HFP 0 Report post Posted January 16, 2013 As I was reading more posts this morning, I found myself starting to question what I thought I understood...therefore, I would appreciate some clarification regarding the option fee when working with a CA. If the seller wants $200,000, which of the following is correct: - I structure the deal with the seller for $205,000 (their price plus my option fee) or - I structure the deal with the seller for $200,000 and then structure the deal with the T/B for $205,000 and pocket the option fee. Also, how is the option fee credited towards the purchase price when the money never went to the homeowner? Thank you for the clarification! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 16, 2013 Chad, first, what the homeowner "wants" isn't the determining factor in the price of the house. Every homeowner I meet wants more than their house is worth. That's the nature of the beast. We can get deals all day long if we give every homeowner what they think their house is worth. But if you can't move the property because it's overpriced, what have you gained? Just a friendly reminder. . .rant over. . . The key is what will the market place of potential tenant/buyers accept for a particular house. If you and the homeowner agree that the homeowner will net $200K, you need to factor in the option consideration you expect to receive, along with the rent credits you are offering. So if those figures are $5K and $5K respectively, then the selling price you advertise the house for would be $210K. So, again, the question you need to ask yourself is whether or not that $210K is market acceptable. The option money can be credited towards the purchase price because the agreement between the parties says so. Share this post Link to post Share on other sites
HFP 0 Report post Posted January 17, 2013 Michael,Thank you for your reply! My scenario of what the homeowner "wants" was a hypothetical question but thank you for emphasizing the importance of what the market will allow vs. the sellers wants. So to be clear, I would have the option contract with the seller for $210K, is that correct? Thanks again for your help! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 17, 2013 So to be clear, I would have the option contract with the seller for $210K, is that correct?Thanks again for your help!That is correct. In the example above, that would mean a net price to the seller of $200K. Share this post Link to post Share on other sites
