Need a quick rundown on Straight Options

General Real Estate Investing
1

Hi Everyone,

I’ve come across someone through my preforeclosure marketing that looks like they would be a good candidate to use a straight option with. Problem is, I don’t know how to use them. Can someone provide an overview on the process and a suggestion on the best form to use?

Thanks!

  • Jean
2

Pure Options are the height of simplicity. You tie up a property for the best price you can negotiate for an agreed to period of time. Then you hustle to find a buyer willing to pay you more than your option price and you profit from the difference. Or you can assign the option for an assignment fee.

3

Thanks for the info but I’ve got a couple more questions:

  1. When you find a buyer, do you sign a purchase and sales agreement with the seller and then assign it or does the new buyer sign a P&S with the seller? If the new buyer and seller sign, how do we get paid?

  2. Do you need to record a memorandum of option? If so and the option expires, what do you do with the recorded memorandum?

Basically, I need to know the process after we get a buyer.

Thanks!

  • Jean
4
1. When you find a buyer, do you sign a purchase and sales agreement with the seller and then assign it or does the new buyer sign a P&S with the seller? If the new buyer and seller sign, how do we get paid?
Depends upon whether or not you assign your deal or set up a double close. There are a number of ways to do this, depending upon the deal, the participants, and the title company/attorneys/lender.
2. Do you need to record a memorandum of option? If so and the option expires, what do you do with the recorded memorandum?
You aren't required to record a memo, but there is no down side to doing so. When the option expires, so does the memo.