quick turn question???

[jefferycarson]

on the Ron Legrand option to purchase contract (as a buyer) section #4 states....... option consideration. in consideration for this option, buyer agrees to pay seller$_________now and $_________upon exercise of this option.



my question is what is a reasonable amount to pay now??? and upon exercising the option???



and is it possible to pay $0 now and $0 upon exercising the option....or does there need to be a dollar amount exchanged to make it legal??



also what clause would i put in my contract to make sure that any mortgage pay down comes to me.



thanks in advance, i appreciate the guidance!!!

 

[Thomas Beyer]

In Canada, you need "consideration" for any contract, say $1 or $10 !



The question is why would someone give you an option for free ? Now there are some idiots out there .. but not that many. A reasonable guideline is perhaps 1-3% of property value .. so on a $200,000 home that would be $2000 to $6000 !



When you exercise the option you are now buying and/or assigning the contract. Thus, usually FAR MORE money changes hand, maybe another 2-6% or more, or whatever the seller agrees to.



How many properties do you already own ?



if none, this strategy is not recommended as it is a "senior step".

 

[JimWhitelaw]

[quote user=ThomasBeyer]

The question is why would someone give you an option for free ? Now there are some idiots out there .. but not that many. A reasonable guideline is perhaps 1-3% of property value .. so on a $200,000 home that would be $2000 to $6000 !


I've obtained options on several properties for $1.00. The reasons that people do that are varied and not usually related to idiocy. People with little equity, mortgage trouble, house needs repairs, want a quick sale, don't want people coming in their house (open houses), or just plain don't like/trust realtors (maybe that one's a bit irrational, but not necessarily idiotic).



Also:



1) Don't use the LeGrand contracts, use the ones created by Barry McGuire that are available on this site.

2) Regarding mortgage paydown, normally you'd do that via your purchase and sale contract, not your option to purchase. It's part of the breakdown of "unpaid seller's equity" in the payment section of the contract.

 

[Thomas Beyer]

[quote user=JimWhitelaw]I've obtained options on several properties for $1.00.


You must be a very persuasive person.



Did you close on many of those properties with a $1 deposit ? As sometimes $1 might be overpaying, as the mortgage + upgrade requirements could exceed the property value.

 

[GaryW]

[quote user=jefferycarson]option consideration. in consideration for this option, buyer agrees to pay seller$_________now and $_________upon exercise of this option.



Hi Jeffery:

Mine are anywhere between $10 and $100 now and 0 upon exercise of this option. I've had no problems in attaining this. In a couple of cases, I added the clause that lets them continue selling as well and one of those was under a realtor's contract.



Gary

 

[lanedry77]

I too have gotten options for very little. My best would be $10 for a 34 month option.



And I agree - Use the documents from Barry McGuire's 'deal ready documents' home study binder, not Ron's.







Thanks,



David.

 

[InaGefter]

Is there similar set of "ready for use" documents for Ontario?



Thanks,

Ina Gefter