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  • Originally posted by pooomba View Post
    Mark I used an option. I was just trying to explain them for those who might not know what they are.
    I use options all the time, they rock!!
    I don't doubt that a good option agreement is worth paying for.

    But without a price or time period specified in the agreement, it is just a right of first refusal and not worth much at all (the point I was making).

    You can pay me $1k for a right of first refusal on each of my properties if you want. I'll offer them to you for $1m a pop tomorrow.

    M
    Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

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    • Hi

      Is there a rule of thumb for options - % of asking price for upfront option payment?

      Jon

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      • Mark the option stipulates "fair market value" and has a clear process for establishing that.

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        • Originally posted by pooomba View Post
          Option agreements are caveatable Xav.
          To ensure we are on the same page:

          An Option to Purchase is a right to require the other person to sell you their property at any time of your choice within the option period. you would be familiar with these in a lease option context.

          A Right of First Refusal (or Right of Pre-emption) is an agreement requiring the other party to offer you the property first if they intend to sell it. If you refuse they can then sell to a third party, except that (usually) if they decide to sell for less than they offered it to you for they have to reoffer it at the lower price.

          The agreement you have described in this thread is a Right of First Refusal, NOT an Option to Purchase. It does not matter that you call it an option, the legal effect of it is a Right of First Refusal.

          An Option to Purchase creates an equitable interest and is caveatable.

          A Right of First Refusal does not, until the "triggering event" (them wanting to sell).

          If you want to discuss it with your lawyer the leading case is Motor Works Ltd v Westminster Auto Services Ltd [1997] 1 NZLR 762.

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          • As I said Xav I use option agreements.

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            • So this:
              Originally posted by pooomba View Post
              So we got the people in front to agree in writing to... sell to us when they were ready to sell at fair market value.
              Should read as follows?
              Originally posted by pooomba mk2
              So we got the people in front to agree in writing to... sell to us at a time of our choosing
              Feel free to ignore this if you want, I am just trying to be helpful. But unless you mistyped the first time, what you think you have done and what you have actually done are two different things.

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              • Originally posted by pooomba View Post
                Mark the option stipulates "fair market value" and has a clear process for establishing that.
                "Options Rock" and gets Dean almost excited about them as he does over his wife and god - think I have that right.

                I have downloaded all your conditions from Massive Action so I will go and read it.

                But quickly how would market value be established in say 5 or 6 years for example.

                Is it like get 3 RV's divide by 3 and take off 2% agents commision and add in the value of the last cat she had ?

                Not the Big Mac price index or anything silly.

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                • You both get RV's and split any difference is a simple way.

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                  • Originally posted by pooomba View Post
                    You both get RV's and split any difference is a simple way.
                    Nice, thankyou Dean

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                    • Originally posted by Tucker View Post
                      You go on about what if the market turns Joe public will be bitter and have a nasty reaction towards investors etc. Were they nasty the last up turn of the cycle or the one before that or the one before that.
                      Some say investors are being immoral well what about the property I bought (and others) 5 years ago that has doubled now, going by some of your posts me purchasing this was immoral because I bought it and made money but the vendor loss 100% capital growth. This means I should have to give it back, in fact everyone should have to give their property back because the original vendor didn't realise it was going to increase in value in the long term and so has been ripped off.
                      You are being silly. The issue I had was specific to the long settlement at today's price for next to nothing down. And to be honest, I don't really even have a problem with that.... it just struck me as an interesting interpretation of win-win.

                      As already conceded, I don't know the facts, and Dean is confident with what he has done.

                      But don't go painting me as some anti pi apologist who is determined to hold all money grubbing investors to a higher standard... cause it just aint so.

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