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Learning and Burning

Pure Option "class"

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OK, As mentioned before im trying to work the Pure Option into my bag of tricks. So a basic scenario gos.

Mr Seller would you consider selling your house on a Pure Option? How do you propose it with words he would understand? Im throwing it out there and not alot of feedback. Thinking im proposing it wrong?

 

Now, He agrees to talk and i want to work a Pure Option so my pitch is i will bring you a buyer for the home. And i will be paid by my buyer via an assignment fee? Option fee? What is it called?

 

We agree on numbers. I give him $1.00 and have him sign the pure option agreement. Anything else i need from Mr Seller?

Now for my buyer what do i propose to her? House below market? Standard sale? And what do i need her to sign?

 

Im meeting with a pure option lead on Monday and this will be my first pure option pitch so im excited to get my foot in the door with another tool.

 

Ha i said Tool.

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Right now, looks to me like you're the teacher's pet and sitting in the first row.

Pitching to the homeowner? Make him understand the advantages to having someone like you, a seasoned pro, to help him sell his property at no cost to him and with no downside to working with you.

With potentail buyers, it's simple. Are you offering a worthwhile deal? A bargain? If so, you'll attract attention. If not, you're holding a worthless piece of paper.

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And worthless doesnt pay the bills. My scenario is owners been trying to sell it for at least one year. Realtor (friend) got sick and owners been working it herself. Shes is open to me selling it for her and making a profit. As a pure option cause she wants no ties to it anymore. Maybe work into Lease with option to buy... Ha Ha..

My goal is to get the best price. Market like crazy and make that paper worth CASH MONEY..... Thats what pays the bills...

 

So needing to make sure i got my agreements in order for who signs what and when? Is the $1.00 enought to make it binding?

 

Sharpening the tools....

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A Pure Option is as straightforward as it gets, and the paperwork reflects that. $1 is satisfactory option money. If you're feeling like a spendthrift these days, drop a five on the homeowner and blow her mind. B)

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Aha,

So, I Break the bank and give into the five. We sign a pure option agreement, Now are deal is accounted for and i got all i need. ? The Signed Contract.

 

I now market for a buyer who will see the value in my deal, and so willing to pay me for it. And thats what i call the assignment fee....?

 

My buyer and i sign the Assignment of Agreement contract. He pays me my Assignment fee and BAM.... Brownchickenbrowncow.... to the bar. i mean bank...

 

What am i missing? Besides the motivated seller and my buyer?

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You've got it. I like that you already learned the going to the bar part of this business so early in your education. You'll do well.

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This is great stuff. I got one of these going now and 2 potential buyers. I have a pure option signed with the homeowner, I will sign an Assignment of Agreement Contract with the new Buyer. Michael, what is the best way to get the cheque from the new Buyer since I'm in British Columbia and the home is in the US?

Will I need to use a lawyer to ensure that the buyer upholds the Assignment Agreement?

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Working long distance can add a few hurdles to the deal, but nothing that can't be overcome assuming both parties are legit. You say the property is in the US. Is the buyer, also?

An attorney acting as the middleman is one way to assure all goes well, with both parties splitting what should be a nominal fee? If you're both comfortable with the idea, a transfer of funds from his bank to yours is also a workable solution.

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Glad to see this post still living. I didnt get this deal done, never gave me a reason. So, now i got another in the works, and will find out tomoorrow. I have been trying to work the Pure option more. And to peak interest im wondering what your words are to sellers? I say would you consider selling through a lease or lease with option to buy? I'm thinking its sounds foreign so guessing the no's are based on not understanding. Cause the benefits are no brainers.

I really want to close one and so am on the hunt for my first Purer option.

 

Learning and Burning

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You're correct. To the average homeowner, terms like Rent to Own, Lease Option, and Pure Option are incomprehensible. Part of our tasks with them is educator. You need to explain, simply, the advantages to what you are offering. In the case of a Pure Option, if it's nonexclusive there is no downside for the homeowner. Make them understand this and there isn't any reason why they shouldn't go along. . .unless they don't like or trust you.

Also, for a Pure Option to be worthwhile, you must get a price that attracts buyers. A full retail Pure Option will be impossible to move.

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I have had the opportunity to share the rarified air of Michael C via a telephone call today. The call was about a Pure option I have with a California owner of a home in Indiana. When I spoke with the seller in California, this is the script I used to get the Pure Option Agreement signed.

“Look Mr. Seller – I am not a realtor who wants to tie up your house with a ‘listing. I am a real

estate investor and I have a plan to help get your home sold where I will market it at my

own expense and on my own time. In the meanwhile, you can continue to sell it yourself,or even list it

with a real estate agent. If you get it sold first, I walk away and you owe me nothing. Would you be

interested in finding out more about it?

 

I would like to have a ‘non-exclusive option’ to purchase your home. Like I said, this means that you

can continue to sell the home any way you like, and I will just be another‘marketing’ method in your

home selling toolbox. I will do my best to find a buyer for the property, and if I do, anything I get

from them ABOVE what you and I agree upon as a price will be my profit. Does that sound fair?

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PART 2

 

So Mr. Seller"if I were to offer you ALL CASH for your property today"what would

be the absolute BEST PRICE you could give me on the house? <shut up here!>[seller gives you the price]

 

“Is that the BEST you can do?” I need to be able to negotiate with my customers – so there

has to be some wiggle room in order to make a profit, you can understand that, right? So

with that in mind, what would be the absolute least you could take for the property for an all

cash, fast sale?

You need to be sure that the CASH price you get will be a chunk less than what the seller is asking for the home. If it is, go ahead and write up the deal. If it isn’t, walk

away. (I re-learned this today from MichaelC :-)!! Thanks Mr. C.

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Charles, it was a pleasure speaking with you yesterday! Hope I was able to shed some light on a few things for you. Here's to getting that deal done. . .along with many others. :)

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yeesh. get em on board with the non-exclusive idea but then sign a real option. in my eyes, you run the risk of the buyer going right around you when he figures out who the seller is in the closing room. a nonexclusive option is a risk: marketing costs capital, going around a nonexclusive option doesnt. they can and will go around you.

 

example: before i had any real clue what i was doing i entered negotiations with a highly motivated seller. looking back, it was the perfect scenario for a LP. id never done one so i probed the market by putting out marketing before i ever had an agreement in place. well, a week later they stopped returning my calls, and a few weeks later the MLS listed the property as sold (at a DEEP discount, mind them)......their do-nothing realtor had a buyer after i lit up the property.

 

to answer your original question... i dont propose a pure option. i propose to buy their house and a pure option is what i do when they offer me a wholesale price.

 

if you go back the the 4 tiers of rei, "pure options" is the business of wholesaling.

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