Posted by Jay (MI) on July 10, 2003 at 15:32:50:
I would explain it to the seller like this:
If you were going to sell through a realtor, which I may have to do if I can’t move the property, would cost you:
6% Realtor Fee = $5,400
3% Transfer tax = $2,700
5% holding cost (your profit - gotta have a profit) = $4,500. (You can also explain this as ~6 mo’s in payments, which is probably how long it will take for him to sell the house through a realtor.)
“The most I can offer you for this house is $77,400.
Basically you would have to give me $5,000 to take this house. I understand that is a lot of money, but I can’t take the risk of holding the property at $83,000”. Also, don’t forget to negotiate him paying the next 3 payments (at least 2).
With that said, the deal could still work based on the back end and the monthly spread. I would try to get something out of the seller. If he doesn’t buy into that, I would make a deal with him that stipulated I would take control of the house for the $83k when I found a T/B and had the non refundable option consideration in my hand. That way your at least partially protected.
If it was a nice house, in a nice area, I would take the deal on the terms that I mentioned above. If not, tell him to have a nice day, and find another deal.