Ron Legrand Option Strategy

TerryKruse

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Registered
I am visiting a seller in the hope of getting a option for a "pretty house" in a great neighbourhood. I plan to Round Robin/Cash Sale the property within a short time.

I have 2 questions.

1. When I do this option, do I have to also fill out an Agreement for Sale or does this step come when I exercise my option?

2. The Option form has space for a Witness. What happens if there is only the seller and I at the meeting?

Thank you in advance,
Terry
 

BarryMcGuire

Inspired Forum Member
REIN Member
QUOTE (TerryKruse @ Oct 21 2009, 11:54 AM) I am visiting a selling in the hope of getting a option for a "pretty house" in a great neighbourhood. I plan to Round Robin/Cash Sale the property within a short time.

I have 2 questions.

1. When I do this option, do I have to also fill out an Agreement for Sale or does this step come when I exercise my option?

2. The Option form has space for a Witness. What happens if there is only the seller and I at the meeting?

Thank you in advance,
Terry

Hi Terry, both good questions.
1. When you get your option signed, that gives you control of the property. If your exit strategy is to do the Round Robin/Cash Sale, then, as long as you get a buyer who is just getting their own new mortgage as seems like for your pretty house in great neighborhood, you DON`T NEED the agreement for sale strategy. Once you settle on a buyer, they do their diligence and go unconditional with you . At that point , you can handle the sale in a couple of ways.
  • You exercise your option with your seller and have your lawyer, ( I see from another post that will be me
    ), handle the paperwork going between your seller and the ultimate buyer, or; You could tell your seller you have a buyer to buy from you. He could buy your option back from you for the amount of the profit you are making and then he closes directly with the ultimate buyer. You would ask to be paid right now. If you get a deposit on your sale to the ulitmate buyer in the amount of your profit, that would work great. You have all your money you are ever going to get and you just let seller clsoe with buyer. Either way would work. # 1 is probably easier and more understandable for all concerned. After you do a few of these and are really comfortable with the process, it will be much easier for you.

2. As for the witness , you don`t need one to be legal but always better to have a 3rd party witness - that is, not your husband or seller`s wife/relative. For our Quick Turn deals, they are not well known and you can bet that some sellers will squawk that they have been mislead... or worse. Great if you have a witness who can testify what went on at a signing. My advice is that you are better off with a 3rd party witness.

Hope this helps

Barry
 

TerryKruse

New Forum Member
Registered
Thanks Barry.

As it turned out, the property was really pretty but priced at market so it didn`t work out. The neighbourhood did have homes that sold for as much as $200k more than this one, but other factors would make it difficult with this property.

For others who posted on a similar topic - thinking a seller would be resistant to an option - my seller was willing to take an option had we come to an agreement on price.

We talked for about an hour and a half and I may just have a JV money partner in the future.

One other question Barry: If a person were to option a home and do the Round Robin/cash sale as I intended, would there be anything wrong with splitting the profits 50-50 with the seller? Or would this become some type of partnership?

Just curious....

Cheers, Terry
 

BarryMcGuire

Inspired Forum Member
REIN Member
Hi Terry. Too bad the pricing side didn`t work out. But, on the other hand, great that the seller was comfortable with the concept of giving you an option. In the end, options really are quite simple. A seller gives you the chance to buy his property for a fixed price within a fixed period of time. For that chance you pay a small sum of money known as the option money. Of course you want that some to be as small as possible. Really, the basic notion of an option is really simple and explainable.
Now regarding your question about getting an option, selling the property and then sharing the profits 50-50 with the seller, I think that is way closer to acting as the sellers Realtor and leaving you open to a charge that you are acting as an unlicensed Realtor. I would be very careful with that one.
cheers

Barry
 

TerryKruse

New Forum Member
Registered
I thought that would be a problem and just wanted clarification for the future.

Thanks Barry

Terry
 
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