Re: Best way to work Simultaneous Close? - Posted by Craig
Posted by Craig on May 23, 2000 at 17:05:03:
There are a couple of ways to go without actually purchasing the house. One way is to have the seller just market and sell it and carry back the financing with your help. Then sell the note through you. Since sellers have a difficult time understanding this kind of deal, they probably won’t want to do it that way though. Another is to work out a non-exclusive option with the those sale terms, then deal with the buyers yourself. When you find the buyer and get them qualified you just assign the option to them, in which case the seller will be carrying the note as discussed above, without having had to deal with prospective buyers, then selling the note through you.
I think however that you are expecting too much in this deal. You have enough room in the deal to not have to sell above market value, which if you do will impede your finding a buyer quickly. So let’s assume you are to sell at the FMV of $114,000. The other obstacle is finding a buyer with 10% down. That may take a while also, so let’s assume you will find a buyer with 5% down. You should be looking for a buyer with credit of 600 as far as scores go. In this scenario you may be able to carry a 1st for 90% with a rate of about 12.5%. Expect being able to find a buyer that will qualify for 85% though.
So now you have a 1st for $96,900 plus $5700 down. Expect to take a 5% discount on that 1st when you sell. Which will leave you with $92,055 + the $5700 down = $97,750 cash on the table plus a 2nd for you of $11,400. Assume that you will be paying $2,000 in closing costs yourself and deduct that and you’re left with $95,750. Deduct the $89K you owe the seller and $6,750 cash remains along with that 2nd.
Lower your expectations but hope for better. Think about this. You will sell that home much faster when you market it with owner financing, a low down payment, seller paying closing costs, minor credit problems ok. Some of the prospective buyers might have the 10% down and be willing to put it up in a competitive buying environment. For instance if you have a couple of other buyers with the 5% you may tell one that there are a couple of others who qualify but if they can put more down then you will definately sell it to them.