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I have a buyer that has agreed to a HBS but I am unclear on the paperwork.
My attorney is wanting to review the docs and I don’t have them. I am not going to do a double close on this one as the spread is not that big. I think my option price is going to be $370k and it is a $420k retail and closing costs are so high here that a double close doesn’t make sense.
As I understand it-
I will do an Option for $370k.
Run the HBS.
Once the Highest Bidder is identified, my Seller will contract directly with new buyer.My attorney thinks I am opening myself up to getting screwed by seller and suggested I do it as a listing. I am a licensed broker here, but I don’t want to put on the MLS (and the seller doesn’t want it on the MLS.) And I am prohibited from doing a “Net Listing” anyway.
What is the mechanism for protecting my interests and also getting paid? Options, contracts, etc. without an attorney here is frowned upon.
What am I missing here?
Anyone with knowledge about the paperwork have any input?
Thanks for your help!
Rene
Rene,
I believe the best way to do it get an option from the home seller. Do it in a business name or your name and disclose you are a broker but are doing this for your personal business. Spell out in your option what your strike price price is. There is not much spread there your selling for almost of 90% of fair market value. Are you in a supper hot go go market where everything is selling fast and for full retail?
Don WedeThe Seller signs a form called “Memorandum for Option to Purchase Real Estate Contract” that you will file with the county. This form secures exclusive buying rights for the option period. This will have to be taken care off or the title will not transfer at the time of sale IF the Seller decides to go behind you.
Also you are going to get an EXCLUSIVE option contract on the property. Your ption can be for any number of days depending on the type of market you are in. During that time, no one else can buy the property.
After the HBS, with a confirmed Buyer, you will either transfer your rights to the option with a fee attached, or write a new state stipulated contract between the Buyer and the Seller, along with a signed cancellation of option comtract with the fee clearly written. All these documents will be given to the title company/closing agents. Your fees will be reflected on the HUD statement.
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