option vs. purchase sales agreement - Posted by Rich

Posted by StevenS(CPA) on July 24, 2007 at 20:32:00:

When to use an option - generally the best time to use an option is when you do not have an exit plan on the deal but are relatively sure you can get the deal done.

A purchase sales agreement is better when you already have your ducks lined up and know how you are going to make the deal work.

Signing a purchase contract may not be a big deal to us who signs them everyday, but it may have a huge effect on a seller who is assuming he has sold his home and on any real estate agents who may be in the deal. They don’t like seeing buyers go back on their agreement even if there is liq. damages included.

An option gives you more freedom to walk away if you can’t do the deal and has less of a psychological impact on the seller if you can’t do the deal.

Plus option money is usually much cheaper than puchase consideration.

But this is just my opinion.

Hope this helps.

option vs. purchase sales agreement - Posted by Rich

Posted by Rich on July 22, 2007 at 13:28:10:

Why do end investors prefer the puchase and sales agreement opposed to the option to purchase when wholesaling contracts, what is so bad about using the option other than you may get cut out of the deal and what is so good about the sales agreement and do you have to double close using your own attorney when using the sales agreement or can you just assign the sales agreement the same as the option and let the end investor close. What would be the best approach.

Re: option vs. purchase sales agreement - Posted by Bob Smith

Posted by Bob Smith on July 23, 2007 at 20:35:38:

A purchase and sales agreement with a long escrow period and a liquidated damages clause is an option.

Re: option vs. purchase sales agreement - Posted by David Alexander

Posted by David Alexander on July 22, 2007 at 14:39:06:

In residential transactions that is what is accepted… a properly executed contract can work just as well as an option…

Once you start doing deals… you’ll get past worrying about signing contracts… cause you’ll structure the deals that you know you’ll make happen.

Options are usually used in paper, land and commercial deals.