I'm looking into a couple of multi unit properties and they are all being sold by the same seller. They seem like good deals, but you can only see the inside of them during a paid option period after your offer. The seller said this is to prevent annoyances to the renters. Has anyone experienced this before?
By paid option period do you mean after you have a mutually accepted offer and put down earnest money? It so, yes, I've seen that consistently in my market.
@Ryan Haase making an offer contingent on inspection is sometimes preferred for sellers who have investment property who wants to sell it turn key to another investor. Having to pay upfront for an option however I haven't heard of before. I know there are inconveniences to the tenants and so the seller is probably trying to discourage the tire kickers. The seller probably wants you to have your financing planned out and do some due diligence prior to seeing the property.
Yes, this is what I mean, in Texas they call it an Option Period. Basically, you can buy a period of time (typically 7 to 10 days) to get out of the contract for $50 or $100. This is separate from the earnest money. How do you formulate an offer amount without seeing how much work is needed inside the units?
This is very common for tenant occupied properties...it's designed to weed out tire kickers. While I would hate to pay an option fee just to see the interior of a property, landlords don't want to upset the tenants by having a lot of prospective buyers coming through the units and inconveniencing the tenants who would surely complain.
Again, this is quite common.
Thanks for the verification everyone, I've had plenty of properties where people have required a preapproval letter to verify financing, but this is the first time I've ran into this.
I don't know Texas but that sounds off. You should already have contingencies on the offer that get you out without paying...inspection, financing, attorney review, etc. To your question (and I'm not an expert, just sharing what I'm doing) I'm putting together offers based on the seller information plus anything I can dig up elsewhere on the property (county website, through my Realtor/by talking to their Realtor etc). Apparently it's pretty common on multis to renegotiate after inspection.
It probably would help if you let some of the Bigger Pockets subject matter experts review your proposal.
@Ryan Haase thx for the info. I didnt think it was impossible, it just sounded really strange, but I can see how it might be useful in certain situations.
The OP is using a standard TREC form used by all realtors in TX, and yes the "option" period as they call it, is SOP.
This is SOP as Wayne said especially on multi-family such as a 4-plex or larger. It is almost impossible to coordinate with 4 tenants constantly for buyers to walk through the property. In the past, we have tried to keep one unit vacant or accessible to show a buyer but that is not always possible. With the option period in Texas, you can walk away for any reason during that period. So try to get a low fee of $25 and a longer period like 14 days
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