Posted by Lori Samson on June 02, 2000 at 23:30:47:
If you can get a property that much under market and it’s in good condition I would just buy it. Hold it for the long term asset and passive income it would bring in. Well… maybe not now with interest rates the way they are. Lori
Options/ Ron Legrand - Posted by Carlos
Posted by Carlos on June 02, 2000 at 07:35:33:
Hey everybody… I have a quick ? about options. I heard Ron Legrand say that if the owner did not want to do a Lease/Option, your second solution would be to just do a straight option. In doing this, he said that the owner should exclude him and his assign’s from the agents listing. My ? is, How is this done? How do you go about excluding yourself from an agents listing? Is there a document that you can use? Thanks guys and gals…
Carlos… (Stepping out on faith)
Re: Options/ Ron Legrand-Has anyone DONE one??? - Posted by Mel FL
Posted by Mel FL on June 03, 2000 at 22:26:37:
I have heard Ron talk about options too. I do understand the concept, but have never heard of anyone actually doing this.
I would love to hear about someone who has really done one, or better yet a few.
I think that I could get sellers to agree to an option for well below market, but I dont like the idea of marketing a property only to loose it because someone else made an offer on it.
So if you have done options I would enjoy “real world” feed back!
Thanks.
Re: Options/ Ron Legrand - Posted by Lori Samson
Posted by Lori Samson on June 02, 2000 at 10:23:57:
I have been doing options a long time and I have never just optioned a property. Think about how that would be if someone offered you that. Most people have already been trying to market the house and what will you do that is so magical that can get the job done? If you can offer the property with terms then you do have the magic it takes. Without a means to offer it with creative financing I think it is wishful thinking and unfair to the seller to have tied up his property with you. I have done 100+ deals and this is what my experience has been but may not be Ron’s. He never gives ANY examples of having done this himself and I have wondered in the past if he really has been able to use this. It just doesn’t make much sense. Lori
Re: Options/ Ron Legrand - Posted by Steve-Atl
Posted by Steve-Atl on June 02, 2000 at 09:06:49:
Ron’s comment assumes the property is not yet listed. He says to the seller, “If you want to increase your chances of selling by listing the property, go ahead. Simply exclude me from the listing.” That is done by the seller telling the listing agent to exclude you in their listing agreement since you already have an option with the seller.
If the property is already listed, its unlikely the realtor will agree to exclude you. In a case like that, just wait for the listing to expire then get an option agreement with the seller. After that, if they want to re-list, go ahead but exclude you in that listing agreement.
Good Luck!
Non-Exclusive Option - Posted by Monique
Posted by Monique on June 04, 2000 at 09:13:07:
Lori,
You’ve been at this much, much longer than I have. So I almost hesistate to respond. And you’ve given me some great ideas before, I hope you find this even just a tad bit useful.
You mentioned “…I think it is wishful thinking and unfair to the seller to have tied up his property with you.” LeGrand actually recommends offering a non-exclusive option to the seller. That is, to NOT take the seller’s property off the market at all.
We tell our sellers that if they wish to continue marketing their property, they are welcome to do so. Our contract with them says that if the seller finds a buyer before we do, we walk and the contract becomes null and void – with no cost to the seller whatsoever. We’ve had a fair amount of success with sellers who like this idea and have signed contracts with us, particularly if they have not been able to get any offers on their own.
The key is to attract more buyers than the seller does by offering Seller Financing in one of two ways: a) by taking back a 2nd for your buyer so that they can qualify for a 1st mortgage at a lower LTV; or b) creating a 1st mortgage and selling it.
Monique
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.