OK, so I have some delusions of grandeur for my young real estate empire that involves obtaining land for future multifamily development.
I have targeted some specific parcels of land that would be great. I’d like to start contacting owners to see if they’re inclined to sell. For those with no immediate plans to sell, I’m thinking of offering a “right of first refusal agreement” with them.
If I understand how this works….I pay them a little $ right now, and whenever they get around to selling (1 yr, 10 yrs, whatever) I would have the right to purchase the property, assuming I want to pay more than anyone else.
I have 2 ?’s about this…
How much $ should I reasonably offer to the owner for this type right? The parcels in question are residential, between 0.5-2 acres, and are valued between $80K-$200K. Some are owner occupied, some are low-end rentals.
I think this is a fairly common legal agreement, but I’m sure it needs to be recorded, etc.. Should I expect to pay an attorney $300-$500 for the paperwork?
Any feedback appreciated!
Ithaca, NY “10 square miles, surrounded by reality”
Replies
I'm interested in this as well.
There are several houses and a couple of vacant parcels in my neighborhood that I'd love to get my hands on eventually.
Anyone?
You can Google for first refusal right and see all kinds of stuff.
To make both you and the seller happy about the eventual price, some sort of mechanism goes into play to determine the market value of the property at the time the seller wants to sell.
Neither the asking price nor an appraisal can really work here. What is needed is a valid offer from a qualified buyer, and that can only be gotten by the seller's offering the property publicly, and a qualified buyer making a written offer. That offer is then shown to you and you best it, or at least meet it.
Imagine trying to do this without this step that determines market price. For example, the property could command only $100K, but a "friendly" appraiser could write it as $120K, or a broker could advise an inflated asking price.
A commission is paid to a broker, if you buy and the broker brought the offer.
I cannot imagine what kind of agreement would actually bind the seller to showing you a valid offer. It seems as if the property could slip away by the seller making a quiet private sale, leaving you out in the cold.
We have that here in my developement it was written in the C&R's in 1928 and renewed.It requires allows the ajoining property owners to match any offer. It allows for 15 days, but most often the neighbors issue a wavier.And I would think that you would want it recorded to prevent it being sold without any notice.
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
This topic has always made me wonder how the realtors communicate the facts, if they do at all, to the buyers.
You would think they would have an obligation to tell any potential buyer, who wants to make a written offer, that a right of first refusal agreement is in place, and that the buyer might not get the property at all.
"This topic has always made me wonder how the realtors communicate the facts, if they do at all, to the buyers.You would think they would have an obligation to tell any potential buyer, who wants to make a written offer, that a right of first refusal agreement is in place, and that the buyer might not get the property at all."In general that can be a problem.But first let me tell you about the area. It was started in 1928 as a summer lake, but even the orginal C&R's had require permanate structures, setbacks and the like. The lake is about 100 acres and about 800 houses.When it started it was way out in the county and there was rummors and hints of bootlegging going on during prohibition. One house had a still in the lower level, several had hidden passages, and there where reports of seaplanes bring in "goods". Now it is in middle of growing subburban area.About 10 years ago the last summmer only house was torn down and replaced.Many of the houses have the orginal cabins burried in them with several additions on and/or over them.About 1/2 - 2/3's of the home sales here are handled by long term RE agents that live on the lake. The agent change over the years but it has been that way for a number of years. Of course they know all of the details. And the lake and city have handbook that has all of this stuff on it if the seller reads it.A few years ago one of my neighbors was selling his house and his agent came to be with a wavier. I refused to sign until the propery boundry was cleared up. When I did that the they and the agent claimed that I had to buy the property. Neither had any real idea what the wavier was really about.Well I don't know if I did the best thing later we signed an agreement that the boundry was unknown. This is not an uncommon problem here.There buyer backed out. Later they got one of the agents that lived on the lake and knew the "problems" and had no problem selling it and they even got a little more money. But then tried to get me to pay for their attorny that drew up the agreement.But even more of a problem is that the development company has a number of rules limiting the size of boats, motors, sking rules, etc. These are not new and while they are updated over the years the basic concept has been in force for at least 40 years.And the development company rules have as much force as the C&R's, it is just that they are much easier to change. The developement company owns the lake and roads. And each property owner is a member of the development company. Basically an HOA, but started before anyone knew what that was.Anyway a realestate agent sold a house on the lake and told the buyer that they could put anykind of boat that they wanted on the lake. When they tried to register their's, which was much, much biger than allowed, they got made at the development company.A friend of mine is a real estate agent and how lives on the lake. I ask her about HOA's in general. She said that the MLS indicates if there is one and then she points the buyer to HOA and leave it up to then to see if they have any "issues" that concern the buyer..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Anyone that wants to give me cash now for a first right of refusal later should e-mail me for an address where they can send the check too. I'd bet 10 to 1 odds I can get offers you'll refuse.
A fool and their money are soon parted.
Yes, definitly want it recorded so that it can't slip by me. Otherwise no need to spend some $ now.
I was thinking of a time frame similar to what you mention, like 15 days to respond.Ithaca, NY "10 square miles, surrounded by reality"
The more common things is an option. Now that probably most commonly a short term deal. Might be 3 months to an year.I guess it can be structed many ways, but I think that commonly a sales price is offter and an amount to keep the property off the market for that time period.Then if everything works like to your liking, such as being able to buy the ajoining properties or zone changes etc then you close the deal and pay the pre agreed amount.Otherwise you wall away just paying the earlier fee..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
The more common things is an option.
Yes, but this is a totally different tool entierly.
People who want to sell now...I would just buy the property, or maybe do a short term Option, until I know how many takers I have within this contiguous area.
However I'm really thinking this might be a longer term developement idea, like maybe 10 years out.
I'm anticipating some of the parcels will just have no interest in selling now (especially some of the owner occupied ones who are invested emotionally, no plans to move, etc...); in which case an Option to buy won't help me. I'd keep the low-end rentals up and running just to break even for now, and wait out the other buyers with my ROFR.Ithaca, NY "10 square miles, surrounded by reality"
I'm not sure anyone would buy into a ten year option idea. You'd have to build in some considerable increases perhaps tied to the rate of appreciation. If you did that, you'd lose the gain that you were creatively trying to tap.
Keep thinking.
blue"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
I'm not sure anyone would buy into a ten year option idea.
I agree, but I 'm not talking about an Option, where a price (and appreciation) are agreed to already.
I just want to be guaranteed an opportunity to bid on it in the open market, whenever they decide to sell it. 5yrs...10yr...20yrs....Ithaca, NY "10 square miles, surrounded by reality"
So how about it:
What would YOU want to get paid... to guaranteed me an opportunity to bid on YOUR house in the open market, whenever you decide to sell?Ithaca, NY "10 square miles, surrounded by reality"
I havent read all the thread .
Best thing to do is try it .
My wife told me many years ago when I was running around asking about rental property;
What are you doing ? You are asking people who dont have any more experience than you do. At this point in your research you know more than the ones you are asking . You cant talk to a real landlord for fear of competition so all you are asking is the defeated ones and people like that always feed negative imformaton.
It was all true . For all the reasons others failed I used there negative advice to build a sheild in my plan. So it wasnt in vain. Someone else probably would have been discouraged by all the negatives.
I was a pioneer here of 3 bedroom rentals . In other words no one had multiple 3b houses. Many said it wont work for many reasons . I heard everything under the sun of a negative . I built a defense for offensive negatives . Most of the things didnt even come to pass for lots of different reasons . Because Im not the person they were when it happened . Heres an example ;
I just got hit hard on a rental. If it had been bid by you or others here it could have come in at 10 to 20 grand . Here its worth about 8 to 10 grand . To many they would have said the house was destroyed . It would have put a lot of landlords out of business on that house . But those people have somthing missing that I had . ^The ability to roll on site and perform with money in the bank. I got hit last week and Im going to finish it this morning . Its rented too. Its back on line with a week break. You cant get a contractor to call you back in a week much less schedule it .
So be your own pioneer. You can find new ways we can learn from.
Tim
That's the simple truth. Thanks for the encouragement.
Ithaca, NY "10 square miles, surrounded by reality"
I'm not sure anyone would buy into a ten year option idea.
I agree, but I 'm not talking about an Option, where a price (and appreciation) are agreed to already.
I've actually done that with an open-ended option. It was convoluted and I had difficulty explaining it to the attorney preparing the documents (who'd never done anything of the sort before). But it suited both my and the sellers' needs. Annual appreciation was built in (we both gambled). The seller exercised his side of the option on yr 6, IIRC. I'm now the owner of the property, FMV 5-6 times my cost.
This was not a situation as you're envisioning, only an example. The mechanism worked flawlessly.
Very little isn't possible if you're creative and can explain it adequately to the seller. Good faith is a requirement. Details are crucial.PAHS Designer/Builder- Bury it!
Stray
I dont know much about the "right of first refusal" other then I have a house in a historic area and the historic community has the right to first refusal but as far as I know they have never used it.........they are presented with the offer when it's made and they give their thumbs up or down right there.....and as I said, I dont think they've ever used it.
Theres no way that I'd give you 15 days to make up your mind if I had a potential buyer on the line. I dont give more then a day or so when I right up an offer because I want to move on, not willing to spend anytiime in Limbo waiting for someone to make up their minds. I'm also not going to pass on a bird in the hand for someone to exercise there right to yea or ney a deal only to have my bird in the hand move on down the road.
Just a thought on the time issue, dont see anything wrong with your concept. I know around here the bigger trac-home builders have options on land all over the place, not the same but similar.
Doug
Theres no way that I'd give you 15 days to make up your mind if I had a potential buyer on the line.
Good point. Maybe the provision could be something like: Owner shall notify me if they place the property on the market. Then if they get a bid, I have 48hrs to counteroffer. Does that seem more palatable? I definitely don't want this to be some huge red flag that worries the owner unnecessarily.
I'm also not going to pass on a bird in the hand for someone to exercise there right to yea or ney a deal only to have my bird in the hand move on down the road.
Understood, but in theory I'd be bringing in a higher offer than they have anyway. Isn't this a positive attribute from the owner's perspective? (as long as I must respond quickly)Ithaca, NY "10 square miles, surrounded by reality"
Stray
It was my understanding that the first refusal allowed you to match/buy ahead of anybody else, not necessarily come back with more money.
I own a house in a historic district (mentioned it in the earlier post), the district has the right to first refusal/ buy ahead of the one making the offer. There is no "deal" up front with them and me, its just there, but what do I care, if I'm selling I dont care who's money it is, I just want it. They can buy ahead for the same amount, but as I also mentioned they have in the 80 years that this has been there policy, never implemented it.
I guess I wasnt aware that you'd come back with more money. That also would bother me if I was the guy that was trying to buy...... now I have to be in a bidding war with someone and I dont have the right to come back and counter/bid higher. I think theres some grey area here that needs to be worked out.
My suggestion would be to get ahold of a realestate lawyer and ask these questions to. You shouldnt have to drop to much $$ to get the info that you need.
I understand what your trying to do and think its a good idea, just not sure how to go about it.
Doug
I am googling and otherwise looking into it, but I thought perhaps some real estate-savy folks here had been party to this type of thing and offer some insght/pitfalls.
If they did want to sell and came to me first (vs an agent) I'm sure we could come up with a plan; ie they get two appraisals I get two appraislas and we negotiate from there; or something to that effect.
I'm really more concerned with knowing that it's on the market for sale, and having the right to bid higher than anyone for the purchase. It's especially important since I'd be trying to buy several adjacent lots to eventually combine into one development. To pull that off, I may need to even pay somewhat above fair market value for some of the parcels.
Knowing I have the right to buy an adjacent lot down the line, makes it less risky for me to aquire some now, and wait for other one later.Ithaca, NY "10 square miles, surrounded by reality"
I am googling and otherwise looking into it, but I thought perhaps some real estate-savy folks here had been party to this type of thing and offer some insght/pitfalls.
When I was a licensed agent I ran into a few. Don't know of any that were a result of the point of this thread, but they were intact (social obligations). Potential buyers, outside the agreement, were told about the possibility of their offer having competition. It was left to the buyer to offer accordingly.
I'm unaware of any difficulty resulting from such an agreement. All it did was give notice that a bidding contest was possible. Which was not much different from normal practice when you have openly listed property.
Nobody I knew put much faith in the practice. Any listing agent worth his/her salt would have been in contact with anyone they knew with previous interest anyway. That's about all the agreement amounts to.
For an inexperienced buyer with a novice selling agent, very possibly a serious detraction.PAHS Designer/Builder- Bury it!
Nobody I knew put much faith in the practice. Any listing agent worth his/her salt would have been in contact with anyone they knew with previous interest anyway. That's about all the agreement amounts to.
Yeah...about all I want is to hear about it when the owner wants to sell. Ideally, their agent (after seeing the ROFR) would call me anyway as soon as they get the listing; and then I'd know to put in an offer. I'd rather avoid a bidding war myself obvioulsy. In fact the best scenario would be for the owner to call me before they call an agent, so we can negotiate a price, and they save 6-7% in RE commision fees.
For an inexperienced buyer with a novice selling agent, very possibly a serious detraction.
A real detraction...or just a perceived one from their end (ie they'd be uneasy because of their lack of inexperience)? I suppose either one is a negative.Ithaca, NY "10 square miles, surrounded by reality"
Yeah...about all I want is to hear about it when the owner wants to sell. <snip> In fact the best scenario would be for the owner to call me before they call an agent, so we can negotiate a price, and they save 6-7% in RE commision fees.
And you're correct, rofr will do just that. I also think you are well-advised to record it if possible. While rofr implies another offer, you might get lucky and find owners believing they'll do better without professional help.
For an inexperienced buyer with a novice selling agent, very possibly a serious detraction.
A real detraction...or just a perceived one from their end (ie they'd be uneasy because of their lack of inexperience)? I suppose either one is a negative.
You understand the situation. You're putting a slight cloud over the property, not much if you understand it. What it's worth will vary greatly on how knowledgeable the seller is, and how important it is to you. I'd suggest offering a small percentage of current market value rather than a fixed amount.
If you negotiate well, you may find you don't have to put up any money. Always keep the seller's POV in your mind and work from there toward your end.
Sometimes you'll win, sometimes you won't. But you can control your costs. Relatively small gamble. And after your first attempt, you'll know what you're getting into.
Pretty sure I wouldn't bother. PAHS Designer/Builder- Bury it!
Well, I've gotten a lot out of this discussion.
Its helpful to know how mistrustful people might be to the idea. If I go into it trying to address/allay these kinds of concerns, maybe I can sell it.
Next stop is my RE agent for her advise on it, and then maybe the lawyer.
Ithaca, NY "10 square miles, surrounded by reality"
It has been interesting. I'm disappointed hasbeen hasn't chimed in. He's a Colorado broker and often has good insight. Would've addressed this post to him but don't see how.
Good luck with your Realtor. You need one able to think outside the normal box. The only NY Realtor I've known didn't have a clue how to write a contract, said they never did that. But he left NY 15 yrs ago.
If that hasn't changed, you have a good shot of finding a real estate attorney who's also good with contracts. The concept's pretty simple, devil in the details. I've never used an attorney to prepare a contract, but I've written quite a few, later reviewed by attorneys. As with Realtors, some are better than others.
Local custom is the one important point you need to learn. Fear of the unknown is normal.
Believe I initially mentioned I'd seen quite a few rofr and never found a problem. Just had to be explained to everyone involved. Even within this thread, misconceptions surfaced that I didn't address.
Separated mineral rights are much worse. May you never bump into that.
Good luck. PAHS Designer/Builder- Bury it!
I'm not a lawyer and the following legal advice isn't. Legal advice that is. It's just a personal opinion.
A Right of First Refusal doesn't come into play until the buyer has recieved an offer he will take.
In the extreme case the the seller puts the item up for open auction, after the winning bid the ROFR holder has the right to acquire the item for the amount of the winning bid.
If he puts it on the normal market, when he finds an offer that he will accept if the ROFR holder refuses, the ROFR holder can meet that offer.
All the ROFR holder is telling the seller is "Get the best deal you can, and I'll meet it.
In any case, if the ROFR holder refuses and the seller doesn't accept that particular deal from the third party, then the ROFR calls his lawyer. The seller must accept the third party offer the seller shows to the ROFR holder.
I don't know what happens if the third party puts in a 'ROFR refuses' clause. Sounds like fraud to me.
If you make an ROFR offer, I think you should recognize that some third parties may have a legitimate out in their offer that may come into play after you have refused. I think this situation should reinstate your ROFR offer since it was NOT the best deal the seller could get.SamT
Guys that don't do things correctly the first time.....then argue that they did nothing wrong.....if made to agree to fix the problem, rarely put the time and effort into truely doing it properly. they'll just look for the quickest fix to appease you and get their money. JDRHI <!----><!----> 84310.51
Interesting. I'll have my wheels turning and mull over that scenario. Seems like there's a way to mold the language a bit in the contract the clarify the "if this... then that" kind of thing. Thanks.Ithaca, NY "10 square miles, surrounded by reality"
I have a great realtor, have known her for 15 years and bought 3 houses with her as my buyer's broker. She is savy, and has been president of RE Board here, etc...
I was licensed years ago but haven't kept it up. Maybe some day.Ithaca, NY "10 square miles, surrounded by reality"
bump
Edited 1/31/2007 10:42 pm ET by rez
Don't call me bump. Just call me "dip in the road". < G >
"Doubt is not a pleasant condition, but certainty is absurd."
~ Voltaire
ok i gotta be the devils advocate on this,i have done several of these,but first
why as the owner of a 200k property [2007 value] would i want to limit my negotiations with a buyer say 5 years down the road by having to declare that i had a first right refusal in play for a little money in hand today? you have to offer the seller something he wants today worse than be able to sell his property at fmv 5 years from now.
now if you wanted a option to buy on the property for 300k in 5 yrs [approx 10% inflation] and wanted to put down 10% of purchase price today and pay taxes on it till closing,as a seller i'd be all ears.i've got 30k in my,if things go the way they have i should be getting fmv in 5 yrs and i don't have to pay no stinkin taxes.now at the end of 5yrs you come to me and say you really don't have a use for this yet but....... do the same deal now price goes to 450k at the end of another 5 and pay me another 30k [all of these option moneies do come off the purchase price at close.
so you say man that sucks i'd be crazy to offer that deal,but at year 9 a devolper wants the property to square off the land next door.market value may be 450 but your holding aces.you price it at 700k and he takes it. you go to closing clear the property for 390 and pu his check for 700. you just turned your 60 into 250.
to show you how bad a first right of refusal screws things up.i looked at a pc of property here,about 1.5 ac commercial land asking 100k. talking to the real estate agent it comes up that you cannot build a hotel on it and the hotel next door has 1st right on it. i'm gone. sits on the market for a year and i'm talking to the agent and he tells me the owner wants a offer period.ok what the heck i'll give 17.5 for it he laughs but rights it up.it goes to seller,he SIGNS it.my feelings were well i got a heck of a deal for the hotel didn't i. believe it or not this place had changed corp. ownership about 5 times over the years. the new guys said "what pc of ground? we don't want it!] i got it bought for the 17.5 ,listed it on the market without the 1st right and it brought 85k.thats what a 1st right does to property. larry
hand me the chainsaw, i need to trim the casing just a hair.
you have to offer the seller something he wants today worse than be able to sell his property at fmv 5 years from now.
I'm not sure how what I'm proposing diminishes an owner's ability to get FMV, whenever they decide to sell. If anything, isn't it guaranteeing some price competition to bid it up?
my feelings were well i got a heck of a deal for the hotel didn't i.
If the hotel had wanted the property, they might have countered at $18k, but then you'd have the opportunity to beat that price.... ultimately highest bid wins, and the owner gets the best price the market can produce.
listed it on the market without the 1st right and it brought 85k.thats what a 1st right does to property.
Hmmmm. That's what I'm afraid of. But It seems like more of a perceived negative on a property than a real detraction. I guess the key is structuring the ROFR to make it as palatable to owners and agents as possible. Ithaca, NY "10 square miles, surrounded by reality"
my thoght on a fror is when i have made my best offer it goes to the person with the first right in place and they say yea or nea.if they say yea the deals done,you don't go back to the first guy because you have explained to him the first time that his offer needed to be his best.deals done. larryhand me the chainsaw, i need to trim the casing just a hair.
this is not a common situation at all.... more a TV info sales deal.... what you can purchase is an....option to buy, but that states a price and expires at a stated time... this ties up the property so that you can put your deal together without it selling after you have put a ton of effort into a project....
you can write up any kind of contract saying anything you'd like... as long as everyone signs off... in most cases it's a CONTRACT... no need for lawyers, recording ect.... just a basic.... I will... You will... document.... and some form of compensation... even if it's just $10.... this is a binding contract... and gives you legal standing... just means you can go to court and maybe win.... you can always get out lawyered
p
you can write up any kind of contract saying anything you'd like... as long as everyone signs off... in most cases it's a CONTRACT... no need for lawyers, recording ect....
My thought was if it's recorded, their attorney will flag it. No deal will go through without me getting a call. I don't want to have to bring a court action after the fact.Ithaca, NY "10 square miles, surrounded by reality"
you can write up any kind of contract saying anything you'd like... as long as everyone signs off... in most cases it's a CONTRACT... no need for lawyers
Now wait a minute. You are doing a deal that will have an impact for years on a property worth a lot of money and you won't spend a few bucks on a lawyer? Unless the other guy is similarly adventurous, he has a lawyer and the contract will reflect it. In addition, a good lawyer, like a good builder, will point out potential problems that you might not think of. It is pretty easy to draft an unenforceable contract, especially involving real estate.
what you say ... just isn't so... lawyers really are not needed for most contracts
you will, i will, dates, times, amounts, it's a contract...
you can always address 10000 different things in any contract... my commerical leases are over 43 pages long and have another 16 pages of rules... my standard statement is
" read this if you find anything NOT in my favor I'll correct it"
on the flip side I have cousins that are the largest landholder in the state and have given me a sample of one of their commerical leases... as large as a big city yellow pages... they told me everytime they have a problem that has not been directly addressed in their lease... they add it to all their leases... if i had to that... I'd spend all my wake'n hours at kinkos make'n copies...
just my opinion but it's rare that you find a lawyer that knows more about your business than you do... I love my lawyers but it's the information and research I provide that lets me win cases... JMHO .... but never expect a lawyer to know how to keep you out of legal trouble... they just aren't geared up for that... they are geared to fix'n the problem AFTER...
p
I think my lawyer is great too, but you know what? He told me he tried Viagra, and he got taller!!!
a side effect i experienced also.... i know a dude who overdosed on the stuff.... had to have an open coffin....
p
I love my lawyers but it's the information and research I provide that lets me win cases... JMHO .... but never expect a lawyer to know how to keep you out of legal trouble... they just aren't geared up for that... they are geared to fix'n the problem AFTER...
We lawyers love clients who think they don't need us until they have a problem. Litigation is a lot more lucrative than dispensing advice designed to avoid it.
Litigation is a lot more lucrative than dispensing advice designed to avoid it.
Is that like missing out on the original bid, then getting called in to fix all the problems the low bidder left behind?SamT
Guys that don't do things correctly the first time.....then argue that they did nothing wrong.....if made to agree to fix the problem, rarely put the time and effort into truely doing it properly. they'll just look for the quickest fix to appease you and get their money. JDRHI <!----><!----> 84310.51
smslaw
I've been involved with probably 20 property contracts and all but the first two or three there wasnt a lawyer involved(at least on my part).
I have a good friend that has made his fortune by lending money on houses(carries the contract) and I'd guess that he can write up a simple contract for deed better then most lawyers! Dont get me wrong, I know your a lawyer and I dont mean to dismiss your skills but simple realestate contracts are not that difficult to write.
Now thats not to say that the other party hasnt used a lawyer, and thats fine but theres only so much that needs to be included in the contract and the old axiom, K.I.S.S. has really worked for me!
Doug
Do not confuse a right of first refusal with an option. With an option you have bought an excersizable right, it is up to you if excersizing that owned right makes economic sense. If you have right of first refusal and the property owner dies leaving the property to the daughter, where does that leave you? Probably SOOL, until she wants to sell, assuming hiers were bound. Another thing to keep in mind is that options can be structured to be negotiable, meaning you might be able to sell the option to someone else to defray your cost should you choose not to excersize.
I've been involved with probably 20 property contracts and all but the first two or three there wasnt a lawyer involved(at least on my part).
That's my point: The original poster was considering doing something he'd never done before and he needs an experienced lawyer to help document the deal and also to point out potential pitfalls that may arise, but may not be obvious. Once that's been done a few times, he may not need anything from his lawyer for future deals. I'll often draft a form contract for a client who will then use it multiple times without involving me.
I think everyones already identified the problems with your idea Stray, but I admire your thought process.
The use of clauses such as the right of first refusal and options is a valid strategy and can be used in some situations. I've never thought of them as a stand alone buying tactic, but rather a clause that is included in some other form of an offer as a sidebar for some specific reason.
I personally would be more inclined to ask for an option, rather than a right of first refusal because it's simpler and easier to understand. The seller's first objection would be that he didn't want his property tied up and the buyer would have to offer some form of release even if it was a option....so both ideas are about the same.
I certainly can understand where these types of offers are made though....especially in areas that are prime for development. I've tendered offers that contained some form of option myself buy have yet to have on accepted. That's okay though....sometimes the offer is made knowing that it will be rejected. The last time I used one, I was intentionally using the option clause to soften up the seller. I offered a lot more than he was asking, on an option clause, and made it contingent upon some things happening in the area that would create the added value. I knew it would be rejected but it was my way of setting up a much lower cash offer that I felt would be insulting to the man. I knew that if I just came out an made a low cash offer, he would reject it and probably not want to continue any negotiations with me.
We're still in a battle.
blue
"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
OK, so I have some delusions of grandeur for my young real estate empire
Delusions are good. You'll never get far if you have small ideas.
blue
"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
That's kind of my MO: Gotta dare to dream....
Thanks for the encouragement!Ithaca, NY "10 square miles, surrounded by reality"
A ROFR offers very little in the way of value to a property owner. It really serves no purpose to him/her except to maybe muddy up a deal that is at hand, if that could be considered a purpose. I can't imagine offering a ROFR it unless there was a tasty consideration up front.
Yes, certainly cash speaks to people, and that's the main hook. "You say you want to give me money for the chance to buy my house, if and when I ever want to sell????"
As to how much cash would speak loudly enough...still not sure.
For some it might be a few hundred and others it might be a few thousand. Ithaca, NY "10 square miles, surrounded by reality"
Laws vary enough from state to state, especially as to RE that the only useful answer would be from someone knowledgable about how it works in your state.
What made the teaching of Jesus different and apparently so hard to accept then as now, was that it required a critical reassessment of the structures and values and attitudes of human society as his listeners and followers shared in it.
- Monika K. Hellwig
from Jesus: The Compassion of God (The Liturgical Press, 1983)
Despite Tom's kind words, I don't know much that could help you.
I'd start by calling some re attorneys. Ask if they have already done anything of the sort. Someone my have just the knowledge you need.
Like contractors and real estate brokers, there are always a few decent helpful attorneys somewhere hidden in the pack of bad ones.
"Doubt is not a pleasant condition, but certainty is absurd."
~ Voltaire