In addition to the above question…I’ve got some add’l questions/scenarions to play out:
a) you advertise that you can close in 10 days…but it seems obvious that really it’s more likely that you often need something like 60 days in order to find a subsequent buyer that will pay what you’re asking. How do you deal with the initial owner in this regard…(changing timeline for them from 10 to 60 days)?
b) If the person is still living in the dwelling and you start your “Handyman” campaign to upsell the house…they will obviously be times when they’re present in the house as people walk-thru to look at it. Do you get much flack from them once they realize that you’re upselling at $135M as opposed to the agreed upon $100M. In other words, how do you keep the previous owner at bay as you manuever the sale?
c) Lastly, this is just an option…so I’m assuming you can’t do any type of cosmetic fix-ups like front yard landscaping in order to make the place more appealing. Is that correct? You do nothing/can do nothing…because the place is not yours.
Thanks for the add’l insight…I like your low risk approach.
Mike, there is no need for a purchase agreement initially. You only need the Option Agreement to take control of the property. The purchase agreement may, or may not, be needed later on. Once you have found your buyer, you can either assign your option agreement to them or, if the deal warrants it, do a simultaneous purchase and sale.
Mike, a lease option is just what it sounds like. It is a lease with an option to purchase attached to it. Unlike a Pure Option which is simply locking in a purchase price for an agreed to period of time.
The lease option can be used to take control of a property from a seller without the need for getting your financing in place immediately, or without taking ownership. There are advantages to doing it this way. Once you have done so, you can then turn around and lease option the property to a tenant/buyer, making your profit off of the spread between the two deals.
Risky? Well, more so than a Pure Option. But there isn’t an investment that is without risk. Overall, though, done correctly and using good agreements to protect your position, the risk is minimal.
As far as closing in 10 days, ALL of the people I’ve dealt with have wanted at least 30 days before closing. Make sure you write your option for at least 60 days. That gives you time to get the players lined up.
I use the 10 day close to get peoples attention. It let’s them know you can move quickly. As far as moving the closing date up or out it’s never been a problem, these people are just happy to have sold their house quickly without having to fix ANYTHING! Remember that.
As far as showing their house while they still live in it. I am honest right up front with these people. I explain that I’m paying them for this option inorder to buy the house or bring in another investor who will buy it. I make my money on anything I get over their stated price. Be up front with people, they respect it. Also, these are the types of folks who don’t want to do anything to their property, in return they accept less than they could get. You’re not going to deal with brain surgeons and rocket scientists here.
The open houses are just like a realtor would have. Have them leave for 4 hours. I explain to them that some of the people who will be looking at their house will make comments that they will not like hearing. You don’t need to hear that stuff, go out for a few hours, enjoy the day, that’s what I’m here for. When you get home I’ll let you know what’s going on, and that’s it. SIMPLE!
When I get a real buyer for a price I accept. I call my lawyer tell him what that number is and he fills it in on a sales agreement. The buyer goes to his office with a deposit check and signs. The money is held by my attorney so everyone feels safe, and then the seller goes down to sign. Yea, they will see how much more I got for the house but what are they going to do? Not sign and collect their $100,000+++ check because I made money like I told them I would? It’s not hard Dude.
As far as closing in 10 days, ALL of the people I've dealt with have wanted at least 30 days before closing. Make sure you write your option for at least 60 days. That gives you time to get the players lined up.
When you state that this buys you time to line up the “players”…who are the players that you’re lining up.
Also…what type of closing costs do you typically have. I’ve found closing costs to be a real killer…
Do you have any add’l tips on who the players are that you have to line up…(and how you get the best deal with each).
And what a person should shoot for…as far as getting a lowball closing cost scenario.
Thanks very much Pete.
-Mike
P.S. I know you’ve already covered some of these players…guess I’m more concerned with title company costs and the related that can easily get tacked on.
If you have a realtor on your team, or have one that is willing to work with you for the long haul. you can ask that realtor to access the local MLS system, which will give you access to the listings that have expired or been withdrawn. The owners of these properties could be getting close to desperate if the listings have expired without any offers or activity. never hurts to ask.
The “players” are BUYERS. You guy’s have to actually DO one of these to really learn. I could spend 6 months telling you word for word what I do. I’m not going to. No one did it for me, and I was better off for it. I’m not trying to sound like an *ss here but there’s nothing wrong with finding your own way and making your own mistakes. Some of these questions are insulting.
“How do I get a realtor to get me MLS data?”
Holy crap, You need more help than I can provide if you can’t figure out that one.
The 95% of callers who want retail prices for their homes are told I’m not buying homes with George Soro’s money for charity. I actually need to make a profit doing this.
Wing it boy’s. Don’t be afraid to mess up. If you have a lawyer he will make sure you don’t get into legal trouble. (you WILL ABSOLUTELY need a lawyer to do this.)
Figure it out. You’ve got a great recipe here. JUST DO IT!
There are a million different directions you could go in in this business. Pick an area of real estate that you are interested in and focus on that. Dont go in every direction or you’ll go no where.