New to: Option to Purchase Contract

8 Replies

When offering the owner a small percentage of the purchase price of the property to secure the option; how much should be offered? Is there a legal minimum or maximum to offer? What is a good length of time/duration for the option to be in place?

Thanks in advance.

It is what you can negotiate.  Offer as little as you can as an option fee and get as long an options as you can. In general no legal requirements unless there is something specific to Ohio. 

There is no legal minimum or maximum at least not in Indiana.  You need to ask your home owner what they will pay if they sell with a realtor, explain the benefits of doing an lease option with you.  There are benefits right?

If so, explain that they are more than welcome to find a buyer on their own, and that if they do, then they are more than welcome to sell to that buyer without paying you a fee.  However, you need to make sure they realize the value of your service before the question of an option fee and sharing it with them ever comes up.

Ned and Ben,

Thank you very much. Also, what does the chain of documents look like? My idea is as follows;

  • First is the Option to Purchase Agreement between myself and the owner
  • Second is the Assignment of Option to Purchase Agreement between myself and the buyer

Did I overlook anything?

Brian,

That is how I would do it. 

Ned

Originally posted by @Ned Carey:

Brian,

That is how I would do it. 

Ned

 Ned,

Since the goal is to get the property sold, when does the actual Purchase Agreement come into play? If the Assignee is to purchase the property, do they [ seller and assignee ], immediately [ same day as signing of Assignment of Option Agreement ] execute a purchase agreement to finalize the sale of the property? 

I have never bought with an option. I never thought about it before. I would presume that the option to buy would include the exact terms of the deal and could become the contract simply by choosing to execute the option. I would rather structure it that way that have to count on the seller signing a new agreement. 

Hopefully someone will chime in about common practice here.

Brian, I'm a broker buying for myself so I use the state contracts in Texas. There is a termination option in there so I write up the contract terms day one with the option to terminate. Would it be easier for you to do the same?

I have my offers pre filled with $10 option for 60 days. Never have a problem with it because I'll either buy it or assign before.

Originally posted by @Randal McLeaird:

Brian, I'm a broker buying for myself so I use the state contracts in Texas. There is a termination option in there so I write up the contract terms day one with the option to terminate. Would it be easier for you to do the same?

I have my offers pre filled with $10 option for 60 days. Never have a problem with it because I'll either buy it or assign before.

  •  Option to Terminate: What does it effectively do? What does is cause to or prevent from occurring?
  • $10.00 Option for 60 days: What amount of equity interest does this afford you?
  • Should you assign prior to term date: You reap profits; Price of Assigned Option - $10.00 = Net Profit. Correct? And if correct;
  • And if this is correct; Does the seller share in those profits? If so, how?

Randal, Thank You for your time my friend.

Brian.

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