Is My Purchase Agreement Solid Enough To Flip?
I want to sign a Purchase Agreement (Contract to buy) with a seller of arural convenience store/gas station/laundromat/car wash on 7 acres for $120,000. In Minnesota this document isn't notarized. My goal is to get it under contract and advertise it widely--something my seller hasn't done---and flip it before closing for $150-175,000, possibly to a Contract for Deed buyer (I could borrow 100% if need be). It has development potential and several nice building sites..
In the course of showing it to potential buyers, how do I keep my seller from 'stealing' my buyer(s) by just saying, "Hey, this guy's profiting off of me; I'm selling it to him for much less, I'll sell it to you for less than he's asking, after all, I still own it!"??? Or, at the very least, to keep them from 'spoiling' my deal by disclosing too much about my purchase price and scaring off buyers?
From reading posts on this site, I see contracts get sold and flipped all the time. Is there a document iI can get notarized and/or recorded to make sure this cannot happen? Or is it normal just to trust sellers to keep their mouths shut and be happy with their lot? Should I offer the seller a bonus if I can sell it before I close on it? Thank you.
Does the seller know you are an investor and plan to resell it? If it is out in the open, I'm sure there will be less chance of ill will than if they find out via the back door.
I don't know if this works, but I suppose you could get your contract signed and notarized, and then file it with the county immediately. I have not done this, but heard of one investor doing this. It may be state/county specific so you will need to check on this.
hth,
Robert
[addsig]
Robert's right about your needing to record something to the effect that you now have an "equitable interest" in that property...once you DO have a signed contract of purchase.
FYI, nowhere is it it common for a RE P&S contract for to be notarized, as normally it's not desired by both sides to record and let anybody know of it until the deed is conveyed.
And, interestingly enough, (for Robert's benefit )CA is one state where one could NOT record such a notice or memo of interest. CA has a very short laundry list of what can be recorded, whereas many states don't have such a rule.
Don't know what MN law is, but a local recorder can tell you quick enough.
John,
Thanks for the information. I had wondered if I could do it, now I know I can't. At least in CA.
Thanks,
robert
I'd probably move from a PA in such a circumstance to an Option to Purchase. The disadvantage is that the Option will cost you actual money-- not an earnest money deposit to be refunded if you walk away. The advantage is that this "consideration" makes the contract more binding and enforceable.
option to buy ala commercial, or assignable purchase agreement.
w/ the later (if you give enough time for escrow) you have absolute control. with the option you don't.
w/ a gas station I would be veryconcerned. you buy for 100K sell for 200k, and the cleanup if 400K. OUCH!
Robert, why not in CA?