Have a verbal agreement, Now What?

Question

So I have a verbal agreement, very informal at this point, from a seller on a piece of development property in St John, US Virgin Islands. The owner said he would sell me the property at about 73% of comparable property values in the area.

I'll be looking to assign the property for a modest profit. What should my next steps be?

Curt Davis · Answer

Well, what happens when you start marketing the property without a signed contract and then your potential buyer goes around you and gets it cheaper? No signed contract, no agreement. You actually have nothing at this point because in the real estate world, sadly peoples word is no good anymore these days.

Haven M. · Answer

Thanks Josiah. I'll be sure to include the assignment clause and will definitely see if he'll go lower. He's had the property for awhile, and just wants to have it off his hands at this point, so I think I can whittle the price down more as I make it clear that I'm serious about buying.

Josiah Grimes · Answer

Haven,

Just as a heads up make sure you get an assignment clause put into your contract. It will make it much easier your first time around to not have to do a double close. Also, 73% is a nice discount but always see if the seller will go lower.

Best of Luck,

Josiah

Haven M. · Answer

Jamie- The 73% number is based on my own research. I'll be looking to turn the property at about 80% value to comparable properties to someone interested in developing the plot.

Jamie Gaymon · Answer

The owner said he would sell me the property at about 73% of comparable property values in the area.

IS that 73% the owners number, or the number that you came to based upon your own research?

James H. · Answer

There might be some forms available on BP for free. I would go to a lawyer and have them help me draw up a simple contract. It couldn't cost more than about $500. They can be VERY simple. I learned how the wholesale process worked when I bought my rental form a wholesaler. It is pretty simple. I wouldn't waste my time advertising until I had a signed contract. Words mean nothing in real estate just as they mean nothing in any thing else.

Haven M. · Answer

Do I create the contract myself? Are there generic contracts that I can modify?

What sort of things do I need to have included in the contract to allow me the time and ability to turn the property around?

Haven M. · Answer

Should I start marketing it before I even have it under contract? In terms of marketing what avenues would you suggest?

James H. · Answer

Meet with him and get him to sign the contract....Then start marketing it....

Have a verbal agreement, Now What?

Have a verbal agreement, Now What?

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