All Topics / Help Needed! / Buying a House using an Option

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  • Profile photo of neilharrison_253neilharrison_253
    Participant
    @neilharrison_253
    Join Date: 2013
    Post Count: 33
    April 15, 2014 - 9:32 pm

    Hi, I have recently come across a house we would quite like as our PPOR. I am around 6 months away from having sufficient cash to cover 5% deposit, Stamp Duty and LMI. The property is currently tenanted and I am aware that the seller is not in need of cash right now. If I were to suggest the use of an Option to purchase how would this work. My understanding is it needs to be written up by a Solicitor who is aware of these types of arrangements. It needs to protect both parties as I have no desire to move in and rent it for 6 months and then have the rug pulled out from under me. I have heard that there should be a small deposit paid that will be non refundable should i choose to not proceed with the sale at the end of the 6 months. I would like to agree on a price now as the market looks to be moving but suspect the seller will want over the odds on there current price so as to hedge there bets on growth over the next 6 months. What else am i missing. Anyone done this before and how well did it work. What costs am i looking at with regards to getting this all setup?

     

    Thanks in Advance

    Neil

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    April 21, 2014 - 2:17 pm

    Hi Neil

     

    I am a solicitor and have done options myself before. It sounds easy, but it is very difficult to get someone to agree to enter an option agreement in general and even harder to get them to accept your terms.

     

    For an option agreement and legal advice you would be looking at around $2k. A contract of sale needs to be prepared and various searches done so it is not a simple process. The optionor wouldprobably need their own legal advice too

     

     

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    April 21, 2014 - 3:13 pm

    As Terry said.

    One of the beauties in Qld is there is no Stamp Duty payable on the Call Contract.

    If I was a seller I would be wanting a deposit to cover me if you decide not to take up the Option. I would also be expecting you to cover my legal fees as well.

    We have done many an Option Contract in Qld but these tend to be on the bigger development sites where the Seller is expecting to wait 6-12 months to maximise his sale price not your average home and average sale price.

    Cheers

     

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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