Singlewide MH Option Contract

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  • I have the opportunity to purchase another mobile home and wondered what benefits of doing an option would be for this deal. Should I just pay cash or is there an advantage to doing an option? I think the seller will go for it with a $50 option consideration fee from me.
    Here is the wording on my option:

    For good and valuable consideration described below, the Buyer/Optionee has the option to purchase the property known as (address), for the price of ($) from Seller/Optionor as of the date of this agreement, with the following terms and conditions:
    1. The purchase price of ($) is as of the date of this agreement.
    2. The $50 option consideration receipt which is acknowledged by the signing of this agreement is non-refundable and will apply to the purchase price if and when this option is exercised.
    3. The term of this agreement is 30 (thirty) days. The Buyer/Optionee has the right to exercise this option any time on or before (date).
    4. In the event that the Buyer/Optionee wishes to exercise this option, they must bring the full amount of the purchase price funds ($) minus the down payment of ($50) for a remaining balance payment of ($).
    5. In the event that the Buyer/Optionee wishes to exercise this option, they will also provide a purchase contract for both Buyer and Seller to sign, at least 2 (two) days before the Buyer exercises this option. Said purchase contract should be delivered to above property address.
    6. This option agreement is assignable, transferable and/or saleable by the Buyer/Optionee.
    Notarized signatures and dates

    The mobile home is a 1974, 12×64, 2 bedroom, 1.3/5 bath singlewide in good shape. I will need to put in a central AC and fix the existing heater. Interior paint, new flooring and a repaired tub surround are all that are needed (it doesn’t need subflooring, just regular flooring). I happen to have enough flooring from another project to do this floor so all in all I think I will need about $3000 to put it in selling condition. I believe I can seller finance it for $10-12,000 and $1000 down so I’m considering offering the seller $4000 (she is asking for $6,000). With my seller finance price plus the interest I will earn over time, it pencils out. I could also seller finance it “As-is” for about $8,000 because it is pretty much move in ready but it has window ac units in the 2 bedrooms and they block access to emergency exits in case of a fire so I don’t feel comfortable selling it that way. My most expensive cost will be the new AC unit.

    How would you all purchase and then re-sell this deal?

    HI Elizabeth

    there are a lot of different ways to structure an option contract. There is no one right answer to do it this way or that way. With options, it is basically what ever you and the seller can agree to.

    But, when I do options or any other transaction, I want to include all the terms, conditions, and purchase language in the first document. That way there is no chance of a squabble later on or a chance the seller backs out when you present a new set of documents for them to sign. No new negotiations can open up if everything is included in the original agreement.

    In your proposed agreement, you state that if you decide to buy, you will prepare a purchase contract possibly 30 days later. I think that is a mistake. it is better to have the complete purchase contract included in the original option. And just include your “wiggle” language that you you need 30 days to do your due diligence. Include in the agreement that if you decide not to buy, you will notify the seller within 30 days by certified mail and with a phone call or email.

    It is better if the original agreement you enter in to has all the language necessary to close the deal.

    Oh I see. That makes sense thanks!

    Also give yourself the option to extend if need. Example $100 to extend an additional 30 days

    Hi, Jackie. I am only now exploring my membership in CFD. The above concerning mobile homes reminds me of a question I have about them and the use of options. So here goes. In a typical real estate deal, if one obtained an option on a parcel, he /she would go to the county courthouse and have it recorded. However, if one optioned a mobile home, how would the option on it be recorded, since it’s viewed as personal property? What county office would handle this type of situation? Thanks. JN

    Hi John

    Unless you have a really long term option or there is a huge profit margin, there is really no need to record your option.

    Jackie, This complete rookie thanks you very much. One other thing…Just for the sake of future reference, where might one obtain a “Form For Calculating Income And Expense” for any potential multi-fam situations? Thanks. JN

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