Hands Off Approach

[EQUITY NOTES 0]

Hi

 

I read the posts on having a hands off approach (Michaels)

 

When you let the seller decide on the t/b and his credit, I begin to worry about the two of them doing a deal or worst yet t/b giving money to seller directly

 

It just seems better to keep them apart until its necessary, (when I have monies from them)

 

Most of the time t/b wants or feels need to work directly with seller

 

Do you run into this also?

 

So what steps would you advise to keep control of the deal

 

Thanks

Tom

[jhanson8 0]

If you have the seller under contract there shouldn't be any problem. The seller and TB working together on their own is exactly the point of a CA. The contract you have with the seller represents your interest in the deal and gives you control. If they prefer to work without you, they can buy out your interest and you're on your merry way. But don't go out of your way to keep buyer and seller apart; it looks shady.

[MichaelC 160]

Tom, what jhanson said. If you have a signed agreement between the homeowner and yourself, the likelihood of him going around you is minimal. Get the deal and don't sweat the small stuff.

[TAT 0]

How are you guys determining the buy out amount? What if you find someone that has more to put down than the buy out amount. Does this now become a concern having the two parties communicating?

[jhanson8 0]

How are you guys determining the buy out amount? What if you find someone that has more to put down than the buy out amount. Does this now become a concern having the two parties communicating?

The TB's down payment amount determines the purchase price. Always, always, find out how much the TB has to put down first. Let's say that you ask for $3k upfront, but the TB has $5k. Do you think they're going to let you raise your price? Here's my process:

1) You get a house under contract for $200k

2) Find out how much TB has for a down payment/option premium (whatever you want to call it). Most TB's will tell you very early on, if not in your first conversation. For this example, let's say $5k.

3) Offer the TB a purchase price of $205k, that way their money is actually "buying down" the price.

4) You get your $5k, the seller keeps the original terms, and the TB puts their money to good use and receives good terms.

 

Obviously, that's an oversimplified example, but you get the idea.

[MichaelC 160]

TAT, what do you mean by the "buy out amount"?

[TAT 0]

TAT, what do you mean by the "buy out amount"?

 

 

"Buy out amount" when seller trys to back out of the deal (Like in jhanson8's last deal). I would assume you would have an amount in mind when drafting the agreement between you and the seller.

[MichaelC 160]

Got it. But I call it a cancellation fee. If, and only if the question is raised by the homeowner, do I even discuss the possibility of the homeowner cancelling the deal. Bad vibes to focus on that. But if they do bring it up, we'll agree on an amount and add it to the agreement.

[jhanson8 0]

I have the cancellation clause in the contract from the beginning and I make sure everyone knows about it. Realtors may work for free, but I do not. Plus, it's easier to negotiate the buyout when everything is fresh and new than when everything has gone to ****. I think one month's rent is standard, but be flexible. Don't let a buyout clause disupt a potential deal. Then again, if the buyout is causing that much trouble with the seller, they're probably not that motivated to begin with.