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Doug Pretorius (ON)

How to pitch a pure option

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I do not use a non binding option agreement. THe way I figure its my money that is going into marketing and my time period. I am giving the seller earnest money for the time of the agreement. I do not want to give them the option to sell it. I know I do not get that many deals because of this, but I do not want to give them the option....lol

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That makes sense considering you're buying at 15-20%+ discount. The 'deals' I'm getting are more like 5-10% and I don't plan on spending much time or money marketing them. A dozen or so cheap signs around the neighborhood and a few pics on the website and that's it.

 

What I'm thinking is that by having lots of these little deals on the go at the same time, they'll create synergy. 20 signs x 20 houses = lots of buyers.

 

The only risk I can see is that I would have to be very careful not to allow the buyer and seller to meet until I have a contract.

 

So... hypothetically, Jonathan, if you were to allow the seller the option to sell it themselves would you bother to sign a non-binding contract upfront?

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Doug, I think you would need something in writing to protect yourself. Let's say you find a buyer so you go ahead to exercise your option. Only problem is the homeowner decided the house is now $10K more than you and he agreed to.

The deal may be non-binding, but at least your tems need to be in writing.

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MC, at least a letter of intent or something to spell out a few of the terms... yeah that makes sense too.

 

BTW I met with this particular seller again and took pics of the house, but he still didn't sign B) Wants to take it to his lawyer on Monday to look over, even though it's non-binding, LOL!

 

Oh well, we'll see what happens, and in the meantime on to the next.

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Wants to take it to his lawyer on Monday to look over, even though it's non-binding, LOL!
B) You sure this guy doesn't originate from Florida? :D

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Could be one of those Canadian snowbirds who winters in Florida. Picking up some bad habits in the process it seems B)

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Wants to take it to his lawyer on Monday to look over, even though it's non-binding, LOL!

 

 

I am curious, how many sellers take a realtors agreement for a listing to a lawyer for review?

Maybe one out of a thousand.

This is just one more excuse for not making a decision and delaying the answer.

 

Although the option agreement permits the seller to sell on his own, it also provides a condition where you as the holder of the agreement should be compensated if the seller sells to a buyer you bring to the table.

 

Also, it provides for the price and terms of the deal if your buyer buys the property. And, unless your seller has a legitimate offer from a third party, the seller is obligated to sell based on the written conditions.

 

I think this is the highest protection you can get from a non-exclusive agreement.

 

Without this agreement anyone can change the rules at any time.

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Wants to take it to his lawyer on Monday to look over, even though it's non-binding, LOL!

I am curious, how many sellers take a realtors agreement for a listing to a lawyer for review?

Maybe one out of a thousand.

This is just one more excuse for not making a decision and delaying the answer.

 

You really said this one right. Most of my contracts get the lawyers look at. Don't know if its because investors have a bad name or what. Its amazing what the lawyers input is. Its just something because they are BILLING for the look over.

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I think it's because the public is trained to trust realtors. They believe that the realtor is working for them and their best interests, so figure that it's unnecessary to take it to their lawyer. Usually everything goes pretty smooth and they're none the wiser. It's only in cases where things go bad that sellers find out who's side the realtor is really on and just how one-sided a listing contract actually is.

 

Not much we can do about the large percentage of sellers who take our contracts to their lawyers. The nice thing is that I've yet to meet a lawyer who gave any of my contracts the thumbs-down.

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Hi Doug

 

So this is how I think it would work; correct me if I am wrong. Your option contract allows you to have a mortgage that would count as your downpayment with the sellers. Am I right? Also I think that you are planning

to cancel your option when you find a buyer so they can sign the purchase and sale contract with the sellers directly and have them pay you for your marketing by giving you the buyers mortgage for the downpayment.

 

Maybe I am making this too complicated.

 

Gord

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Gord, that's one way to do it, but I don't like the idea of putting it in the seller's hands to assign the mortgage back to me.

 

Here's how I plan on doing it the first time around, and if my lawyer OK's it, I'll keep right on doing it like this:

 

Step 1:

Sign Contract #1 with Seller at let's say $200k, cash.

 

Step 2:

Sign Contract #2 with Buyer at let's say $220k, $200k cash and $20k note.

 

Step 3:

Hand both contracts to my lawyer and let him sort it out.

 

 

One way I see it going down is for the seller to pay me the $20k note as a fee to assign Contract #2 to them and cancel Contract #1.

 

Or maybe I'll be paid the note as a cancellation fee so the buyer and seller can close directly with each other.

 

Or maybe none of the possible alternatives will work out and I'll end up getting sued by both buyer and seller! :lol: Come to think of it maybe I'm not as smart as I think B) Or maybe I'm just overthinking it all! :D

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Doug

 

Why not get a power of attorney that states that any seller financed mortgages are to be assigned to you for compensation, for selling the house on the owners behalf?

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In case anyone is following this thread to find out what happens, here's an update:

 

This particular deal is going nowhere at the moment, the seller didn't call or fax the signed offer like he was supposed to, so I'll have to call him tomorrow and see what's going on.

 

Nevertheless, moving on... I have an appointment with another seller on Thursday to practice my pure option pitch again. Wish me luck B)

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Nevertheless, moving on... I have an appointment with another seller on Thursday to practice my pure option pitch again. Wish me luck B)
That's the key, right there. Moving on! I see too many n00bs get all wrapped up and around one potential deal. And when that deal doesn't materialize, all is lost because there isn't anything else on the back burner. We can all multitask and work several deals simultaneously.

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