When a property is purchased on a lease option with the intention of also selling on a lease option often the vendor will not want to stop marketing the property through the agent until you have a qualified buyer ready to go.
With this being the case how does one obtain an above market sale price when the LO buyer is in full knowledge of what the property is being marketed for by the agent ?
Henry
Hi Henry,
Good Question…..Hope this answers it for you and puts the lights on.
You have to understand the type of market you are attempting to market a lease option to. These people fall into one of these catagories.
1. No Deposit or not enough.
2. Deposit but damaged credit (So lenders will not touch them)
3. People desperate to get into the housing market but currently locked out.Tell em the property has a slight mark up on it (due to you taking the extra risk).
You will find that if you give them full disclosure on what and how you make your money and justify them with the risks you are taking fackoring also that they have limited choices anyway…..
If they are serious they will see that they have no other choice.
I often compare it to the 24 hour convenience store.
“It is the same milk as every where else…. BUT because it is open 24 hours a day the price is higher”… “It is the same house but because we are looking for people with less choices than people with bank funding we have an alternative at a price”Cheers
Kiwi[baaa]Wow, what an excellent analogy !!
If the buyer bauks at the price I can say… “have you ever been to 7-11…”Thank you as this answers my question and a number of others at the same time.
Do you formulate your figures on a price mark up and charge a premium to std interest rates or merely a price mark up funded at the equivelant of bank rates ?
How bg a mark up does the market accept ?
Set percent ?
Set dollar figure ?I am looking at properties around the 350-400k mark.
Thanks
Henry
Originally posted by McHenry:Do you formulate your figures on a price mark up and charge a premium to std interest rates or merely a price mark up funded at the equivelant of bank rates ?
How big a mark up does the market accept ?
Set percent ?
Set dollar figure ?I am looking at properties around the 350-400k mark.
Thanks
Henry
Hey Henry….
To anwer your fantastic questions….
– Firstly … there are no set rules.
The main factor is the strength of the market at the time….
If youa re getting 50 phone calls of interest a day then you can set up a dutch auction and see who will pay the most vavourable for the property.
– Since you are using such a flexible tool … you can taylor the solution to meet the requirements of the Leasee…. your tools of this mix arePURCHASE PRICE,
TERM LENGTH,
OPTION FEE,
WEEKLY PURCHASE PRICE CONTRIBUTION AMOUNTPerhaps run some advertising with different prices or rent amounts and see which you get the strongest response from.
Cheers,
Kiwi[baaa]Henry,
just off the topic for a minute, make sure your contract with the buyer allows you to pull out incase the vendor sells the property on the open market after you have a tenant/buyer signed up.You don’t want the buyer to sue you because you can no longer deliver the property.
We buy properties in Adelaide. No Agent Fees.
[email protected]
phone 0412 437 582How could the vendor sell the property from under my if my interests are protected by a caveat ?
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