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Steve Morton

Advice on an option

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Hey Jason-

 

Yes, I am asking for the assignment fee upfront.

 

I assign it over, collect my fee, and I'm out. I think this is what freaks them out. I tell the buyer that I will help out all the way to closing. And now I am having to add that if the seller falls through and can't close, I will refund thier option consideration. Nothing should fall through just setting their mind at ease. :lol:

 

Am I messing up here? I could of had this property sold 2 weeks ago!

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This is what I figured.

And I don't blame them for being apprehensive in the process.

A majority of buyers (retail) are conventional thinkers ---->banks, title companies, etc. etc.

So, therefore, they're not used to the idea of someone asking a few thousand up front, just to

buy a house. Unless it's an owner finance or LO deal.

 

Why don't you do your option deals the way Jonathan has described in detail here on

the forums?

This would seem to side-step having to ask for an assignment fee up front, as well

as doing away with seasoning issues from the buyers' mortgage company/bank.

 

Good luck!

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I can use Jonathan's release agreement, and for the most part it will work. Especialy if the option is recorded putting the the attorney's mind at 'ease'. This works well for SLOs, but for POs I only have the property for a few weeks and just want to flip it quickly.

 

I've had to really work this porperty and have someone ready to sign the assignment Friday with cash up front but it's been a tough sell on this one. :lol:

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Steve, I'm with Jason, why does the buyer need to know the structure of the deal? It doesn't effect anything for them one way or the other. All they need to know is how much they have to pay. The fact that $X goes to you and $X goes to the owner is irrelevant.

 

If you are collecting the assignment fee upfront then personally I would just tell them that they have to pay $X now and $X later. No need to confuse them with "assignment of interest in subject property" type language.

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Ok, thanks for the replies. I am just trying to not have to go all the way to close; but that maybe my hang-up.

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Hey Steve, thought you might like to know the latest numbers:

 

The average price of houses in Waterloo region for Feb 2007 was down 4% from Jan 2007. So it's going to be extremely tough to move a pure option right now unless you get it at a massive discount.

Wow. That surprises me Doug. Although, I don't suspect this market will be in decline for long. The population is only just going to continue to grow.

 

The issue with the assignment fee you guys are talking about is something that's been a concern of mine as well. I just don't see the average home buyer out there being comfortable handing me over some cash for my contract on a house that I don't actually own, no mater how I try to explain it to them.

 

I've seen the discussion on this forum on using an option release form to close, how many here use this method?

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The issue with the assignment fee you guys are talking about is something that's been a concern of mine as well. I just don't see the average home buyer out there being comfortable handing me over some cash for my contract on a house that I don't actually own, no mater how I try to explain it to them.

I guess I want to be able to assign up front and not go to close. If the buyer is sold on the house and gets hung up with me than I am not building a strong enough rapport with the buyer. I may not be explaining (selling) the option assignment & fee good enough for the buyer to trust me. So, I guess I need to know how others deal or present this.

 

When I advertise the property the price does not reflect my assignment fee. And usually after the buyer has come out to the house for a look and shows interest do I mention the assignment and my fee. Is this how others do this? Or is there a better way to sell the Option to the buyer with out going to close?

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Steve N, I expect the market to continue down for at least the rest of the year and then remain flat for another 3 or 4 years maybe more. This area has always had steady population growth, but that doesn't mean it won't continue to have normal market cycles. But this is GOOD news for us! The next several years are going to be spectacular for creative investors.

 

Steve, in all the pure options I did I included my fee in the advertised price, that way there are no surprises for the buyer. If you're springing the assignment fee on them at the house I'm not surprised it's causing problems, I know if I was a buyer I would be very wary of someone telling me: "Oh by the way I don't actually own this place but I'll give you this piece of paper that gives you the right to buy it for $10,000 cash."

 

Just treat it the same way you handle a CA. You don't have any trouble getting the money from the buyer in that case, do you?

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Just treat it the same way you handle a CA. You don't have any trouble getting the money from the buyer in that case, do you?
No problems that way with CAs. I will start adding my fee to the price when advertising a PO. I can see the confusion for the buyer.

 

Thank you.

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Steve, in all the pure options I did I included my fee in the advertised price, that way there are no surprises for the buyer. If you're springing the assignment fee on them at the house I'm not surprised it's causing problems, I know if I was a buyer I would be very wary of someone telling me: "Oh by the way I don't actually own this place but I'll give you this piece of paper that gives you the right to buy it for $10,000 cash."

 

Just treat it the same way you handle a CA. You don't have any trouble getting the money from the buyer in that case, do you?

 

Steve,

 

Doug is right on the money with his advice, by padding his purchase price to the end RETAIL buyer!

 

However, the ONLY way it will work without a hitch when assigning a contract for a referral fee is when you assign it to an an ACTUAL INVESTOR. They understand what they are and how they quantify to their bottom line -- A GOOD DEAL! Meaning, they will be more than willing to pay you a $5,0000, $10,000 (or whatever fee you think it's worth) assignment fee ESPECIALLY if they KNOW that they are getting the property WAY BELOW MARKET VALUE!

 

A typical RETAIL buyer, will usually say, NO WAY MAN!

 

They just don't understand it! They think that you're either ripping them off or that you're a con artist!

 

Just some food for thought!

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Steve, in all the pure options I did I included my fee in the advertised price, that way there are no surprises for the buyer. If you're springing the assignment fee on them at the house I'm not surprised it's causing problems, I know if I was a buyer I would be very wary of someone telling me: "Oh by the way I don't actually own this place but I'll give you this piece of paper that gives you the right to buy it for $10,000 cash."

 

Just treat it the same way you handle a CA. You don't have any trouble getting the money from the buyer in that case, do you?

 

Steve,

 

Doug is right on the money with his advice, by padding his purchase price to the end RETAIL buyer!

 

However, the ONLY way it will work without a hitch when assigning a contract for a referral fee is when you assign it to an an ACTUAL INVESTOR. They understand what they are and how they quantify to their bottom line -- A GOOD DEAL! Meaning, they will be more than willing to pay you a $5,0000, $10,000 (or whatever fee you think it's worth) assignment fee ESPECIALLY if they KNOW that they are getting the property WAY BELOW MARKET VALUE!

 

A typical RETAIL buyer, will usually say, NO WAY MAN!

 

They just don't understand it! They think that you're either ripping them off or that you're a con artist!

 

Just some food for thought!

 

Hi All,

I just signed a straight option for 90 days with a bloke from England. Its a brandnew condo building next to Disneyland. Its going for 485k. The way I'm doing it is if, and thats a big if, I can find a buyer, he will pay me 2500 (a months rent). I will assign the option back to him for 2500 and I'm done.

 

I sent out a bunch of emails and am getting a lot of responses. I really dont like doing condos but this one was so easy. He's an invester himself and knew right away what I was talking about. We faxed the contract back and forth. It took a total of 3 hours. Like MC says, Its a no brainer deal.

Bill :D

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Nice Bill! and that is how it should work.

 

Ok, the way I see it there are (3) ways to do this...

 

1. Assignment & Fee up front and your out.

 

2. Release Agreement and you go to close and collect fee (Jonathan).

 

3. Assign up front and have the seller pay fee after close.

 

I think all of these have their pros and cons.

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Nice Bill! and that is how it should work.

 

Ok, the way I see it there are (3) ways to do this...

 

1. Assignment & Fee up front and your out.

 

2. Release Agreement and you go to close and collect fee (Jonathan).

 

3. Assign up front and have the seller pay fee after close.

 

I think all of these have their pros and cons.

 

 

Just Picked up another 90 day option. This time a little closer to home and a workable selling price (235k). I have a list of 8 or 9 looking in this price range. Maybe I'll get lucky and wont have to market at all. Its a 4/2 that was all redone by a contractor, roof and all. Its a good deal for somebody. All the sub-prime loan people are trying to get out of the fix there in. Well, like Dino used to say "keep them cards and letters comin"

Bill

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