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He's not ready to sell, and you aren't ready to buy it sounds like.
Either make him an offer without an appraisal, and let him take it or leave it, or he needs to either get an appraisal or several market analysis done by several agents so he can set a price he feels comfortable with, or he needs to list it, and get offers and pick one.
Trying to get him to accept a contract when he isnt ready is unlikely to be successful. And right now, most homes are selling over appraised value.
I am ready to buy. He is not ready to accept any offers until the appraisal is complete.
This might be exactly what I am looking for Are there generic contracts for this out there or is this just a clause? I am going to research this more.
So, what would one be willing to pay for such an opportunity?
5% of proposed contract price? 10%. Non-refundable, of course. It is a purchase, not a deposit.
Otherwise, in a roaring market, what benefit would the seller gain? Why would he complicate things when another buyer might walk away rather than play?
I think an option for right of refusal may be a deterrent to many buyers, particularly if they have been frustrated in other attempts to purchase.
This is my concern because in this market, who knows what it will appraise. I don't have unlimited funds either...lol. This is going to be owner financing. I am trying to think of a way to word it so I wouldn't be stuck if it came in too high. You have to get creative in this market. I wonder if I can say price to be determined once appraisal is completed. I was also going to say that this offer is contingent on a satisfactory appraisal and agreement on sale price by the Seller and the Buyer. Essentially, I am just trying to write up a contract to get first negotiations.
I'd like to make several points here:
You seem to be contradicting yourself. In your first post, you said, "I am already aware of what the property value is and it would be a cash transaction." Yet, in this post (above), you're saying that it is "owner financing". Do you mean "seller financing" or are you planning to get a loan? I thought you said it was a "cash transaction".
Never use the word "satisfactory" in a contract unless you spell out clearly WHOM is going to determine whether something is "satisfactory" or not. And, depending on the issue, you might need to clarify what the criteria will be for determining "satisfactory". "Satisfactory" is one of those vague words that can cause all kinds of problems unless it is specified who determines it. Something may be very satisfactory to the buyer, but not to the seller, or vice versa.
As to your desire for "first negotiations", that's going to be difficult to demand unless you're willing to enter into an "option contract" with the seller and put up some money that you could possibly lose. I doubt that's what you want to do and also doubt that the seller would do it. I think your best bet is to simply tell the seller you are interested and ask politely if he would contact you first when he knows what he wants for the property. If the appraisal has already been ordered, it shouldn't be too long before the seller finds out what it is, and then the negotiations could begin. I just don't think there's any reasonable way to FORCE the seller to give you first refusal or first negotiation rights. Heck, the seller might not want to "negotiate" at all. He might say "This is my price. Take it or leave it." And in this market, I can't blame him.
I am already aware of what the property value is and it would be a cash transaction. Could the appraisal be used for leverage or could it end up coming in high and possibly kill the deal? The seller is suggesting it.
Quote:
Originally Posted by beckycat
This is my concern because in this market, who knows what it will appraise. I don't have unlimited funds either...lol. This is going to be owner financing. I am trying to think of a way to word it so I wouldn't be stuck if it came in too high. You have to get creative in this market. I wonder if I can say price to be determined once appraisal is completed. I was also going to say that this offer is contingent on a satisfactory appraisal and agreement on sale price by the Seller and the Buyer. Essentially, I am just trying to write up a contract to get first negotiations.
Yes, which is it?
Quote:
Originally Posted by Okey Dokie
An option to buy with right of first refusal?
An Option to Buy and a Right-of-First-Refusal are typically separate instruments. They could conceivably be merged, but it is unlikely that this Seller would be open to either one, let alone some type of combination. It doesn't sound like the Seller is open to complicating his potential sale. Why should he?
With an Option to Buy, a non-refundable amount is paid for the right to buy the property at a specified price within a certain time frame. I have done several 6-month Options and have typically paid $10,000 for each Option. I have structured my Option contracts so that the amount paid is applied to the purchase price if the Option is exercised, but that is not the case with all Option payments. If the Seller won't agree to a sales price now, I wouldn't expect him to agree to a price set in an Option contract.
With a Right-of-First-Refusal, a non-refundable payment is made which gives the purchaser of that right the opportunity to match any bona fide offer made by another party that the Seller agrees to accept. This is another complication but it may be less objectionable to a Seller since it acts as a back-up offer and may help to bump up the price initially offered, since they would likely inform a potential purchaser of the outstanding right. Besides this potential for price escalation, another downside to a purchaser is that you may never be able to fully trust that an offer made is entirely legitimate. Still, there are limited instances in which a Right-of-First-Refusal is an appropriate strategy.
Based upon the information provided in this case, however, I really doubt that the Seller would agree to either an Option or a Right-of-First-Refusal. Understandably, your desires are really not in the Seller's best interest.
Last edited by jackmichigan; 06-03-2021 at 10:09 AM..
You seem to be contradicting yourself. In your first post, you said, "I am already aware of what the property value is and it would be a cash transaction." Yet, in this post (above), you're saying that it is "owner financing". Do you mean "seller financing" or are you planning to get a loan? I thought you said it was a "cash transaction".
Never use the word "satisfactory" in a contract unless you spell out clearly WHOM is going to determine whether something is "satisfactory" or not. And, depending on the issue, you might need to clarify what the criteria will be for determining "satisfactory". "Satisfactory" is one of those vague words that can cause all kinds of problems unless it is specified who determines it. Something may be very satisfactory to the buyer, but not to the seller, or vice versa.
As to your desire for "first negotiations", that's going to be difficult to demand unless you're willing to enter into an "option contract" with the seller and put up some money that you could possibly lose. I doubt that's what you want to do and also doubt that the seller would do it. I think your best bet is to simply tell the seller you are interested and ask politely if he would contact you first when he knows what he wants for the property. If the appraisal has already been ordered, it shouldn't be too long before the seller finds out what it is, and then the negotiations could begin. I just don't think there's any reasonable way to FORCE the seller to give you first refusal or first negotiation rights. Heck, the seller might not want to "negotiate" at all. He might say "This is my price. Take it or leave it." And in this market, I can't blame him.
Sorry about the confusion. It was originally cash or owner financing. He prefers owner financing due to tax implications. It works out better for both of us. The contract would state satisfactory to the Seller and the Buyer. I can ask him to contact me first but I feel that still leaves the pool open to multiple buyers. I suppose, if he's not happy with the offer even if we are in a contract that is contingent, he could just move on. I was hoping this would make the sale pending and he wouldn't be entertaining other offers.
This is the deal that he has informed me after he thought about it. He is going to get the appraisal and then let everyone know the results. He's then going to let everyone put in an offer. Then he will let everyone know the highest bid and see if anyone wants to beat it. He also said it's not just the offer, it's also going to be the terms and financing that he takes into consideration. Hopefully, a biding war isn't in the future.
...lol. He has clearly stated that he does not want an agent in this market. He just wants an appraisal.
Big mistake. As mentioned above, appraisals can vary hugely by the person doing it.
It's just an opinion and nothing more. The market sets the price.
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Are there generic contracts for this out there or is this just a clause? I am going to research this more.
I don't have unlimited funds either...lol. This is going to be owner financing. I am trying to think of a way to word it so I wouldn't be stuck if it came in too high. You have to get creative in this market. I wonder if I can say price to be determined once appraisal is completed. I was also going to say that this offer is contingent on a satisfactory appraisal and agreement on sale price by the Seller and the Buyer. Essentially, I am just trying to write up a contract to get first negotiations.
...lol. He has clearly stated that he does not want an agent in this market. He just wants an appraisal.
