[Larry Niskey]

Larry Niskey

Hi,

How do you approach sellers for option deals?

I was thinking something like: “if we can agree on the price, would you give me the right to buy your property within the next 30 days”.

Also, I was thinking of doing a non-exclusive option so it would not tie up the seller’s property and he would be more inclined to agree to the option.

I need cash now and plan to do some option deals and turn them over to cash or terms buyers.

Any thoughts?

Thanks
Nick

[DON WEDE]

DON WEDE

Nick,
Jackie is much more etiquette in answering these type of questions, but I will give it a go. First off you need to have your cash buyers ready to pull the trigger on a deal if you are projecting a quick cash out option. Do not do a non exclusive option. You want to project that you can get the job done. Also you do not want to put time, effort, and maybe some money into a deal and have it go South at the last minute.

Maybe a better approach would be saying that either you or one in your investment group will be closing on the property.

Have you considered doing HBS as apposed to wholesale flips?

Don Wede

[Larry Niskey]

Larry Niskey

Hi Don,

Thanks for your response. I was reading the ebook “Flip Deals” and my goal is to use the strategies to get an option on an “ugly” house for a cash investor buyer or “pretty” house for a retail buyer that may get a loan or use the seller’s existing financing.

I guess I was not clear on how to approach the seller and what to say to the seller to get an option for an “ugly” house or for a “pretty” house.

So you suggest not using a non-exclusive option, right? My thinking was since I’m new to this, that using a non-exclusive option, if the deal some how did not go through, the seller would not be upset with time lost while his property was off the market.

So you suggest using the HBS instead of just assigning the deal may be better? I guess with the HBS one would not really need a buyer’s list since the HBS marketing should pull in the buyers, right?

Thanks
Nick

[DON WEDE]

DON WEDE

Nick,
Like I said before I do not believe in the non-exclusive option for the reasons I mentioned. A HBS is a way to generate in most cases more cash than whole sale flips. Also if you do not have a deep investors list this gets around this problem. In fact you will more than likely develop a wholesale list of buyers from attendees at your HBS
Don Wede

[Jackie Lange]

Jackie Lange

HI Nick

It is better not to go chasing Option deals. Instead, chase motivated sellers.

Some of the motivated sellers will say yes to your offer to buy their house with seller financing, or master lease, or subject to, or low cash offer, or anyway YOU can acquire the house. These are Plan A offers.

But when those solutions do not work with the seller, that is when you pull the PLAN B out of your bag of real estate techniques.

If Plan A does not work, they I tell the seller that, “the numbers just don’t work for me to buy your house BUT I have another solution. That is when you would explain how

1 ( for a wholesale flip deal) you work with a group of investors who may be interested in the property. If you can get a contract to buy the house for a reasonable price, with 7 days for your investor group to inspect the property, you will be able to determine if they will buy. If they don’t approve the purchase within 7 days, then you will tear up the contract. There is no obligation, no real estate commission, and the buyer will pay the closing costs.

(notice you use the word contract .. not option.. because sellers understand contract, but they don’t have a clue what an option is. YOu need to use easy to understand language that sellers understand)

2 (for a Highest Bidder Sale) – you tell the seller that the numbers just don’t work for you to buy the house but you have another solution which has been proven to get houses sold within 7 days. Explain the way a Highest Bidder Sale works. Tell them that you need to get a contract to buy the property before you can do a Highest Bidder Sale. Tell the seller that you will do 7 days of aggressive marketing, then hold a 2 day open house. After the open house the house will be sold to the highest bidder. If for some reason the house is not sold for a high enough price, the seller will be under no obligation to sell. No risks. The buyer pays closing costs but the seller will need to pay for a house inspection.

With a Highest Bidder Sale, it depends on the condition of the property will determine how low the contract price needs to be.

You always want to CONTROL the property exclusively with a contract to purchase — that also has a contingency clause.. That is the only way your profit is protected. You would never want to do a non-exclusive contract.

[Larry Niskey]

Larry Niskey

Thanks to all for your help and guidance!