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First Pure Option to close


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#1 Learning and Burning

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Posted 29 February 2016 - 10:33 AM

Hello Again

 Got this Pure option and an accepted offer. Deal is Seller has agreed to an owner carry. Asking 75k offer was for 80k. 20k down of which i get 5 seller gets the 15 and will carry the balance of 60k. Got through this part and now what happens? 

Buyer wants to keep pyments @ 500 per month not including insurance and taxes. Also, plans to put more towards balance as he gets more money.Hw would this effect the amortization schedule? I am not sure where to take tis now and need to learn as seller is counting on me to get tis to the finish line.... 

 

Learning and burning



#2 MichaelC

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Posted 29 February 2016 - 11:05 AM

I want to be sure I understand the deal, Mike. 

1) You assigned your Pure Option to a third party? 

2) Your option price is $75K?

3) Your buyer offered $80K, total price; $20K down; $5K to you as assignment fee and $15K to homeowner, leaving a balance of $60K? 

4)  Seller has agreed to finance that $60K?

Is all the above correct?  If not, what am I missing.  If yes, the wise and easy way to do this is bring the deal to the title company/attorney that will be handling the closing and they will handle the paperwork and specifics.  With three parties and seller financing involved, it's best that everyone's interest is protected and the paperwork is correct.  It's a few dollars well spent.



#3 EQUITY NOTES

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Posted 29 February 2016 - 11:33 AM

Looks like a nice way to go

 

I checked my calculation and it appears it would run 120 months to pay off the principal with zero interest

 

As Michael said the escrow attorney can and should draw up the note, and of course any additional payments can be applied to the principal.

Tom 



#4 Learning and Burning

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Posted 29 February 2016 - 04:11 PM

The terms you mentioned are correct. $500 per month is buyers number with out impounds he wanted. Seller agreed and now got to figure out interest rate length and what happens when buyer pays a few thousand between payments? Talked to Title Co does not have an attorney in house or one for a refference. She says these are done normally without an attorney. Says we bring them the earnest sales agreement with all terms agreed uopn and they take it from there. Id feel more comfortable to have an attorney do it. Seller is concerned with extra payments posted and how it changes the amortization time rate etc? as buyer mentioned was his goal. Trying to cross my T,s and dot my I 's to finish this one off. Seller did not want to go to a realtor so this one means a lot for me to get it DONE. 



#5 MichaelC

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Posted 29 February 2016 - 05:26 PM

Very unusual that a title company doesn't have an attorney on staff or at least on speed dial. :blink:  I'll suggest the obvious:  try another title company, or contact a real estate attorney directly.  You can contact a local real estate club for recommendations for either.



#6 EQUITY NOTES

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Posted 01 March 2016 - 02:24 PM

Hi Mike

Once you set up the deal or the escrow company additional payments on the note are simple to calculate

 

I would advise buying  t-value software, its a great tool to figure out what additional payments would do to the note balance.

Its $125.00 for the program on disc or download, from paper source.com

It also runs any  amortization  schedules you desire

Don't buy all the additional stuff they offer for a year.

Hope this helps

Tom



#7 Learning and Burning

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Posted 02 March 2016 - 01:59 PM

Nice to know about the software sounds like it would do me well on this one. Not sure its in the budget this time. Can i ask the escrow to calculate for me so i am in the know? Also, i am waiting a lawyer to confirm what he will do and cost hoping to get answers today on this part. Who would pay for the lawer service?  Now how do i secure the deal with only a verbal agreement from the buyer? When and where does he put the 20 k down? And i get piad out of escrow or do i get mine from buyer as hes buying my agreement? Again this is my maiden voyage on a Pure Option..... 

 

Learning and Burning to the finish line



#8 MichaelC

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Posted 02 March 2016 - 02:38 PM

 

Who would pay for the lawer service?

 

Whichever party the lawyer is representing.  If he is representing all and simply facilitating the completion of the deal, the legal fees are typically split.

 

 Now how do i secure the deal with only a verbal agreement from the buyer? When and where does he put the 20 k down?

 

A verbal deal is no deal at all.  You need to get a signed agreement and a nonrefundable good faith deposit, (the more, the better).  The balance of the agreed to down payment would go to the attorney who will distribute it at closing as per the instructions you provide.



#9 Learning and Burning

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Posted 02 March 2016 - 03:02 PM

I am drawing up the Owner sale agreement and earnest money receipt now with the terms agreed upon. I this what i will have the buyer sign so to secure the deal?  And the good faith deposit who does that go to? and like 1k or 5 k for this amount? Buyer is on board and waiting my instructions. I have Pre paid legal service that i am hoping they will review this for me as one of my benefits from them with no cost. Would this be sufficient for what i need done here? 



#10 MichaelC

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Posted 03 March 2016 - 10:21 AM

Mike, did the attorney get back to you with some answers?



#11 Learning and Burning

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Posted 03 March 2016 - 12:22 PM

I missed her call yesterday but waiting a call back now. Wondering your thoughts on how to get this one to close?



#12 MichaelC

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Posted 03 March 2016 - 01:22 PM

I missed her call yesterday but waiting a call back now. Wondering your thoughts on how to get this one to close?

Normally, with this being a simple assignment of a Pure Option to a third party, you would only need an assignment agreement between you and your buyer, stating the amount of the assignment being paid.  The agreement is signed, you are paid, and you're done.

But this deal is a bit more involved as it seems the homeowner is leaning on you to see the deal to completion, and she is offering seller financing to the buyer who, of course, needs to see this noted before dropping any cash.  That's why I suggested an attorney to tie up the loose ends and bring the deal together to everyone's satisfaction.



#13 Learning and Burning

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Posted 03 March 2016 - 02:44 PM

Yes she is relying on me to avoid the realtor scenario so im under the gun to Git R done....Still no word from lawyer. Go figure. Can this agreement be adjusted once submitted to escrow?I have the terms that all have agreed upon and all are on board for asap.  I'd like to get signed, earnest money put in and solidify the deal at min by days end. Is this possible? 



#14 MichaelC

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Posted 03 March 2016 - 03:13 PM

. . .Can this agreement be adjusted once submitted to escrow?I have the terms that all have agreed upon and all are on board for asap.  I'd like to get signed, earnest money put in and solidify the deal at min by days end. Is this possible? 

Absolutely.  Contracts are adjusted, tweaked, renegotiated and rewritten routinely.  Better to have something in writing ASAP, an exchange of funds, and then the details can be worked out and finalized.



#15 Learning and Burning

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Posted 03 March 2016 - 08:30 PM

Ok

I just talked to the lawyer and she stating i can not do what im doing without a brokers license.I told her i am a principal in the deal per my Pure option agreement.

with the seller, where i gave her money so to make me a principal. She wants me to send her the Pure Option agreement. I will send it and need to know if i need anything else on this to C.M.A... She did mention a finders fee but didnt seem to know about the Pure Option agreement. Told her i was trying to secure my steak in the deal. 

Kinda stressing this one now... 






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