Seems like these are pretty solid contracts. I’m knee-deep in the real estate investing game myself. So, it’s nice to see like-minded people sharing useful resources.
Thanks!

This is excellent.

Watched your Option Agreement video. Well done. Just one question. Do you assign the option agreement when wholesaling, or when you have a buyer do you go ahead with the Sales Agreement and assign that?

Hi, Arlen. Great question.

If I’m using an option agreement in a transaction, there’s seldom a reason not to just assign the option contract to the new buyer. Unless for some reason there are some terms in there you’d not be comfortable with someone (your buyer) assuming.

Make sense?

…jp

I have been trying to get started in wholesaling/assigning/flipping properties (whatever you want to call it). It sounds like a great way to get into investing in real estate w/o any cash/credit or job. But a Realtor I’ve spoken to stated that you still must have to come with cash in order to get a house under contract. The lender (bank or mortgage company, etc) wants to see a POF (Proof of Funds) letter. You just can’t tie up a property and put it under contract and assign it over to someone else unless you come with cash at the table. You must obtain funding in order to put a property under contract. Please advise. How do I get started with no job and no money? Thank You

Hi Billy, thanks for posting.

Your Realtor is what we call an “inside the box” thinker. He’s been trained by his broker and a myriad of real estate classes to see things only one way.

For example, whenever I’ve purchased a house from an individual (non-listed) property, as a result of my own direct marketing, I’ve yet to put any earnest money in their hands. Instead we use the contract itself as legal consideration, which is perfectly legal in TN (although most Realtors would tell you otherwise b/c of simple ignorance and assumptions).

It’s true most any Realtor worth his salt will ask for earnest money and a POF, but most is not all. For example, lately there’s been a trend on FDIC listed properties actually requesting verbal offers b/c they’re so desperate to move the dang things.

I’ve yet to find an REO listing that didn’t require those two items, however. So in the REO arena, you’ll just have to find a way to contend with it. You can still “wholesale” but you’ll just have to do a simultaneous closing or come up with transactional funding and do a double closing (which isn’t hard to do these days).

Hope that helps. I can’t write a whole book about it, but know that the limitations your Realtor sees can be overcome with creativity and an open mind. Start networking with the Realtors other investors in your area commonly partner with and maybe they’ll see a little different perspective.

My best,

…jp

Thank you so, so, so much for the free videos and contracts that you have provided on this website…they are SUPER helpful to a lay person like myself trying to get started and sort everything out…may all good things come to you now!

Thank you so so so much for explaining this process and including free forms…your willingness to give knowledge where others are taking without giving is truly amazing…

Great video, and info. Q, is there a way to use an Option on an REO? Thanks.

Hi, JD. I’ve never known of a way to use an option on an REO listing. They don’t want to get strung along. Only a buyer seems to fit in their box.

…jp

JP,

Lookin’ for more info. When you have an option on a property, and want to exercise that option, do you do that by then executing a Sales Agreement?

Great information. I’ve always found that sellers are relieved to see short, plain English forms like your short option. They’re much less intimidating to them, and make you look like the “easy” option.

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great work,, very helpful please continue such good work.

Karl – according to Equity Trust Company you can do the option from a Roth IRA

They have educational materail on how to set it up correct so it past the IRS rules.

JP – Question re: option begin date and end date. How long do you want to tie the property up? And should the begin date be the date that you present the option to the seller? What if he delays signing a day or two or seven. This would then shorten your option time…right?

Hi, KC. Great question.

You can have the option term for whatever time frame makes sense. I’ll often use 30 days if I’m just looking to wholesale and I think I can get it done quickly. I’ve done 60 days. Some folks will do, like, a year. It’s just up to what makes sense to you.

The begin date: I’d make it a specific date, and also give them a deadline by which they need to sign/agree.

Hope that helps!

…jp

JP On Option Contracts. Good videos with some super tips. However, me thinks maybe more important was your suggestion that listeners take a contract law class. I knew of this but just haven’t done it yet. So not I am, thanks to you, determined to give it a go if I can find one available. What’s that they say ” If you think education is expensive then try ignorance”.
I notice in a couple places you use the words “Option fee and then you call them a “down payment”. I’ve read other places where you should NOT call them a down payment. What’s up. Is there a difference? I brought this up here in case there is a difference then others would know of it. When you reply would you also PM me the answer as I do not visit these sites often. Thanks

Hi, Mike. Thanks for the props, and you know I agree – far too many underestimate the value of taking a contracts class.

To answer your question, it’s really just option consideration. If I used the words “down payment” it was just a slip of the tongue. The two should not be confused in my opinion.

My best,

…jp

Great info!! One question… say you found the house and you want to try to find a buyer. How do you know whether you should use a purchase agreement and then assign that or use an option agreement? I had heard before that the option agreement always allowed the seller to “keep looking” for a buyer and be able to sell if they found a buyer first. So I figured the difference would be the purchase agreement “locks” you in and the seller can’t sell it to anyone else and the option agreement gave you the opportunity to find a buyer while allowing the seller to still look too. But you’re saying that the option agreement gives you total rights to the property so what’s the difference – when would you use one versus the other?\

Hi, Jackie.

The option agreement is a unilaterial agreement and a purchase agreement is a bilateral agreement. In other words, in a purchase agreement, both the seller and buyer are on the hook to each other – one to sell and the other to buy. In an option, the seller is on the hook to sell *IF* the buyer does in fact elect to buy. But the “buyer” has the “option” to either move forward or not. Hence the name. You’ll see the terms of the option agreement lay this out pretty clearly.

No, the seller’s not supposed to have the automatic right to look for another buyer — unless you (as the optionee) elect to give him that right.

Personally I use an option with an individual seller (not a bank) when I’m honestly not sure if there’s a viable deal there for me or not. And I usually tell the seller if another buyer presents himself, they can come to me and tell me, and I”ll either close in 10 days based on our original terms, or I”ll release them to go with the new buyer. That helps them feel better about me “tying up” their property (which I’m not really doing after all — but I need the equitable interest in my court so I can legally market the property for resale without a real estate license).

Hope that helps!

…jp

Hey JP, rookie question. Do banks allow you to control a property with an option contract? And do you as the buyer send your option contract to the bank to sign? Thanks.

Hi, Karl. No, I’m afraid they don’t. At least not for now. If things keep getting worse for them, you never know! Word on the street is the FDIC is now accepting verbal offers! Whooda thunk that woulda happened?

…jp

Thanks for the info about Equity Trust Co.

Hey JP, I hope this isn’t a dual posting, rookie questions: Will a bank allow you to use an option contract when purchasing a REO?

Secondly, who provides the contracts, the buyer or the seller?

Great resource of information! Thanks JP. I will check your website regularly!!

JP,I’ve never met ya,but I sure like ya! Thanks so much for the vids,the forms, but most of all for keepin’ it simple! This girl likes it simple ’cause life’s complicated enough. Great site.

They have educational materail on how to set it up correct so it past the IRS rules.

appreciate you sharing the forms with us, they’re very helpful. Thanks for taking the time and effort

JP, I feel so blessed to have stumbled upon your site. Not only is your information so thorough, but you make it simple and easy to understand. PLUS, I can’t believe all the forms you have for free and now I just saw these awesome videos!! Thank you for doing this, I AM HOOKED on your site and all your amazing content!!! LOVE IT!!

Hi JP,
Newbie question: If you find a good deal on a house and want to find a buyer, but the seller says they want to work with an agent (or they already are), can you still do an option agreement or purchase agreement or does the agent have exclusive right to the property? I’m a little confused…

Also, is “real estate option” the same as “option agreement”?

Thanks.

Hi, Joanna. You can use an option agreement on a house listed with an agent. The only problem is that the agent may very well advise them against it.

Most agent’s won’t understand what you’re doing or how it could be in the homeowner’s best interest. And a confused mind almost always says, “No”. Don’t forget the agent has a fiduciary responsibility to protect their buyer, so you can’t really blame them for “playing it safe” in their eyes.

But as far as whether you’re technically allowed to secure a listed property with an option, there’s no problem there.

You also asked, “…or does the agent have exclusive rights to the property” The agent will typically have an exclusive right to list – meaning no other agent can also simultaneously list. But you’re not listing their property as an agent when you secure an option on the thing…you’re a potential owner with an equitable interest. Very different kind of thing, and one does not conflict with the other.

Make sense?

And yes, the real estate option and option agreement are the same.

…jp

http://www.simmonsholdings.org

These option agreements are GREAT! Very “to the point” for the layman seller and investor just stating in wholesale. Thanks guys I have gotten some good info from the great questions here. Good luck to all!

JP, I commend you on a job well done and I found your videos of explaining how to assign contacts and r. e. option contracts very educational and to the point. Thank you!