Using Option to Wholesale..How does it protect me??

Question

I'm trying to wholesale an out-of-state property and was thinking of tieing it up with a non-exclusive option agreement.

I have a buyer who's looking and who MIGHT be interested in the property. But if I show him the property and he does like it, then how I protected from the buyer just circumventing me and making a direct offer to the seller?

Will Barnard · Answer

Why not get an exclusive option and record it with the county recorders office, this gives you equitable interest in the property. If you already have a potential buyer, your seller should have no problem with a short option period and you are safe.
You can also have your potential buyer sign a Non-Circumvent agreement which states they can not go around you direct to buyer or you can sue them for damages and costs.

Jon Frame · Answer

I believe a Flex- Option is what you are looking for. You would have to negotiate with the seller a price and deposit. Usually a small deposit will secure your interest in the property so the buyer can't circumvent you. You just tell them that you have it tied up under contract and you will assign the contract to them for a fee.

This agreement also let's the seller to continue to market the property and gives you the right of first refusal, which basically means they have to contact you first before they sell it. If you don't have a buyer they can sell it to theirs and you would lose your deposit.

This is great if you are worried about getting a buyer and tying up the property, it gives the seller the best of both worlds.

Hope this helps......

LeJon Ratchford · Answer

Thanks Jeff.
LeJonR

Jeff Warner · Answer

LeJon,

As I understand it, if you record your option with the county recorder like Will recommended you will have equitable interest in the property and they will NOT be able to go around you. This will "cloud" the title and give you a legal interest in the property. In order to remove the option, I believe you would have to file a quit claim.

By all means, someone can correct me if I'm wrong here.

Jeff

LeJon Ratchford · Answer

I am glad I have found this thread. So if I use a flex option contract. I find a buyer, they meet with me and the seller to view the property. The buyer says he is not interested then he contacts the seller direct, and they do a deal. Is this possible. The reason I bring this up is from my understanding you the seller, can continue to market the property while I have it under contract. What if the steal my potential buyer right from under my nose. Is this possible?
LeJonR

Using Option to Wholesale..How does it protect me??

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