Thanks for all your well wishes for my surgery. Yesterday was a tough day but today I’m doing much better… despite the black eye.
Doctors do things a little different in Panama. After the surgery the doctor gave me his cell phone number with instructions to call him if I had any problems. He also drove me to my hotel so I would not have to take a taxi. Try getting that kind of service in the US!
Ok… back to Options… and why it is such a powerful technique.
When Jack Miller started his real estate career he was a real estate agent. He’d get a 6-month listing agreement then attempt to find a buyer. If Jack got the listing AND found the buyer, he’d split the 6% commission with his Broker. So, he’s make about $3000 on a $100,000 listing.
If Jack got the listing but another agent found the buyer, the commission was split 4 ways. Jack would get 1 1/2%, his broker would get 1 1/2%, the agent who found the buyer would get 1 1/2%, and the buyer’s agent’s broker would get 1 1/2%. So, for Jack’s hard working in finding the deal, he’s only walk away with $1,500 on that same $100,000 house.
Well, it didn’t take Jack long to figure out he needed find a better way so he could get a bigger piece of the pie. He needed to control both sides of the transaction by both finding the listing and finding the buyer. His profits increased dramatically by doing this. But, as a Broker/Agent, Jack was still limited to that 6% commission.
TAKING IT ONE STEP FURTHER…
Jack, being the sharp guy he was, quickly realized if he stopped being a Broker and real estate agent he could make a lot more money!
You see, a listing agreement is much like an Option. The agent/Broker controls the property for 6-12 months – as long as the listing agreement is for – and when the house sells the listing agent gets paid. But profits are traditionally limited to about 6% .
So, Jack took it one step further.. instead of getting a listing agreement, he would write a contract to buy the house BUT only after he could find a buyer and make a minimum 10% profit margin.
Or he’s write a contract to buy the house subject to the mortgage or with seller financing BUT with an agreement that he would only close after he found a buyer who would pay more.
Sellers love this!
Sellers who signed up with Jack got 100% of the sales price because Jack had to find a buyer who would pay more or Jack would not get paid. The agent’s commission was not deducted from the Seller's proceeds at closing.
Jack was making 10 -20%, sometimes more, on each deal.
Investors were also calling Jack to get his help finding deals. He’s get paid $500 up front to be a “scout” for their properties. Once he found the deal, the investors would pay Jack a flat fee to assign his contract.
Of course, sometimes Jack ran across deals that were so great he kept them and rented them out.
Options made it possible for Jack to retire in 5 years with enough cash and cash flow to support his wonderlust lifestyle.
Plus, while traveling the country in a motorhome, Jack continued to get Options on properties all over the United States
With an Option, you can control properties in any price range. Even multi-million dollar properties, apartment buildings, mobile home parks, run-down wholesale properties and nice houses in nice neighborhoods… can all be Optioned!
I was never a real estate agent but I used Options to control properties too. I started by getting Option contracts on wholesale properties which I'd sell to rehabbers. Then I'd got Options on nice houses, million dollar houses and even mobile homes. I'd sell most properties but I'd cherry pick the best deals to add to my rental portfolio.
WANT TI LEARN MORE?
I added another F.R.E.E Video to help explain this. WATCH THE VIDEO HERE
Hopefully, this helps you understand the power of Options! With an Option, you “control” the property long enough to make a profit BUT you do not need to buy the property. Same profit… less risks!
Best of Success… and Freedom
Jackie
P.S. CashFlowDepot.com members can watch all 6 videos from this Options training. They are in the What's New section after you log in. Learn more about Options in the training modules.
