Thinking of Selling via an "Option to Purchase"

(April 20, 2016)

Are you actively selling your Tustin house?

Well, you aren't alone. As you know, thousands of people are trying to sell their homes fast and for a for sale signreasonable price. Some sellers don't want to use a real estate agent. There are many reasons why people choose not to use a real estate agent. (You can read my blog post on selling without a real estate agent for more info on that.)

This weekend, I was working with a homeowner who wants to sell his Tustin house.

He hasn't worked with a real estate investor before, so I gave him some insight on that. While we went back and forth on price, repairs, costs associated with escrow, holding a property, etc., he received another offer on his Tustin home. He also shared with me that it was an "Option to Purchase" contract from another investor.

What is an "Option to Purchase" contract?

It is a contract that basically states that the buyer has the "option" to buy his home for a certain price and (usually) within a certain period of time. Usually, the buyer on the contract is NOT the end-buyer, but merely serving as a middle-man. Once an investor has a signed "Option to Purchase" contract, he then goes out and tries to find a buyer. If it doesn't work, then the investor isn't out any money. But what about the homeowner who wanted to sell his Tustin house fast and without a real estate agent?

The Tustin homeowner shared a copy of the "Option to Purchase" contract with me.

He was under the impression that the investor had a buyer already lined up. That may be the case, but I will make a big bet, that there is no end-buyer. To me, this is no different than putting your Tustin house on the MLS with a real estate agent. There is still going to be a period of time when potential buyers will want to see the house. There is still going to be escrow, inspections and a lot of unknowns. Will this homeowner be able to sell his Tustin house fast? I suspect not. I don't see many advantages of using this contract over doing a regular sale.

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Jennifer Shenbaum

Written by Jennifer Shenbaum

Jennifer Shenbaum is a real estate investor based in Southern California. She is a veteran of the housing market crash of 2007. Best of all, she offers free remodeling ideas to all who ask.

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