Re: Options/ Ron Legrand - Posted by eric-fl
Posted by eric-fl on June 02, 2000 at 18:18:08:
I think Ron’s idea here is not to option the property at full price - you can do that on a sandwich lease, but on a straight option, now we are talking DISCOUNT. Heavy discount, maybe not 50%, but probably at least 20%, and as much more as you can get. What would make you be able to sell when the seller couldn’t? Well, for one, it would be the hope that an experienced real estate investor would have more marketing experience than the average FSBO, and probably more than the average agent. We are also highly skilled at pre-qualifying buyers, usually a big difference between experienced and non-experienced home sellers. Additionally, if you have an option at 80% market value, and can re-market the property for 90% market value, that’s not fantastic or magic, but it’s still a better than average deal for the average buyer. I THINK this is where Ron was going with this strategy - though of course, I can’t speak for him directly, just my interpretation.
Incidentally, I agree that I don’t like this either as an opening strategy - but it makes a nice option if the seller just HAS to have cash for that equity, and there is enough equity to play with. It’s just another tool in the toolbox.
I was checking out other investor’s sites last night, and noticed that one of them was an agent - he states that often times, if a seller doesn’t want to l/o, he can just list the property instead. The “straight option” method may be a nice alternative to a listing for the non-licensed investor. Incidentally, a straight option is essentially the same as a rare form of listing known as the “net listing” - basically, anything more I can sell it for than our agreed price, I keep. This can be much more lucrative than the normal 3% commission if you know your market well.