Once the secret document wielded by big time developers, the option contract is suddenly the new black. Featured currently in high priced seminars across Australia that claim you can make millions in a couple of weeks. What is an option contract and how exactly can it make me millions?
An option contract is a legal document drawn up to grant the holder control of a property for a predetermined amount of time. The person who controls the option has the right to on sell the contract to another party, namely a developer. The option holder also has the right not to exercise the option, for example they apply for a development application which is denied by council, the holder can cut his losses and walk away from the contract without any repercussions. At no time whilst the contract is valid can the owner of the property sell it to anyone else. Options work best with properties which are not listed publicly on the market, and when you approach a property owner directly.
The people who make the big bucks from this strategy are able to identify properties that are zoned for development that the public are not aware of. By finding properties that can be developed the contract holder can often offer the owner an above “unimproved market price” for the option of the property, conduct a development application, and then on sell it to a developer for a tasty profit. The developer pays the owner the price negotiated in the option contract and the holder keeps the icing on top.
Not bad for a little bit of research, negotiation and paperwork.
About Rob
its a great idea and im so interested in getting into it. Just one question please, where can i get an option contract?
thanks for any help
Hi Flora,
A good property solicitor can draw one up for you.