Posted by Bassman on December 02, 1999 at 05:02:34:
Why not get an Option for 295K ( is that the lowest he would go for all cash?) Then market it at 3330k all cash . You may not make 60k but a quick 35k is better than nothing.And you wont have to worry about notes and holding costs if it takes awhile to get a buyer.
Just my thoughts.
Scott
I need some advice on this deal… Thanks a million!!! - Posted by JohnB_NJ
Posted by JohnB_NJ on December 01, 1999 at 22:22:16:
Nice house on bayfront property. Will appraise for over 360k. Needs nothing. Owner needs to sell so he can by a different house. There is a 130k first mortgage. Seller needs 50k to put down on a house he has under contract.
The seller will sell for 295k. It is listed with a Realtor.
Ok, so the seller needs roughly 200k to pay off existing first (needs to do this so he can qualify for another loan), 50k for the down payment on new house and 15k in commissions to Realtor.
I have a very short fuse on this. The seller’s contract to buy the other house terminates on Dec. 15th. If he gets his current house under contract, he will be able to extend his purchase contract. I would like to put the home under contract and advertise it for sale in the North New Jersey area where the “money is” and find a buyer that would love to own a bayfront house.
The seller is willing to hold paper for the remaining 95k for upto 5 years at 7% amortized for 30yrs (2nd position).
Since this is my first “high end” deal, I need some advice.
My partner was thinking that we can find a buyer with 10 to 20% down on the 360k price and create a note for the difference and sell the note at simultaneous closing (I think that would be a triple close) to fund the deal. Again, the seller will hold a 95k second.
Of course I will have to spend some cash to advertise the heck out of this property but the my sellers are very cooperative and will help me show it to my buyers. My only fear is the Realtor will put her nose into the deal and screw it all up. Oh, the house is listed at $389,000. She has it listed way to high. The house is truely only a three bedroom with a loft but she has it listed as a 5 bedroom. The house has been on the market for a few months with only a few showing and really no interest.
Again, any and all advice will be greatly appreciated. My partner, Mark, put a call into American Note to see what they can do with this deal.
Thank you and have a great day!!!
Sincerely,
John Bittel
Mark Russomanno
Just some comments - Posted by John (WA)
Posted by John (WA) on December 02, 1999 at 09:19:05:
First of all I have to question the value…You say it will appraise for >360K but you also say 389K is way too high. Realize that 389K is only 8% more than 360K. Point is, 8% is not that much more. Also, the fact that it has been on the market for several months (with little interest) should be an indication of the demand and perceived value of the home by the general public. Value in high end homes can be pretty subjective as well as having a limited buying audience. Maybe the true value is closer to 330K. If that is the case and you are buying at 295K then you would only be purchasing for 11% under market. Considering that you might have to resort to a RE agent to help you sell it, there would be no profit. Additionally, this is winter and home sales are slowing which will affect your carrying time. Right now he is the guy with the problem, don’t make it yours.
In addition to an all cash offer of 235K you might also try an alternate offer. Perhaps the guy would be willing to create a partnership with you such that you split any profit above the 235K or something along those lines. Personally, I would be looking to take some of the risk out of the deal.
Re: I need some advice on this deal… Thanks a million!!! - Posted by steph in tex
Posted by steph in tex on December 02, 1999 at 06:40:27:
hey John,
what do you think the house will Appraise for? Maybe even a little more than 360K??
how about offering the seller 235K cash, and using hard money? you can cash him out quickly and then open up your profit margin. if he won’t go for the 235K , he can carry a 2nd - my hard money lender will lend me 65% of ARV wether my seller is carrying a 2nd or not. have him carry a 2nd, and defer payments for 6months. then get to work. i’d try for the 235K and he’d be done, or maybe the house will appraise higher so you can up your cash offer…? just some thoughts
steph in tex