MichaelC

Sharyn, first bit of advice is to not give either party advice. You're neither a Realtor nor an attorney, and you don't represent either party. In fact, this being a CA you assigned the deal and are out of the loop, as per the CA Assignment Agreement that everyone signed. That said, if you feel you must keep open lines of communication with both parties, I suggest you tell them to reach a settlement or contact their respective attorneys, which will end up costing them even more. For what it's worth, my very non-legal opinion is the seller will ultimately be required to pay the cost of rectifying the issue. Regardless of what the agreement they signed states, state law supercedes the agreement and most states require an existing condition such as termites to be the responsibility of the seller. Again, just my non-legal opinion.

Mike, if you are selling to a cash buyer then yes, there's no reason why the buyer shouldn't put down a nonrefundable earnest money deposit and be held to a quick close timeframe. The exception being an inspection that reveals an unexpected problem, such as a cracked foundation or a sinkhole, etc. Of course, if the property is being purchased as-is, the inspection clause is a moot point.

Mike, it's all in your head. If you can do a deal on a $50K junker, you can do a deal on a $500K McMansion. The concepts are the same, the only differences being the market for more expensive homes is smaller, meaning it will likely take more time to find a t/b. But on the positive side, the option money is substantially more. When that homeowner questioned you because her Agent bad mouthed you, you should have offered to present her with your proposal via a Short Offer Letter and she would have seen the substantial difference in her net selling price. Neither you nor the homeowner had anything to lose. Don't let the bigger numbers intimidate you; a lease purchase is a lease purchase.

The only consistency in marketing is the inconsistency. Marketing is fluid. What works one month may very well flop the next. What works on my area may fail in yours. Take a diversified approach, keep track of your results, and be nimble and ready to change your approach as your results dictate.

Good ideas, Jay. Please feel free to visit my Paypal account and set an example for others.

Therein lies the problem. No one, not even those who "should" know, (attorneys), are certain of the law. Until a court case sets a precedent it is all speculation. If you want to play it safe, don't offer rent credits. Instead, do as discussed above and offer seller concessions, instead.

Jay, the seller's concession can be for whatever both parties agree to. Keep it simple. For example, seller agrees to a $3,600 concession requested by buyer for necessary repairs, or something similar. That won't raise any red flags or scrutiny and it is certainly legal.

Hi, Jay. Apologies for not replying sooner. I was in the Keys for a few days of excessive behavior. Just catching up now. . . Not sure I understand your question regarding seller concessions. Can you be more specific? Option consideration will be used according to the lender the t/b has chosen. In all likelihood, that money will be a credit towards the purchase price, rather than part of the down payment. You'll note that in the agreements we use they specifically state that the option money is a credit towards the purchase price. The reason being we don't want to make promises we can't keep, such as saying that option money is part of the purchaser's down payment. That's a sure fire lawsuit waiting to happen. Play it safe and tell the t/b that how their option money is used is up to their lender. Neither you nor the seller has any say in this matter.

No, I've never done a deal without talking to the seller or their representative. If they reply to my second email, where I have explained in some detail what I'm offering, they will either call me or I will be asked to call them. If the latter, I will call and attempt to be off the phone within 1o minutes or so. If the call went according to plan I follow up with a Short Offer Letter.

Dino, there is no shortage of tire kickers among homeowners. It's why I advocate making a short offer on any property sight unseen. If the homeowner is agreeable to the concept of a lease purchase and to the terms I offer, then and only then is it worth my time to get inside the property. As far as providing your phone number only, I think you'd benefit from also including an email address. It's the accepted and expected technology of our time. Most homeowners who email me ask me to call them anyway. So what's the downside? Give them every opportunity to contact you, then have a brief conversation to determine if they are serious or just curious. If they are serious, get the necessary info and shoot off that Short Offer Letter.

Now that's funny! Actually, you originally posted in the Marketing forum but I moved it here. Your questions were more about lease purchasing than the specifics of marketing. Already? No moss growing on your backside.

I aim to please. Happy to help, so don't hesitate to ask. How far along are you with your investing, by the way? Sounds like you are just getting started.

By sub lease option I assume you mean a sandwich lease. I get the sense you are combining features of the sandwich lease and the Cooperative Assignment, which will lead to the confusion. If you are working a sandwich deal with the homeowner, it can't be non-exclusive, or at least it shouldn't be. The homeowner should understand from the beginning that in exchange for you being his problem free tenant/buyer, making timely payments and accepting responsibility for the property, (no more tenants and toilets!), there must be something in the deal for you, too. Thus, you have a lower rent and purchase price. If the homeowner has agreed to terms previously, then it shouldn't make a difference nor should it be unexpected, that you are charging a higher price to your t/b. If it does, that is simply greed on the homeowner's part. And, yes, you can certainly do deals at a distance. It's easier to do them locally, of course, especially when starting out, but distance is not an obstacle, what with the information we have available at our fingertips these days.

Hello, Mipopa, and welcome to The Naked Investor. Assuming you are talking about a Cooperative Assignment, the homeowner shouldn't have any concerns about the advertised purchase price since they have already agreed to the net price, When they do ask, my answer is that I am allowing room for negotiating so they are assured to receive the net price I promised. If the deal is a non-exclusive one, I have no problems with different prices. The homeowner is advertising their house for sale. You are advertising their house as a lease option. So of course the prices and terms will be different. Your concerns are rarely an issue.

Correct. Paragraph 4 should reflect the amount of option consideration you paid the homeowner and the date. When you find your buyer, he will receive a a copy of the Pure Option Agreement along with the Assignment Agreement. The key to moving this is value. . .there must be value in what your are offering for someone else to come along and pay you for it. That, and effective and aggressive marketing.

That's correct. Fill in the Pure Option Agreement with the specifics and you're good to go. Except I wouldn't give the homeowner ten bucks. Shoot for $1, $5 if you're feeling generous.

Happy to help, Scotty.

Scotty, you owe your partner a dinner. Your numbers are incorrect. Let me explain. . . Option to purchase price to the tenant/buyer is $80K. Expected option consideration is $2,500. Assuming this is yours to keep, the net to the homeowner is $77,500. 24 month lease, at $1K/mo, with a 25% rent credit for 24 months equals $6K in total rent credits. Or you can offer a 50% rent credit for 12 months, with the remaining 12 months offering no rent credits, (can be a motivation for the t/b to exercise their option). But the rent credits still total $6K. That $6K reduces the net sale price to $71,500. The only time the total monthly rent would be credited towards the purchase is if you are offering 100% rent credit.

He doesn't want you to be able to sublet? That's understandable, and if the place is for you it shouldn't be an issue. The easiest approach would be to modify your agreement to something that requires the owner's permission to sublet. Using his paperwork might be acceptable, too, but the devil is in the details. Know what you're signing.

Yes, yes, and yes. Although it has been a long time since I've done a deal with a Realtor. There are exceptions, but most just get in the way. No, they don't. Realtor training is about listings and sales.

Hi, Scotty. The numbers you are suggesting will work, assuming you are correct about the $80K valuation. However, I'll be shocked if you receive $5K option consideration for an $80K property. Realistically you can expect somewhere in the $2,500 range. And, yes, longer is better. So if you can get the homeowner to agree to 24 months instead of 12, reduce the rent credits to 25%. The bottom line is the same, but tenant/buyers love the idea of more time.

Yeah, many Realtors have a selective memory when it comes to revealing this.

I doubt she calls, but if she did I wouldn't do business with her. She's already let you know she will be a pain in the ass to work with, and probably views you as the enemy.

Simple, straightforward, honest answer: I am not brokering real estate. I am a principal in every deal I do. That's it. You owe this person nothing more. But if you want to be a bit persnickety you should ask her if she is a licensed Agent or Broker. If she is, tell her she is obligated to reveal this in her ad.