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What should I know about an option to purchase?

| May 22, 2020 | Real Estate |

Some people are ready to buy a piece of land right away. However, you might have some reasons to hold off on a real estate purchase even if you want the land. Many property owners, aware of the fact that some buyers need time before finalizing a deal, offer buyers an option to purchase the property at a later time.

Realtor explains that an option to purchase preserves your option to buy the property during a period of time, though you may ultimately choose not go through with the deal. A purchase option provides three possible benefits to property buyers.

It secures the property

While a piece of property looks attractive to you, you might not have everything you need in place to buy the property. You may also want more time to think it over but you do not want another buyer to take the property. A purchase option keeps the seller from selling the property to someone else for a period of time while keeping your option to purchase the property open.

It gives time to pursue financing

You might lack the funding to buy a piece of land even though you are certain you want the property. You may also have some other ideas for the property in mind, like renovation or building a new structure on the property. A purchase option allows you some time to raise the financing you need while making sure no one else buys the property while you do so.

It allows you to seek investors

You might not want to build your own home or business on the land, but you know of another entrepreneur who would want the property. With a purchase option in place, you can approach the entrepreneur or maybe an investor with an offer to buy the land. You might sell the purchase option to another party or you may buy the land and then sell the property to your new buyer at a higher price.

A purchase option provides flexibility that some property buyers need if they are going to proceed with a purchase. These provisions do involve some negotiation, including an agreement on the purchase price at the start of the purchase option period, so some consultation with a legal professional may be of assistance.