Even in the third option period scenario, the builder limits losses to $600,000 (the
three $200,000 fees),which is only 25 percent of the $2.4 million purchase price If
the builder does complete the purchase at the end of the third six-month option
period, the builder may still benefit greatly by using an option contract.
Although the developer may have been willing to apply the first option fee toward
the purchase price of the lots, the developer may not be willing to apply any of the
other fees to the purchase price once an extension or extensions are agreed to.
It happens more frequently than you might expect that the negotiated option fee
does not apply to the purchase price. Why would the optionee accept a deal wherein
the option fee they put up does not apply to the purchase price? Home builders
often acquire finished lots for construction through option contracts with a real
estate developer.
The apparent benefit to acquiring a freehold property is the fact that you will not must spend rent. On the other hand, unless you are sitting on a pile of money it really is most likely which you will want some sort of finance to fund your acquire. Read the rest of this entry »
