OPTION QUESTIONS! NEED HELP ASAP

[Ryan Mertz]

OK, I AM NOT ASHAMED TO SAY THAT IM NEW TO REAL ESTATE INVESTING. I HAVE DONT NUMEROUS REMODELING JOBS FOR INVESTORS BUT NEVER INVESTED IN PROPERTY MYSELF. I WAS SEARCHING FOR A HOME WHEN I CAME ACROSS A NICE DEAL. I THEN FOUND BIGGERPOCKET.COM AND NOTICED THAT THERE IS A OPTION CONTRACT THAT I STARTED BECOMING VERY INTERESTED IN. THIS SOUNDS LIKE SOMETHING THAT MAY WORK IN CERTAIN SITUATIONS AND DEALS.

MY QUESTION IS .
IF I GET INTO A OPTION CONTRACT WITH SECONDARY OFFER CANCELLATION RIGHT OF 1ST REFUSAL CLAUSE WITH A SELLER (OPTIONOR) AND I NOW HAVE A SIGNED CONTRACT AND INTEREST IN THE PROPERTY WHAT IF HE WERE TO TELL ME THAT HE FOUND A BUYER WITH A OFFER BETTER THAN MY OFFER SO THAT HE DOESNT HAVE TO FULFILL THE CONTRACT WITH ME.

EXAMPLE . I HAVE A $50,000 HOUSE OPTION WITH SELLER HE CLAIMS TO FIND HIS OWN BUYER FOR $60,000 AND TELLS ME SO NOW OUR CONTRACT IS CANCELED. HE REALLY DECIDED TO KEEP THE PROPERTY BECAUSE HE FOUND GOOD TENANTS AND WANTED TO CONTINUE TO RENTING INSTEAD OF DUMPING HIS PROPERTY.
***I WANT TO KNOW WHAT I CAN DO IN THIS SITUATION TO BACK MYSELF UP SO THAT IM NOT WASTEING MY TIME OR MY INVESTORS TIME AND MONEY!!
I WANT TO BE A NICE GUY AND LOOK OUT FOR THE SELLER SO THAT IF HE IS TRULY ABLE TO GET MORE MONEY FROM A BUYER HE CAN. BUT ALSO DONT WANT HIM TO 2ND GUESS THE CONTRACT AND USE THE "I FOUND ANOTHER BUYER WHOS OFFERING MORE"

[Jon Holdman]

First, please don't post in all caps. That's shouting and rude.

An option agreement gives you the right, but not the obligation to purchase the property covered by the option. You pay the owner a fee ("option money or "option premium") to buy the option. It typically states a purchase price and a deadline. If you don't buy the property (aka "exercise the option") by the deadline, the option is null and void and you lose your option money. If you exercise your option and purchase the property, the option money is typically credited to the purchase.

The seller cannot not sell your the property. The seller cannot say "the option" is cancelled or "I'm keeping the property" or anything like that. Well, of course they can, but you then have a very good legal case against them. Provided there is no fraud or deception, a judge would very likely force the sale if the seller tried to back out and you took them to court.

Once someone has sold you an option, they no longer "control" the property. They cannot sell it or rent it. You have control. If the seller finds a buyer, you say "great, give them my info and we'll make the deal". Same if they find a tenant and you want to rent.

If the option contract explicitly gives the seller the right to cancel the contract with no obligation on their part, you would be foolish to sign it. Such a contract is essentially worthless. You want an option contact (or purchase agreement) that obligates the seller to actually sell the property.