Lets assume that you reached out, negotiated and tied up an option. Here are the Four Steps you need to make and secure your profit:
Step 1: Make sure that your option agreement is assignable and record an Option Memorandum at the county records so that your option position is noted within the chain of title and secured properly.
Step 2: Calculate option resale value. Always try to sell real estate options for at least 5 to 10 percent of the property’s market value with the option buyers end position in mind. For example, on a property with a fair market value of $100,000 that you have an option to buy for $60,000, in such a situation I would price my option at $10,000. This way, I would be fairly compensated for the time and effort that it took me to get the property under option while the option buyer got a $30,000 discount from the fair market value.
