Objection to Option price in a CA

[DanielSun 7]

Alright this question should be added to CA 101 folder.

 

 

I told a home owner his price is slightly above FMV, it would be harder to sell. He agrees, then we agreed to drop price by 10k.

 

I am trying to do a CA with him, but when he realized that I will add on top of the sale price 8k of option money that will go to my pocket, he isn't happy. why should he reduce his price so that i can add price on it.

 

 

here is the question:

 

In a CA, the Option to purchase agreement will reveal to the seller how much we get paid, any ideas how to over come seller's objections? or hide how much we get paid until later? or stretch our pay grade without alerting the seller?

 

 

Edit: here I add this word so people can search for this in the future. Cooperative Assignment

[DanielSun 7]

Ah nvm I've came up with the answer,

 

Think for yourself for a solution is great, because you need to work your brain to run this biz. So,

 

 

1. sign the contract with the seller, with the purchase price = final payment + rent credit

 

2.think of the amount of option that you want to make out of this deal

 

3. find a tenant buyer that will take the deal and pay the option money

 

4. go back to seller, change the purchase price to final payment + rent credit + option money

 

5. assign the contract to tenant buyer

 

 

 

This is how I come up with the solution, a bit of work, but if I prep. the seller, tell him that "i will increase the final price later to include my option consideration, which is my compensation for service provided"

 

what do you think?

[MichaelC 160]

When a seller sees the price you have listed on the Option to Purchase Agreement, yes, they will sometimes notice that it is more than the net price you quoted them. Inevitably, they will ask why. If you begin explaining in depth about rent credits and the option consideration you expect to stick in your pocket, as you already have seen you will meet with resistance.

Instead, I tell them the price I'm marketing at is more than I quoted the homeowner because I want to leave room for any negotiating that may be required so the homeowner does indeed get their price. Works every time.

[DanielSun 7]

lol of course, simple but brilliant. great solution. thanks michael!

[MichaelC 160]

. . .simple but brilliant. . .

As a child I was so bright my mother called me Sonny

[DeeLight 8]

When a seller sees the price you have listed on the Option to Purchase Agreement, yes, they will sometimes notice that it is more than the net price you quoted them. Inevitably, they will ask why. If you begin explaining in depth about rent credits and the option consideration you expect to stick in your pocket, as you already have seen you will meet with resistance.

Instead, I tell them the price I'm marketing at is more than I quoted the homeowner because I want to leave room for any negotiating that may be required so the homeowner does indeed get their price. Works every time.

 

awww, Sonny, LOL! K, brilliant but simple . . . at some point they are gonna know that you got your vig outta the sale price.

 

I just told my current seller that I wrote the option price that the buyer will pay into the sales price. I thought of the explanation you mention here Michael but I didn't want them to come back and get all fussy when the house sold for x and all they got was the originally agreed upon net price.

 

You have said Michael that if they get fussy at that then they really aren't that motivated, right?

[Chad533 1]

at some point they are gonna know that you got your vig outta the sale price.

 

Ummm...What is a vig?

[MichaelC 160]

You have said Michael that if they get fussy at that then they really aren't that motivated, right?

Logic tells us this is the case. Think about it. Homeowner agrees to accept a net price of $200K. They then find that you'll be making $5K for having the know how and the agreements to put the deal together and solve their problem. Suddenly, the deal is no good. It can only be greed and/or lack of motivation.

 

at some point they are gonna know that you got your vig outta the sale price.

 

Ummm...What is a vig?

http://en.wikipedia.org/wiki/Vigorish I guess you didn't know that Dee is a mobster's wife.

[DeeLight 8]

:lol: rotflmao yeah, right!!

You have said Michael that if they get fussy at that then they really aren't that motivated, right?

Logic tells us this is the case. Think about it. Homeowner agrees to accept a net price of $200K. They then find that you'll be making $5K for having the know how and the agreements to put the deal together and solve their problem. Suddenly, the deal is no good. It can only be greed and/or lack of motivation.

 

at some point they are gonna know that you got your vig outta the sale price.

 

Ummm...What is a vig?

http://en.wikipedia.org/wiki/Vigorish I guess you didn't know that Dee is a mobster's wife.

:lol: rotflmao yeah, what he said :lol:

Years ago I worked a deal with a guy in NJ that used the word vig----I laffed mao then and have used it ever since C'mon now, it's a fun word!!

 

And on the othe fussy seller stuff Michael----right on and for sure. I just wanna know where all the truly motivated sellers are hangin out these days . . . doesn't seem to be CL

[MichaelC 160]

Yeah, vig is a must use word if you're a Jersey guy.

The truly motivated sellers are the ones who contact you. . .although not always. I have more than my share of tire kickers who contact me. It comes down to marketing, and that comes down to finances and time. Work within your budget in the meantime, Dee. Worst thing any n00b can do is go broke before they give themselves a chance to succeed.

[<Steve> 82]

Vig, worked a deal in Jersey, Mobster wife. Yep, I knew it, Dee is Italian.

[DeeLight 8]

Yeah, vig is a must use word if you're a Jersey guy. It's such a funny word!

The truly motivated sellers are the ones who contact you. . .although not always. I have more than my share of tire kickers who contact me. It comes down to marketing, and that comes down to finances and time. Marketing finances----like for ads in newspapers Michael? Work within your budget in the meantime, Dee. Worst thing any n00b can do is go broke before they give themselves a chance to succeed. Definitely, thanks Michael

Oh and steve, shhhh don't tell anyone