Posted by rycherx on December 15, 2003 at 09:19:53:
How much are you going to offer the optioner(seller) for the straight option? $500 bucks? $1000 bucks?
Why wouldn’t I take advantage of the option period and instead of assigning the contract for a fee, why not do a simultaneous close?
If I have the contract for $400k, why not sell it to a person with so-so credit for the appraised value of $500k. Do an owner financing, take a deposit, and sell the note to a note buyer. Wouldn’t I get more money this way than exercising a straight option?
question for simultaneous closers - Posted by RycherX
Posted by RycherX on December 14, 2003 at 17:36:40:
I’ve been reading the boards and there seems to be an overwhelming amount of information and many ways to make money. Because I don’t want to use my own credit or use my money.
I am wanting to specialize in simultaneous closes.
I have a purchase agreement that I’ve been using from Randy who posts here. It seems to be pretty risk free if I can get a motivated seller.
I plan to tell the seller that I will be closing in one month and the contract allows me to back out at anytime.
I will give them a small earnest money amount like $10 bucks.
If they are desperate enough, they should agree to sign.
I recently tried to go to a custom townhome builder who is building a new developing neighborhood. The county appraised the property at $500K. The asking price is $430k. I can get her down to $400k. Question I have is do builders tend to only use their purchase contracts and not yours? I have a contract that protects me.
Even after the contract is signed, if I get potential buyers to look at the place, I have a risk that they will cut me out of the deal and negotiate straight with her because I have a contract with only one unit and there are many others they may be curious about adjacent to it.
So in this kind of transaction(simultaneous close), is my best bet is with a builder that is doing a close out and has only 1 or 2 units left rather than 50? Does it prevent my potential buyer to cut me out as the middle man.
It seems to be better if I use the simultaneous close on non-builders who are FSBO property in residential neighborhoods. They seem to be less savvy and would more likely use my purchase contract. If they are motivated enough, they will take my contract with a $10 deposit.
Re: question for simultaneous closers - Posted by Judah K. Swagerty
Posted by Judah K. Swagerty on December 14, 2003 at 23:39:16:
Why don’t you just create an Pure Option or Straight Option agreemnt. You can lock up the property for a certain amount of time. You now have the right to buy the property yourself or assign the contract to a third party.
I’m thinking you would want to sell the contract. If so, sell the contract to the buyer for the balance.
Appraised at $500K. You locked the property up with the owner at $400K. You sell your position to the third party for 50K. Tell the new buyer that you are willing to take a note for $200 a month for the next 20+ years or until you are fully paid. If the new buyer agrees, sign a promissary note and assignment agreement with the new buyer. Now, hand over the original contract you’ve done with the owner to the new buyer and let he/she exercise the option to purchase with the owner.
NOTE: You have a note giving you residual income for the next 20+ years at $200 per month. Guess what? You could sell the note to a note buyer if you wanted to.
I hope I explained that clearly for you.
Judah K. Swagerty
cannot work with townhomes being built. - Posted by RycherX
Posted by RycherX on December 15, 2003 at 10:15:05:
It seems as if this will not work with newly developing townhomes. If I get a straight option contract with her for $400k appraised at $500k, an investor I want to sell the contract to will cut me out as the middle man has have my seller sell the investor a deal adjacent to the unit under contract for $400k.
I think the only way it will work is if I do a straight option for every single unit in the development or I there is only one last unit left in the development.