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Pure Option

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If you are assigning a Pure Option to your optionee, all he needs is the option money he's agreed to pay you. What happens after that is between him and the homeowner. Remember, it is an option, not an obligation, not an obligation to purchase. If he decides not to exercise his option with the homeowner, or is unable to, doesn't affect your assignment in any way.

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Ok.

Asking $160,000 comparibles say $ 75,000. hes way off as they all are. In a perfect world how would this play out, for me to get paid out? And what exactly do i need signed?

If i can get him to drop price...

 

Wanting to do a pure option.

 

Thanks

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For this to be worth your time and effort you need to be able to sell or assign your option to a third party. For that to happen there needs to be value in your option. From what you wrote above there isn't any and it isn't even close. In fact, it's so far off I have to wonder if you've misread the comps you used? Or is the homeowner so ignorant of the market? Have you asked him how he arrived at his price?

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I asked him and he wants to meet with me to show me the house hes not far so im willing as im learning. We will talk price and such then. Its a rural area so comps are scattered but for all due purposes my numbers show up on most of the recent sold. Yah hes far out so not a deal at all yet. And so with the pure option i add my fee to the price to my buyer? $ 160,000 would be $ 165,000 for my option fee?

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When you meet with the owner, tell him your analysis is coming up with values much less than his asking price. Saying, "It must be me", ask him about his sales data. Make him justify his price, not vice versa.

As for assigning your option, the more value you have in it, the greater assignment fee you can expect. If you have a property at full retail, don't expect anyone to pay you anything for your option. Where's the deal for them? On the other hand, if you have $40K equity in a house, someone will be willing to pay you for that. It's all negotiable, of course. But let them talk first.

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I don't know why you would even waste the time to go look at a property that is so out of whack with the comps. Sellers ALLLLWAYS think their prop is s p e c i a l.

 

I don't want the hard-to-do deals anymore. And keep in mind I haven't done one recently. When I re-started in crei I was wanting to make annnny deal work. Now i'm like, show me the money!! Everyone is unrealistic, like they're living back in 2003.

 

Sheesh

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Ok.

Met him and all is good as hes an older guy who doesnt know much, and doesnt act like he does. His value was for a similiar down the road 2 year ago. HA.

My comp is the one accross the street thats 200 sq ft bigger and sold for $76,000 on 7/12.

 

The house is a 2006 but needs some work. He is open and looking to hear from me today for an offer.

I am thinking vacant house, motivated seller (he called me), newer home, 15 miles from me and i have a buyers list as iv done work in the area. But only for lease options and wanting to add pure options to my bag of tricks.

Obviously, his out of whack with his #s. My numbers are saying i got to get him in the 60s to make a pure option. ??

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OK. Now that you've educated the homeowner to some extent, it's time to cut to the chase and make your offer. Make it a low ball since you have the sales data to back up your reasoning. If he accepts your first offer, don't celebrate. It means you've paid too much. Good luck.

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So as a pure option say i get him to $60k. I would then sell it for $65k minus my 5k he gets his 60? When i market it do i say for sale $65k or 60k thats where i get lost. Needing help with this part of it. How do i word it to buyers?

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So as a pure option say i get him to $60k. I would then sell it for $65k minus my 5k he gets his 60? When i market it do i say for sale $65k or 60k thats where i get lost. Needing help with this part of it. How do i word it to buyers?

You would sell if for what the market is willing to buy it for. The option between you and the homeowner doesn't change one bit. You are assigning it to a third party with the exact terms in place that you already negotiated. If that purchase price is $60K, then whoever you assign the Pure Option agreement to now has that same option to purchase for $60K. The only difference being he paid you a fee because he wanted what you have. In other words, he saw the value in the deal you already negotiated. And that's the key: value. You'll never move that deal if there isn't enough value in it to attract attention from other buyers.

Your marketing should say something like:

Have Option, Must Sell!

$15K Below Market

3/2/2, Great Opportunity

Make Offer

 

Get creative, but get the word out. If it's a good deal and enough people know about, the deal will happen.

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Aha,

My deal is good enough hes willing to pay me for it.... And what do i call that? Consideration money? Option money?

Now, I do have the N.E investor book/contracts. And other then the Pure Option contract what else do i need signed?

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It's called an assignment fee.

The two agreements you would use are the Pure Option agreement and the Assignment Agreement, (not the CA Assignment).

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Hi MC and members,

 

I got a call today from a homeowner who is looking for a rural property in his community in Illinois. He wants to use a land contract rather than a lease-to-own because he wants to move once and be done with it! His current property is 20 acres and he is motivated to downsize to another rural property if there are buildings on the land to store his equipment.

 

I came across a homeowner who lives in Arizona and has 1.11 acre property in Illinois that he is motivated to sell using a lease purchase. The homeowner is asking $155K for the property The property has 3 other buildings onsite which will satisfy the buyers needs. Seems like a perfect fit.

 

My question is will a Pure Option to the homeowner who wants to buy the property using a land contract rather than lease to own be advisable? Would I just assign the Pure Option Contract to him for say, 5K and let him work out the details with the homeowner? The 5K is what I have set as my figure when doing deals. If I can get more that's okay, whoever, 5K is my benchmark.

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Charles, I think the answer to your question can best be answered by the homeowner in AZ. What is he willing to do? Have you mentioned to him the other buyer who may be interested?

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