1,311,397
An option contract is an agreement to buy a property under certain circumstances, such as at a future date, at a stated price. There is usually a non-refundable payment required to be paid to the seller to gain the seller's agreement. If the maker of the option does not exercise the option under the contract the up-front money is lost.
A rent-to-own situation involves an option.
I have never done one.
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Doug Dawes
Topsfield, MA
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Dan & Laurie Pittsenba...
Bellingham, WA
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Lynnea Miller
Bend, OR
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Roy Kelley
Gaithersburg, MD
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Nina Hollander, Broker
Charlotte, NC
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Michael Jacobs
Pasadena, CA
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Ron and Alexandra Seigel
Carpinteria, CA
1,197,152
Not at all common in today’s market.
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
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Roy Kelley
Gaithersburg, MD
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Lynnea Miller
Bend, OR
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Nina Hollander, Broker
Charlotte, NC
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Michael Jacobs
Pasadena, CA
5,583,278
I'm old school and the clean deal is my favorite...since I was usually a listing agent, my thoughts to the seller meant something....and I never wanted to roll the dice, so options were never exercised with my listings....clean deal with typical conditions....
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
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Roy Kelley
Gaithersburg, MD
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Lynnea Miller
Bend, OR
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Nina Hollander, Broker
Charlotte, NC
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Michael Jacobs
Pasadena, CA
5,104,931
I have never done an option contract in 25 years. In my opinion they are worth maybe the paper they are printed on.
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Richard Weeks
Dallas, TX
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Doug Dawes
Topsfield, MA
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Roy Kelley
Gaithersburg, MD
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Teri Pacitto
Westlake Village, CA
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Lynnea Miller
Bend, OR
5,216,409
One buys an option, for upfront non-refundable consideration, to have an opportunity to decide later if he would like to proceed at a designated time or under designated conditions.
Not for the faint of heart and not advisable for a seller even in commercial where it is much more common.
Not for typical residential. A wise residential agent would always advise a seller against it.
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
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Lynnea Miller
Bend, OR
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Nina Hollander, Broker
Charlotte, NC
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Jeff Pearl
Lovettsville, VA
711,852
Have reviewed several for residential purchases, and in all except one, which was between family members, the option has never been exercised. For those buyers looking for a rental in a growing market, these are great as they lock in the potential purchase price and can exercise this at a certain time. However, this is not a good choice for a seller. I saw more of these written in a declining market where the seller was desperate for income from the property. Again, the option never exercised. The other question is how do we get paid as real estate agents working to get these in contract? I have always suggested a large down payment nonrefundable released to the seller and applied to the purchase price/rent out of which 1/2 commission is paid with the balance paid at the actual closing. Never got further than the discussion except the one time between family members.
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
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Roy Kelley
Gaithersburg, MD
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Dan & Laurie Pittsenba...
Bellingham, WA
1,052,211
You have a property. I would like to buy your property. You're not interested in selling it right now. I'm giving you money. In exchange for that money, you agree that when and if you wish to sell your property I'm going to get the first shot at buying it. Meanwhile until we have negotiated a deal on your property, no one else can come in and buy it. That's what the option money is for.
Here's another scenario. I'm going to lease your property. I would like to tie up your property in the event that during the term of the lease I wish to purchase it. I may or may not give you money for that right now. But I'm going to include a clause in the lease that I have the option to purchase the property during the term of my lease should you decide to sell it.
Involvement? Several. I have one coming up this week in fact.
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Richard Weeks
Dallas, TX
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Doug Dawes
Topsfield, MA
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Andrew Cooper
Saratoga Springs, UT
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Lynnea Miller
Bend, OR
7,836,139
Options are common land deals where zoning needs to be changed.
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Doug Dawes
Topsfield, MA
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Candice A. Donofrio
Fort Mohave, AZ
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Debe Maxwell, CRS
Charlotte, NC
5,230,102
I've done many of these for developers purchasing land - they provide consideration for each step of the Due Diligence process until the Contract is ultimately ratified (or terminated if they're not satisfied with their discovery).
Our NC Offer to Purchase & Contract includes what is called a Due Diligence fee which, in essence, is an Option Contract for residential resale property sale.
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Anthony Acosta - ALLAT...
Atlanta, GA
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Richard Weeks
Dallas, TX
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Doug Dawes
Topsfield, MA
2,781,173
You get to tie up a piece of property for an amount of money and length of time in exchange for them not acting on it with anyone else. Example: I agree to pay you 100 to hold a property for 10 days at which time I will purchase or forfeit...Ask a Real Estate office to give you a copy of an option agreement
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
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Lynnea Miller
Bend, OR
1,196,798
Have never done one myself. You have been given the answer you are looking for
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Anthony Acosta - ALLAT...
Atlanta, GA
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Richard Weeks
Dallas, TX
1,502,998
They are very rarely used. I've never seen one.
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
469,510
I have done about 15 of them over the years. Other's have answered what an option is. There are many many uses for options. In a strong seller's market (like the past 3 or 4 years) it can get very expensive to make an option look appealing to a seller and option money is non-refundable.
The only scenario that I like options is tied with a lease and purchase and sale agreement (3 separate but tied together agreements) and the lease is to include the ability to sub lease. This set up can work make one a lot of money under the correct market conditions.
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Doug Dawes
Topsfield, MA
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Debe Maxwell, CRS
Charlotte, NC
5,772,575
You have a great answer from John Juarez
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Doug Dawes
Topsfield, MA
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Nina Hollander, Broker
Charlotte, NC
2,220,654
556,536
An option is not a contract. A contract obligates both parties to perform. An option only obligates one party to perform.
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Doug Dawes
Topsfield, MA
4,434,127
6,393,494
I have seen them, a few turn in regular offers that are set up this way with too many contingencies.
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Doug Dawes
Topsfield, MA
1,239,901
In CA that rarely happens. I have seen it once prepared by a lawyer wanting to offer blah blah money after buyer find a developer. It stipulates an income of $10K for 4 years with 32 conditions. The owner wants X millon dollars for cash no if or buts.
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Doug Dawes
Topsfield, MA
1,712,676
5,868,554
536,943
I see you have some good answers here. Just wanted to say Welcome to the world of Real Estate.
3,345,091
That would be a great question to ask your real estate school instructor. Why they send students here to ask these questions is beyond belief! You deserve a refund.
3,416,038
Most often a buyer ca have the first option to purchase a home contingent on them selling theirs. However sellers normally will only take this in a declining market where buyers are scarce.
4,882,355
It depends on what type option you are talkig about.
I have the option to purchase if I can get financing
I have the option to purhase if I am able to sell my house
I have the option to purhase if I am satisfied with the inspection report
I have the option to lease the house and at the end of the lease purhase the house.
etc etc etc etc etc
4,800,082