Option to Buy vacant land Q's - Posted by Pam-CA

Posted by Pam-CA on November 05, 2003 at 12:08:12:

I wrote here a few weeks ago seeking advice on buying a large parcel of undeveloped land, zoned for light mfg, and received good advice from Ray Alcorn to go for an Option to Buy.

The good news is that the Seller agrees to an Option. Bad news is he wants a $10K deposit, on a $955K purchase price. I told him I couldn’t give him anywhere near that as a deposit, and that I would give him $1K as consideration for the Option contract. I told him that if I failed to sell the property at the end of 6 months, I’d lose the $1K, and that I would not agree to losing $10K or even $5K in the event I couldn’t sell the property. He said I would be “more serious” in my efforts to sell the property if I had $10K on the line! I tried to persuade him otherwise, but he seemed unconvinced.

What is a reasonable deposit on an Option to Buy in this price range?

The deposit is forfeited is I don’t sell, right?

Also, Seller said he is willing to carry up to 50% on this land. I’m not sure how that would work.

Is it possible to structure an Option where the Seller takes back a note from the end Buyer?