Buying a House using an Option

Viewing 3 posts - 1 through 3 (of 3 total)

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