Options Versus Purchase Agreements For Wholesalers
If you are trying to wholesale real estate, you will almost always want to have a written agreement with the seller describing the price, terms and time frame that you will be purchasing the house in. Or, in the case of wholesaling, the time that you will have to find someone to assign your contract to who will ultimately buy the house.
Some real estate investors prefer to use options, while some prefer to use purchase agreements.
An option agreement gives you the right, but not the obligation, to purchase a house for a certain price and within a certain period of time.
A purchase agreement implies that you have the obligation to purchase a house for a stated price within a specified time frame provided that certain things happen (you are able to get a loan, the house passes inspection, et cetera).
Some investors prefer to use an option because it makes it very clear to the seller that they are not obligated to buy the property, but many other investors use a purchase agreement with clearly defined contingencies, which act very much like an option would. For example, the purchase agreement could be contingent upon you finding a buyer who will purchase the property from you within 30 days. If you can’t find your investor buyer to assign the contract to, you are not obligated to purchase the house.
Remember, when writing up agreements of this nature, it is very important that you get competent legal advice from someone who understands your situation and your local laws.
Until my next post,
James
P.S. Take your real estate investing and real estate wholesaling business to the next level with our Real Estate Investor Bronze Membership.
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