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Purchase Option

Posted by StrongWind (My Page) on
Wed, Aug 21, 13 at 16:20

I have a local RE agent, who showed me a purchase option and wants me to sign. He claims he has a company, that buys up houses in my area, for over market value. He sent me a purchase option and states, "I am not allowed to send your homes information off without the signed contract. It is standard procedure." He claims I can cross out the part of the contract, that gives exclusivity to the, 'company,' so I can take other offers.
The house is listed on the MLS, so anyone who knows how to use the internet, can get the house information.
What is this guy trying to pull with me?


Follow-Up Postings:

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RE: Purchase Option

I'd hand it back, unsigned, and tell him to get back to me when he has a firm offer at or above the sales price.

I don't see what the option does for you.


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RE: Purchase Option

Agreed. It isn't anything until it is a contract coming to you.


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RE: Purchase Option

Don't sign it, list on the MLS with a good agent, then this great buyer can offer over list.


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RE: Purchase Option

My broker has specifically banned us from having anything to do with these types of sales, so you won't see any of us bringing buyers.


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RE: Purchase Option

Couple of points; The house IS on the MLS. c9pilot-I'm not sure what you are talking about. A realtor brought this to me...not the other way around.
I did tell him I wasn't going to sign anything, besides a REAL offer and/or a contract.
I'm wondering what kind of scheme this agent is trying to pull. What is the benefit, to him, of me signing this purchase option, besides his bigger commission?
How does this essentially, 'screw,' me?


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RE: Purchase Option

It is hard to say what he is trying to pull without reading the entire contract. Do you have a copy of the contract?


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RE: Purchase Option

I will tell you the terms.
The following terms are applicable to this agreement:
A. The Optionor agrees to grant an option to purchase to the Optionee or assigns, the land and improvements known as:_____
B. Upon agreement the option would begin on the date of:____ and ends forty five (45) days from this date herewith. Option is renewable by Optionee, or assigns for two (2) additional likewise periods for identical terms.
C. Optionor grants Optionee, or assigns access to the above property for showing to prospective buyers, contractors, appraisers, or assigns.
D. Optionor must maintain proper insurance on the before-mentioned property.
E. Optionor grants this option for the consideration of One dollar (1.00) and other valuable consideration.

He also sent me a non-disclosure and non-compete, affiliate agreement, between him and, 'the company.' I'm not sure if he meant to send this to me, or not. I'm guessing he is new at this, (the date on the letter is 8/13/13.) Yet, he wants me to sign that as well, even though, I shouldn't be party to that.
I'm staying far away from this joker. I just want to know what angle he is working.


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RE: Purchase Option

OK.

He wants you to take it OFF the market for 45 days (plus the 2 renewal periods) to give him time to round up a buyer.

During that option period, you can't sell it to anyone else. You could show it, but until the whole 135 days is past, he has exclusive buyers rights.

You would have $1 ... and 4.5 months of inactivity.

Tell him it's on MLS and he can find you any time he has a real offer to make.


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RE: Purchase Option

I looked over the contract carefully and saw he wanted to tie up the house. I told him I would not sign anything, but to bring me a signed, strong offer and at that point, we can talk semantics.
Seems this guy is trying to prey on those, who don't read, what they sign. I feel this is very unethical. Are RE agents/realtors, really that hard up these days, that they will stoop to this level?


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RE: Purchase Option

No.

This person is not representative of *any* real estate agent I ever have heard of.

Bear in mind that I say what I say based on the assumption that I understand what's going on.

It sounds like he's an investor who is using his (maybe soon to be lost) real estate license to prevent his 'clients' from selling their homes to anyone other than himself, & to thereby coerce people into selling their homes to him at vastly reduced prices.

Since licensees are obligated to represent their clients' best interests before their own, this a person who does these things is heading for a train wreck.

Such a person could lose his license & face financial penalties & maybe prison if he's convicted of fraud.

which won't help you if he's gotten your house away from you.

& if any agent had a client who would pay 'above market value' (why would anybody do that?), the agent would sell a real whole bunch of houses really really fast...

but then he'd still have the problems listed above, assuming that he represented himself as a buyer's agent to those buyers & assuming that he really got those buyers to pay more than the house was worth.

"bring me a signed, strong offer and at that point, we can talk semantics."

I'd be surprised if he ever brought you a contract;
if he had a buyer, he'd have done that already.

If I were in your boots, again assuming that I understand what's going on, I'd terminate whatever agreement I had with this guy immediately.

I wish you the best.


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just remembered something else

I think but am not sure that this has been made illegal, but it's hurt a lot of people already.

A while back, there was a spate of people offering to 'buy' houses for a little bit of money up front, so the seller would have enough money to move, & take over the payments.

They told sellers that they specialized in helping people with credit problems get into houses & re-build their credit.

The story was that they'd rent-to-own to these people, & after a year or 2 years of on-time payments, they'd get financing for the new buyers.

The sellers would go to closing & sign papers & move, not realizing that they were still liable to their mortgage company.

Then the 'buyer' would get a chunk of money from someone who couldn't get a mortgage loan.

Typically, all would be well until & unless the new 'buyer' got behind on payments, in which case the original owner would get a surprise when his lender sent him a letter saying pay up or we foreclose.

I say 'typically' because some of these buyers got a chunk of money from a new buyer & collected payments & never paid a dime to the mortgage company.

edited to add:

just remembered smething else, a true story that happened to some buyers I helped a number of years ago, call them the Clancys.

They put a FSBO sign in their yard & were approached by a guy who offered to buy their house for $15,000 + take over payments.

He said he helped people get into houses, etc, & he had a couple who were eager to move into their house.

Only thing was, he wouldn't have the $15,000 until the
young couple had re-built their credit & closed, so he would take over the Clancys' payments & give them a 2nd lien note to be paid off in a lump sum in 15 months.

They didn't get a dime at closing.

Or at any time afterward, either, because in 15 months, their buyer's phone had been disconnected & his company was no longer in existence.

I checked the tax records, & he had sold their house on the same day he had bought it.

This post was edited by sylviatexas on Thu, Aug 22, 13 at 16:46


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RE: Purchase Option

StrongWind-
I'm sorry not to clarify, but we are not allowed to have anything to do with this on either side of the contract - buyer or seller or re-seller or whatever scenario involves these kinds of deals. I wouldn't bring a buyer to the guy who would at that point basically own your listing.


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RE: Purchase Option

Thanks so much for your stories and advice.
This guy is a newish, young, RE agent. He works for Exit Realty and he seems to only have his license for about a year. (The non-compete he signed with that, 'company,' was only 10 days ago.) He has this affiliate agreement with someone I was able to look up. This, 'company,' is one of those, 'Pay me lots of money, so I can make you rich,' type of wannabe gurus.
People are disgusting. They want to rip people off, thousands of dollars...and they can sleep like a baby at night?!
If this scheme isn't illegal, it should be.
Who can I contact, (I have the evidence) to stop this guy from preying on people?


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RE: Purchase Option

Report to your state's DRE and to the local Board of Realtors, altho it's obvious that this guy isn't a member.


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