Is this deal worth pursuing? - Posted by Tony

Posted by Brent_IL on July 05, 2003 at 01:59:01:

Sure it’s worth pursuing, there’s significant equity to play with.

Make sure that you and the seller are talking about the same things. If he agrees to sell for $320K and he pays off the first, he’ll have $60,000 less closing costs less the purchase money mortgage loan, left over to buy a smaller house. Is that enough where you live?

If it’s good for him, find out how little cash he really needs and work from there. Remember that what he said was that he wants income payments. Those payments can be at zero interest.

Is this deal worth pursuing? - Posted by Tony

Posted by Tony on July 05, 2003 at 24:56:07:

I talked to a potential seller. The house comps around 410K to 415K. The owner owes 260k. He might be willing to sell the house for 320K.

The house is 2 years old. Excellent condition. No repairs needed.

Should I invest the 320K and try to sell at retail or use a more creative buying technique? He said he might be willing to take some cash now and some monthly.

He needs enough cash for a smaller less expensive house. The current house is too big after his kids moved out.

Any advice?

Re: Is this deal worth pursuing? - Posted by Bill Ascherfeld

Posted by Bill Ascherfeld on July 05, 2003 at 01:59:46:

At first glance I’d say, yes, go for it, but a lot depends on where the house is located and why the seller is willing to take a 22% hit on the comps., and, if your comps are accurate.

On the surface you stand to gross $90,000 in just selling at retail and going into a double escrow without ever taking title. But how hot is the market in your area? In So Cal, where I practice, the market is so hot this house would sell and resell virtually overnight. But, just because of that super heated market environment you would have a harder time than finding chicken lips finding a seller willing to take such a hit. There must be a reason. I say, dig deeper. Look for hidden pitfalls – the structural soundness of the house; if the seller is not disclosing a huge income tax lien which would follow the property; an undisclosed Black Mold problem; etc. If not, GO FOR IT. Seller carry back is the ultimate in creative deals. In many areas of the country you could refinance that house based on appraised value and give the seller the cash he needs for a down on a smaller house and keep some cash out of the deal for yourself. (if YOUR credit is good enough. In some areas, $100,000 buys an adequate small house. Buyers can get financed for 5% or less down. Do the deal where he gets $5,000.

So, where’s the house?