Got a couple long-distance prospects

[Doug Pretorius (ON) 9]

I have a couple of properties in other cities and so I'm having the owners do the showings. One is almost for sure going to be a hybrid CA, the other might be what you could call a hybrid SLO.

 

For the SLO in particular I want to have it as more of a management set up so that the owner is responsible for payments if it's vacant (I'm planning on giving up the appreciation in exchange). So the price is going to be set as the appraised value at the time of purchase, minus the 5% they would have paid an agent to sell it, anything else will go to the seller.

 

How would I word the contract so that the owner is responsible for any vacancies?

[MichaelC 160]

How would I word the contract so that the owner is responsible for any vacancies?

Simple is best, Doug. Something along the lines of:

 

"Homeowner agrees that any vacancies that occur during the lease period shall be the responsibility of the homeowner. This includes, but is not limited to, all monthly payments on said property and any expenses that occur during the vacancy."

[Dan (SoCAl) 0]

So the price is going to be set as the appraised value at the time of purchase,

Setting the price at the end of the lease would help me a lot given the current declining market. But how is this done when an option is involved? I understood that the purchase price must be stated in the option, otherwise no option exists and you're simply giving the T/B the first right of refusal, which isn't nearly as advantageous as an option.

 

Dan

[MichaelC 160]

So the price is going to be set as the appraised value at the time of purchase,

Setting the price at the end of the lease would help me a lot given the current declining market. But how is this done when an option is involved? I understood that the purchase price must be stated in the option, otherwise no option exists and you're simply giving the T/B the first right of refusal, which isn't nearly as advantageous as an option.

 

Dan

I've been told that leaving a key term blank, such as the purchase price, is referred to as an illusory contract. If there is a problem down the road relating to the purchase price, that open ended contract is sure to invoke a lawsuit from one party versus the other. I don't like it.

[Doug Pretorius (ON) 9]

I've done this on both the buying and selling sides and haven't had a problem. I agree that you can't leave a key term like the price completely blank, but I think it's safe to use a formula for determining what the price will be. It's just like saying that you will buy the house for the mortgage balance at the time of purchase.

 

Thanks for the suggestion on wording, MC.

[Doug Pretorius (ON) 9]

Just a little update. I did sign one of these up, but haven't been able to move it. My option is going to expire in a couple of days. I suggested to the owner that we lower the price and rent but I haven't heard back on that front. I'm really surprised, not only have I not sold this one, I haven't even received a single call or email about it! Usually even if a house is overpriced someone will contact me (even if it's just to tell me I'm insane )

[MichaelC 160]

Doug, the fact that you're not receiving phone calls indicates a marketing issue, rather than a pricing one. Has your marketing been sufficient? Are you doing anything differently from previous properties?