - Posted by JohnB_NJ
Posted by JohnB_NJ on June 01, 1999 at 14:24:55:
Rod,
Yes, that is the way I do an option. When I exercise my option, the option consideration comes off the sales price. The only thing I do not do, is option a home for 3k. For 3k, I want that puppy under contract with “weasel clauses” to get me out if I can not find a buyer. My usual option consideration is $100. Why so low. why not! I am marketing the home at my expense, there is not a risk to the seller. He/she may sell it before I do and I am out of the deal. If they want to list it, I ask that they give me atleast 30 days first (but shoot for 60 to 90 days), then after that, I ask to be excluded from the listing so that I may continue my marketing program on that home. See, with no risk to the seller, they should have no problem with $100 bucks as consideration. I just do my homework to make sure I am optioning the property at a price that leaves me enough room to profit. I only option high priced homes and I need to make atleast 15k in order for me to take on the job of marketing and selling the home. Selling retail is a big pain in the butt and you should get paid well for it.
I usually don’t option homes that are occupied, unless I have a really really motivated seller. The home shows better with furniture in it but sometimes the sellers can get diarrhea of the mouth.
Best of REI success to you.
Sincerely,
John
PS: Optioning a home is my last choice, but it is one of my tools.
Re: Option Consideration Clarification - Posted by Rod
Posted by Rod on June 01, 1999 at 15:19:07:
Thanks for the SUPER INFO!!!
In my post I was referring to the Option Money I charge my T/B’s. Please elaborate on this.
You mentioned L/O was your last choice. What’s your first choice in RE investing?
Thanks
Re: Option Consideration Clarification - Posted by JohnB_NJ
Posted by JohnB_NJ on June 01, 1999 at 15:47:14:
Hello Rod,
Yes, I misunderstood your post. I thought that you were trying to get an option on a home.
If you are trying to L/O a home you have under control (via a lease option w/ right to sublet) or a home you own, then yes, get as much upfront money as you can (the more the better). Ask the potential Tenant/buyer what they have to work with. If it is what you are looking for and they seem to be good canidates, then sign 'em up.
The option money is applied to the purchase price. But if the Tenant/Buyer defaults, that money is non-refundable. Make sure you spell that out for them. I have the Tenant/Buyer intial next that part of the contract.
BTW, I use two documents when selling on a L/O. A month to month lease and an Agreement to Purchase. My Agreement to Purchase states "if the lease is breached, blah blah blah, then the Agreement to Purchase is void and all Earnest money is forfeited. I also add on the Agreement to Purchase, "if tenant abandones the property, the Agreement to Purchase is void…
L/O are my second choice. My first choice is “getting the deed!”. I picked a home up yesterday for $100. The owner signed the deed over to me. Now, there was only about 5k in equity and the seller was going to let it go into foreclosure. I will L/O this home.
Good luck and good investing.
Sincerely,
John
Re: Option Consideration Clarification - Posted by Carolyn
Posted by Carolyn on June 06, 1999 at 24:55:18:
RE: “L/O are my second choice. My first choice is “getting the deed!”. I picked a home up yesterday for $100. The owner signed the deed over to me. Now, there was only about 5k in equity and the seller was going to let it go into foreclosure. I will L/O this home.”
Hi John, I read your post and am wondering if you can expand on the steps and contract you use to “Get the Deed?” I have read others mentioning this approach however, I have’nt read how to do that. Please try to give examples for clarity. I really do appreciate it. Thanks, Carolyn