How much info should I give the investor?

Question

So lets say I work a deal for house worth $100,000 and I negotiated the selling price for $45,000. If I listed the deal in the paper (handyman special / investors delight), and an investor calls me...how much of the information should I give? I dont want to give away too much to where he can go get the house himself, but I dont want to give not enough, to where he says screw off.

Specifically, what should I give him? Equity? City? Buying price? Value? Details of the house?

Specifically, what should I give him?  Equity? City? Buying price? Value? Details of the house?

Anthony Sulecki · Answer

Hes obviously saying my posts were wrong. They arent. You cant assign options, so don't. I did forget to mention that.

Just stick with assigning your contracts, when wholesaling.

John Michailidis. · Answer

I hope that you all seek the advice of an attorney and take everything that you get from these posts with a grain of salt.

There is a ton of great information here, but there are also a very limited number of posts that give blatantly wrong information.

Please be careful -- you can get yourself in a lot of hot water if you listen to the wrong advice.

Anthony Sulecki · Answer

Wrong. Equitable title allows you to buy or sell, just as true title. It holds the same amount of weight, in court. A non-exclusive option gives equitable title, and allows me to do my job while allowing the seller to sell, however they want.

I get underlying control, which is really all I want.

I cant see whats wrong with that, as far as language. It's a fact; I do it often. Its literal.

(P.S. - "Equitable Title" is very real. Just ask any sandwich leaser who has let their lease option tenant pay taxes/insurance on the property, and then have the tenant decide they don't want to pay rent. They've given the tenant "equitable title" and they are treated as owners, so eviction isn't an option, in most cases. My "straight" option, (as I like to call it) allows me the exact same "equitable title".

This is the reason I said assign the contract, in my first post. Options can be very tricky.

John Michailidis. · Answer

Only a deed gives title -- an option does not give title.

I think what's going on here is a semantics issue -- as an attorney I tend to be very precise with my words and don't ascribe meanings to words that they don't actually have -- for example, an option IS binding on the seller during the option period whether the buyer exercises or not, but this is the correct legal terminology and not the way most lay people would describe it.

Unfortunately most non-attorneys do not deal in precise, literal, factual, technically correct and accurate language, which is why so many people get themselves in a bind and end up needing attorneys in the first place.

That said, no need to beat a dead horse or bang heads -- we're both just trying to help someone out.

All the best!

John Michailidis. · Answer

I'd be very careful with respect to this particular advice you are giving:

An option is a legal contract and is as binding as any other.  An option is what is called a "unilateral contract" (a typical real estate contract is what's called a "bilateral contract").

The difference between a "Uni"lateral contract and a "Bi"lateral contract is just as the words imply:

Uni = one = only one party to the contract is obligated.
Bi = two = both parties to the contract are obligated.

A standard real estate contract is a bilateral contract, which obligates both buyer and seller to perform.  An option contract is a unilateral contract in that only the seller is obligated to perform -- the buyer has the "option" to perform, but not the obligation to.

Because the seller is absolutely obligated to perform should the buyer exercise the option, the option must clearly state the terms of the purchase should the buyer exercise the option and the time period during which the option must be exercised (an expiration date).  Also, some valuable consideration is generally required in exchange for the granting of the option.

An option binds the seller during the option period and the property cannot be sold during the option period to anyone other than the optionee (of course, a seller could breach an option contract just like they could breach any other contract, at which point the optionee may have grounds to sue).

DISCLAIMER: I AM LICENSED TO PRACTICE LAW IN THE STATE OF ILLINOIS AND IN NO OTHER STATE.  MY COMMENTS ARE FOR GENERAL INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS OFFERING PROFESSIONAL LEGAL ADVICE.  DISCUSS THIS MATTER WITH YOUR OWN ATTORNEY AND DO NOT CONSIDER THE INFORMATION IN THIS POST AS DEFINITIVE.

Anthony Sulecki · Answer

Its binding, if exercised. If not exercised, you need to simply satisfy "option consideration" which does not necessarily have to come in the form of money. Two stable people can enter into a contract, and have option consideration satisfied, without any monetary exchange.

I understand unilateral and bilateral contracts. My option contracts allow the seller to do as he/she pleases, even with my option on the home. They can even list with a realtor, if they feel thats what they want to do.

I dont exercise the option, ever. The option is moot, as it will never be exercised. It simply gives me title, which gives me permission to control, which gives me permission to sell.......

Brian Christensen · Answer

Sorry, I should've mentioned that this is all hypothetical.  I haven't started any deals or anything yet, I'm still new, obtaining and researching information.

John Michailidis. · Answer

Then the answer is simple.  In a real deal you will lock the property up (get it under contract, or option).  Once locked up, you can feel comfortable with discussing all of the property details.

You really can't do it any other way, because nobody is going to buy a property that they can't look at/get any meaningful information on.

Make sense?

John Michailidis. · Answer

Sounds like you don't have the deal locked up on your end -- why not?

Brian Christensen · Answer

LOL...thank you.  I didnt even think about that.  I forgot that when you negotiate a deal, you lock it up and no one else CAN buy it.

See? This is why Im glad Im asking beforhand, because I would've made some big mistakes.

Thanks again!