Posted by Skip on April 27, 2006 at 19:06:54:
Hi Stephanie,
Are you talking about the part about building a granny unit? I understand you want to make this a win/win situation, but you’d have to get pretty creative to make it a win for your parents. You said you would offer $500 k on a property they could sell for about $1 MM. If it was my property I’d take the $1 MM.
If they want to sell to you to as a favor that’s different. Or you could offer them $1 MM and still build the granny unit.
Buying Parent’s Property - Posted by stephanie
Posted by stephanie on April 24, 2006 at 22:41:01:
Hi,
We have a unique opportunity that requires some creativity and seems complex but am thinking there could be some viable options…
My parents live in Marin County CA, and are selling their home on a prime 2 1/2 acre hillside view property in a very desirable area. They are listing it for 1.3 million. Their dillema: They need to pay off apprx. 200K.
They wish to bank as much money as possible but still wish to purchase a smaller home in area for appx. 5-600,000.
After they get maybe a close to asking price offer, pay 6% commission, they will be looking at appx. $1,000,000 clear.
This leaves about 1/2 to purchase a new home and 1/2 to invest for retirement.
Our scenario: My husband and I love the property and city and would like to purchase it but can only pay 500,000 after selling our home. Want to make it a win/win for all. The parents really can’t afford to purchase another house in same city. Thought is to offer them $500,000 and to obtain a loan to fund a granny unit (1300 s.f.) to be built on the property for them to live. This way, they could remain in same city they love, have no neighbors and enjoy their view, and my family and I could move to some property.
Dilemma - My Dad is very conservative/old school and might think this a potentially good idea but worry that he would not “own” the land he lives on therefore, not build equity and his estate may not be equitable to his other adult children. (He would not own his new home as we funded it.)
Any ideas on how to make this offer very appealing for my parents but at the same time be beneficial for us? Should we offer to include parents to stay on title with a certain percentage or ? ?
Thanks much!
Re: Buying Parent’s (sic) Property - Posted by Skip
Posted by Skip on April 26, 2006 at 22:03:30:
You want your parents to sell you their property for half of what they could sell it to someone else for? That may be a good deal for you, but they are probably better off selling at full market value.
Re: Never - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on April 25, 2006 at 19:19:46:
Fall in love with a House, and Never love a city (or county in this case). Never or at least almost never do business with family.
Now all that said it seems that you are up against a situation that will be difficult to cause to be a win/win. Friends of mine who live in your county tell me that all houses in that county are worth at least a million dollars, so what is dear ol’ dads secret? How is he going to buy for $500,000? Sounds like his house is bottom of the ladder for the area (no offense meant). Is it possible that it is a bit overpriced right now? Is it really worth $1.1 MIL or so? Is it possible for selling prices to decline in your area any time soon? Many think it is. Think “Bubble”.
It sounds like you can’t quit afford the house, and the house might be a bit overpriced. There are untold numbers of ways to make enimies in this deal, what with siblings, parents, and the local economy in general. Whatever goes wrong, will be all your fault.
If the folks can get a reasonable offer on the house it might be prudent for them to take the money and go find another town to love, perhaps in the midwest or some place where a nice house is still cheap.
Re: Buying Parent’s Property - Posted by James Harris
Posted by James Harris on April 25, 2006 at 05:52:54:
Stephanie, Here’s a thought; Your parents could get a cash out refi, they may have to take it off the market. Have the house built on the property; You and your husband could lease-option the existing house from your dad. How old is your dad?
Re: Buying Parent’s (sic) Property - Posted by stephanie
Posted by stephanie on April 27, 2006 at 11:01:04:
Reading ALL the way through is ALWAYS best before replying to emails.
Re: Never - Posted by Stephanie
Posted by Stephanie on April 26, 2006 at 09:19:57:
And why not love a city/county? I grew up in Marin and it is still pretty much the same - quality, calibre people, beauty, similar slow growth and population.
And with that being said, yes I agree and know the wise premise - never do business with family. It seems someone would become unhappy.
Still wish I could buy it and keep the land in my family. Actually, the house is not overpriced. They’re asking 1.3 for over 2 acres with an incredible view and nice home. It will sell hopefully before the “bubble” pops and they will get what they want. My Dad will then turn around and probably buy a fixer in the area or farther north for 600+.
Can’t convince native Californians to move to the midwest, though I lived there and liked it.
Re: Buying Parent’s Property - Posted by stephanie
Posted by stephanie on April 25, 2006 at 10:32:50:
Interesting idea on the lease option. My dad is 67 and basically does not want the responsibility of being on the title anymore. He does not like all of his equity tied up in the house and is afraid of an earthquake. Thanks for your idea. Any other thoughts?