Posted by Ed Copp (OH) on January 14, 2003 at 18:18:26:
You want to have your cake and eat it too.
A non-exclusive option is in my opinion nearly worthless. You say that you will have nothing at risk and this is not so. You will have your effort and expenses at risk. You might well find a buyer and not be able to protect your position.
Now you want to insert clauses to protect yourself and make the option something like an exclusive option. You want to regulate the owner, and some unknown Realtor, this is a waste of time. Why not just get an option that is exclusive, for a consideration. You will then have your consideration at risk, and you will have the proper kind of control of the transaction.
I have an opportunity to buy a hotel/condo unit for what’s owed on the mortgage - $209k. The property was purchased 2 years ago for $235k and unfortunately is very tough to comp as the other 3 recent sales in the building were totally different layouts (Studio vs Executive suite). Might be worth $190k, might be worth $260k. Owner lives out of town and is behind 4 mo on pmts.
Seems to me the best solution here is getting a non-exclusive option to purchase at what’s owed. I’d have nothing at risk but marketing dollars and seller would have someone marketing his property. Anyone disagree?
As far as clauses I’d need to include, let me know what you think of these…
something like seller must receive written statement from optionee indicating that he does not already have a buyer before selling to someone else, optionee must respond within 24?hrs to any written request by seller [this is to ensure that seller doesn’t sell to someone w/out me knowing first]
optionee has first right of refusal for any offer seller receives on his own
option will become exclusive as soon as a deposit of $x dollars has been given to seller [$5k or $10k maybe]
if seller sells to someone else, optionee must be paid the greater of 20% of any net profit (defined as selling price less mtg, backpayments, legal fees, other fees) or $200 at closing [to ensure I at least get something]
Anyone have any more clauses I could/should add?? I’d like to somehow get something in there regarding Realtors, b/c owner said he would prob list it soon if it didn’t sell. Can you have a clause stating that if property sells via Realtor, that Realtor must pay optionee $x dollars???