I recently got 4 houses from an investor type because he liked my CA pitch. We're currently in the process of getting the paperwork finalized, because he has out of town partners on three of the houses. I got a call tonight from a guy who is interested in purchasing one of the properties traditionally. After talking to the guy for a few minutes, I learned that he's pre-approved and can close in 5 days. Great, right? I figured that I could just get the house on a pure option instead and make my cash that way. I just don't know how to set it up without knowing what the selling price is going to be (meaning if they negotiate back and forth, I'd need to add $5k to their/my option price to cover my fee). It could work if I can negotiate a price with the current owners that would allow me to build in a $5k spread, but being investors they want most of the profits for themselves.

The problem that I'm having right now is his partner hasn't faxed back the signed CA forms yet, and my investor wants me to send him the buyers contact info so he can talk numbers/show the house. I don't think I have to explain why that's not an option for me to do so.

So far, my investor seems like a good guy and has kept his word in the past, but I'm worried that my position isn't technically secured yet. I've already agreed to split the consideration on the 4 houses (better than all of nothing), but I don't want them to offer me something like a $1k referral fee when I'm set to make $5k from option consideration (loosing $$ because I opened my grill). Is there a way to proceed while still covering my interest in the deal?

How can I approach the investor without exactly saying,"I'm not going to give you this guy's info until my stake ($5k) is secured.". It's a delicate balance since I haven't received the finalized CA paperwork back yet and would hate to have the whole deal blown because I played hardball.

Brian,

The fast answer is for you to get your best price from the seller and write the option under market value. If you can get it for a $10K discount and sell the option paper to the buyer for $5K, everyone wins. The key is to get the best, best, BEST price from the seller with enough spread to make it attractive to the end buyer (still under market) and to put a profit in your pocket.

Brian, your concerns are well founded. Your position is not protected, and it isn't unreasonable for you to want it to be. I'm sure the investor/owner understands this, too. I'd explain to him that receiving the signed paperwork back is a requirement, because otherwise you could be accused of brokering real estate without a license. With the paperwork signed, sealed, and delivered, you are a principal in the deal and can act accordingly. This should satisfy him without offending him.
Then I would approach the homeowner and ask him specifically what you can agree to if you should unexpectedly find a buyer while marketing for a t/b.
If he's a shrewd investor he'll see the value of having someone like you in his corner and treat you right. Of course, once you agree on something, you'll need to get it in writing to protect your interest. That can be done in a number of ways, none of which should prove to be difficult. We can help you with that.

That's initially what I was thinking, but the problem is these guys are investors in a pretty strong market. Home sales are starting to pick back up after Christmas and they don't want to discount it. I'm thinking if they sold it for $390k (comps), they'd receive $366,600 with a 6% agent's commission. If I can get an option at $385k I could possibly make it work. The only thing is they'd want to handle the negotiations. Can I get an option, but we leave the price out until they agree on something? That way we can fill in the purchase price, I collect $5k with the principle being reduced by that much.



I'm meeting with the in-town investor tomorrow. I don't expect any huge problems. I've told him that I need the contracts back before I can move forward with anything, so we'll see how many he has in hand tomorrow (he has at least one back right now). The only real issue right now is this potential buyer and how to protect my position.