Now I have heard of some wholesalers use purchase contracts to tie up a property and some used option contracts. Can someone please explain the pros and cons of using each one and when it is best to use a purchase and option contract. Thanks in advance for all replies
I’m using flex option to purchase agreements a lot with other investors and for non-investor, non-institutional sellers that may have their house listed with a Realtor or are trying to sell by themselves. The flex agreement allows the seller to continue to market and sell to whoever they want, until I exercise my option to purchase. It also allows me to market their property to find an end-buyer (hopefully before the seller or other investor does). Most investors I talk to don’t mind me trying to market their properties for end-buyers. If I find a buyer first, it’s a win-win-win situation. I make money, the other investor makes money and the buyer gets a house at a great price. :cool
Once I get buyers calling me about a property, I can exercise my option and send a purchase contract to the seller. This way, I will have a contract I can assign to the end-buyer, once they are ready to buy.
If I’m dealing with a non-institutional seller that doesn’t have a Realtor and isn’t trying to sell on their own, I can use a purchase contract to tie up the property. I still add a contingency that says, “this contract is subject to assignment to an end-buyer”. I still have a way out, but the seller is locked into selling only to me.
This all depends on your market and how many people are hitting the seller if its just you use an option if every investor in town is after it then use a PSA. Good luck
Thanks for your advice. I think I will be using the option contract unless I know someone else is looking at the property.