Posted by Gary on February 01, 2001 at 14:00:56:
Thanks for your idea; I ran that by my attorney and he felt that was a good idea; also, he suggested I offer $5k cash using a short-term loan since the interest would be deductible; then refi in a year or so, probably be able to pull out enough cash to pay back the 5k and the interest I incurred plus closing costs…thanks for the idea
Appraisal problem in rising market - Posted by Gary
Posted by Gary on January 31, 2001 at 14:14:22:
I am about to possibly lose a good deal. Contracted with seller to buy one bedroom condo at 66k; planning on putting 10% down with Greenpoint Mortgage; Monthly expenses with debt, PMI, condo fees, taxes, etc. will be $625 and I have a renter already lined up at $925. $3600 a year income on about $10k is not bad (6.6k down plus closing costs). Problem is that my market is rising and there are currently two other condos in contract at or near my price…but the last sale was in June at 55k. I think the appraiser is out of town and is not current with this market; Greenpoint will not only lend me $49.5. Luckily, my attorney is sharp and put in the contract that the sale was contingent upon a bank appraisal of $66k. But I don’t want to lose this deal…Seller will not come down to 55k and I don’t blame him. Any ideas out there in investor land?
Update: Lemon to Lemonade - Posted by Gary
Posted by Gary on February 02, 2001 at 19:17:46:
This business never surprises me! I was about to lose this 66k condo deal with strong positive cash flow because of a low appraisal in a rising market. Well, my attorney negotiated a new price with the seller’s attorney at 61.5k, which meant I needed another 5.4k on top of the 6.6k I already put down. How depressing. But wait! I called my broker to cry on his shoulder but he had a simple but effective solution. He is going to do a quick 90%LTV refi on one of my other properties which will lower my interest rate by 1.5%, and net me enough cash to make up this shortfall. He is going to reduce his fees to help me out as I am a good customer. The bottom line is that my monthly cash flow on the two properties will be the same as if I did not have my problem and I have simply traded equity in one property for the other. The discount in price more than made up for closing costs. My realtor told me that someone is paying cash a few days after my closing for a similar condo in the same complex at $66k! I will probably be able to crank 10k after closing costs from this purchase in about a year because of the lower mortgage balance. Lemons to lemonade…Loving this business more and more…
Re: Appraisal problem in rising market - Posted by Stacy (AZ)
Posted by Stacy (AZ) on February 01, 2001 at 12:16:37:
Just an idea…will the seller carry a second for $11K? He could put a balloon in it at 5 years or so if he felt better doing this, and you’re confident you could refi at that time.
Tell him he really doesn’t have much choice if he wants to sell now at 66K, since there are no comps to support any other buyers that might come along. Seems like they’ll all have the same problem until there’s a sale or two at the 66K level.
Stacy
Re: Appraisal problem in rising market - Posted by Nate
Posted by Nate on January 31, 2001 at 18:18:49:
If none of the other sales has closed, you may be in a bit of a pickle. Appraisals generally aren’t based on properties under contract, because contracts can fall through.
I wonder if the other buyers will have the same problem getting their properties to appraise? If not, maybe you should talk to their lenders!
NT