Posted by msboston on January 25, 2000 at 20:53:10:
So Justin
what happened? Did the Hispanic couple work out?
Good Luck!
I found a potential buyer for my house, but… - Posted by Justin-IL
Posted by Justin-IL on January 25, 2000 at 17:42:16:
He has shaky credit. A FICO score of 468. I found a mortgage broker who said he could fund 80% with about 4 points in closing costs. The buyer says he can get $4000 within 10 days to put down…
Here are the numbers for the deal:
My purchase price: 61K
Selling price: 80K
Buyer’s downpayment: 4K (This will cover closing costs)
Amount funded (lender): 64K
My purchase price: -61K
I’ll net from close: 3K
Plus: I’ll hold a 2nd mortgage for 12K, at a fair interest rate, probably with a 5 year balloon. I’ll work with this guy to get him refinanced after a year or two.
What do you think about this possible deal? Is there anything I’m missing here? To tell the truth, I’d be happy just getting the 3K and not even expect to receive the 12K from the second mortgage. I know how 2nd’s like these are high risk for default, so I would look at it as a “special bonus cashflow”.
I’m thinking about going with this guy; I wanted this deal closed yesterday. I’d be happy with 3K.
Any input would be appreciated…
Justin and Amanda
Work with the better credit buyers… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on January 25, 2000 at 23:26:02:
Justin:
I would advocate you working with the Hispanic couple but to also make it clear to them that you “might” be willing to finance the sale if they cannot get a quick approval from their mortgage source.
As you and I have discussed, it pays to wait for a little better credit quaility buyer to come along since it creates more options for you as the seller. Sure they can try to obtain their own financing, BUT if they are putting down some real cash as a down payment you can also work with them on an owner financed deal and still make a respectable profit.
Michael Morrongiello
FelixM1@aol.com
Hold that thought… - Posted by Justin-IL
Posted by Justin-IL on January 25, 2000 at 20:31:39:
Just got a call from the sister of a couple who were at my open house last Sunday. The couple is Hispanic and don’t speak English very well. Anyways, their sister told me that they liked the house and were pre-approved for a 75,000 mortgage, and offered me 75K cash. They’re going to fax over their pre-approval letter tomorrow. If everything checks out, I’ll collect $500-1000 earnest and go with them!
Funny how things work out sometimes…
Justin
Re: I found a potential buyer for my house, but… - Posted by JeneanNC
Posted by JeneanNC on January 25, 2000 at 20:00:48:
I was in a similar situation and my accountant told me if the buyer does not pay the second, I could write a portion of it off as a loss when I filed my taxes. This would help offset the capital gain taxes from the sale.
I would look a little harder for a buyer. - Posted by Mark-NC
Posted by Mark-NC on January 25, 2000 at 19:28:01:
Justin,
It just doesn’t seem like its worth the effort for that little bit of a cash return. By the time you pay the taxes on the deal with the second mortgage involved you will probably be lucky to have enough money left over to buy a good meal.
This property is an ideal candidate for a seller finance deal and sell the Note at closing. You may attract more buyers to it this way and possibly put more money in your pocket.
Another thing, I would be concerned about is the buyers low credit score. Can the mortgage broker really get them in on an 80% LTV, or is this just a pre approval? And if you did decide to accept payments on a second would you really get paid. Chances are slim that they will, based on their current credit score.
I may be wrong but I probably wouldn’t sell it to them. There is just too much room in the deal to make money from a better buyer.
Good luck with whatever you decide.
Mark
Re: I found a potential buyer for my house, but… - Posted by chris
Posted by chris on January 25, 2000 at 18:43:39:
Justin-
You may want to see what the buyer’s previous housing payments were to make sure that this deal will provide him with similar payments so that he does not have an even higher chance of default. You say that you are willing to let your 2nd go so it may not be a big deal to even check this out.
-Good Luck, Chris
Re: I found a potential buyer for my house, but… - Posted by Bill Malone, Broker
Posted by Bill Malone, Broker on January 25, 2000 at 18:28:13:
The real question here is, “Is the real gain of 3K suffcient to make me happy?” My license is in TN, AR, and MS (I don’t know where you are) but my experience with these loans is that they are shady at the least, (on the surface the investor is told the second is legitemate, when the buyere probably never really intends to pay it back) and the experiences I have had, and my agents have had, have shown that most of these seconds are rarely ever paid back. My main concern is that eventually federal banking officials may come back and penalize someone for having entered into this arrangement. BE CAUTIOUS!
Re: See I told you so - Posted by Tim Jensen
Posted by Tim Jensen on January 25, 2000 at 21:15:05:
Good Job!!
Re: I found a potential buyer for my house, but… - Posted by Justin-IL
Posted by Justin-IL on January 25, 2000 at 19:05:30:
Thanks for the reply, Chris. He’s currently paying $675 for rent, him and his wife together make about 50K a year. I asked him how much he could afford and he said around 800.
But like you said, I’m not really worried whether or not he pays, I just want the cash. It’s paying for our trip to Atlanta. 
Take it easy…
Justin
Thanks for the reply (nt) - Posted by Justin-IL
Posted by Justin-IL on January 25, 2000 at 19:10:08:
nt