Posted by Paul H on March 20, 2001 at 12:19:52:
Hi Wayne,
The way I see it, your purchasing is attempting to purchase your property with no-money down and get cash back at closing. My guess is that you will end up with your $242,500 minus $20-$30,000 in cash to seller for fix ups, and you will have a note for the balance. All in all, you will sell your property for what you have agreed to, and your buyer will buy it with no money down and get cash back at closing for fix ups. Thanks
Here’s A Deal For Some Sharp eyes . . . - Posted by Wayne (MD)
Posted by Wayne (MD) on March 20, 2001 at 10:49:56:
Unbiased Opinion Needed Here . . .
My daughter and her husband have been presented with a purchase offer from a neighbor who also is a mortgage broker. For reasons that go far beyond those of simple business analysis and principles, I would greatly appreciate independent third party opinions of the following purchase offer facts:
?Effective Sale Price: $242,500?
?Seller to take back and hold a second mortgage in the amount of $48,000 @ 8% annual
interest, paid annually, due and payable in 48 months from day of closing.?
?Effective sale price will be increased by an undetermined amount to cover buyer settlement costs and to provide for funding for renovations to the property; adjusted sale price, no matter the amount, will not affect your net proceeds.?
Fair market value of the house is approx $290,000. Amount estimated for fix-up $20,000-$30,000 (my personal estimate). The purchaser does not indicate just how much the ?adjusted sales price? will be.
Thanks very much for your input.
Wayne
Re: ANNUAL payments? - Posted by Dallas
Posted by Dallas on March 20, 2001 at 17:32:16:
Annual payments? And when is the FIRST payment actually due? Immediately? Or in a year?
Re: Here’s A Deal For Some Sharp eyes . . . - Posted by CurtNY
Posted by CurtNY on March 20, 2001 at 12:42:30:
Wayne,
Paul is right, your buyer is trying to buy the home with no money down and get cash at closing to pay for repairs, which for the most part is fine. I do have two concerns: first if I was going to take back that large of a second I would want them to have some money in the deal. Second, the buyer is going to increase the “effective” purchase price to cover closing costs and repairs, he states that “your” (your dautghters) net proceeds will not be effected, well his is correct you will receive the same amount, but your capital gains will increase. The IRS will calculate the capital gains as the final “effective” sales price minus how much was paid for the home (for the most part). So if your daughter is subject to capital gains on this property I would take a hard look at the numbers. Good Luck!
CurtNY