Posted by David Alexander on May 19, 2000 at 19:04:34:
Well Lori,
You know who will buy those seconds from you and you won’t have to deal with those problems… 
David Alexander
Need Help Analyzing Current Offer - Posted by ChuckP
Posted by ChuckP on May 19, 2000 at 16:19:33:
I have a “cash” offer on one of my houses I was going to lease/option. I was asking 89.9K, but I have an offer for 94K with an 80% first with a 20% carry back. I don’t mind the carry back; however, I don’t think the place will appraise for 94K although the buyer’s agent says so.
Also, the buyer wants me to carry his loan fees and closing costs - no way. I say he brings the price down to the original 89.9K where I think the property will appraise.
He is an A credit buyer, but something just does not seem right especially since he is only putting down $500.00. I told the buyer’s agent that I would have to see at least a $1000.00 to consider the offer.
Any comments or suggestions?
Thanks,
Chuck
Re: Need Help Analyzing Current Offer - Posted by JPiper
Posted by JPiper on May 20, 2000 at 03:00:06:
It seems to me you’re chasing off a potentially good buyer. The first question to answer is whether you’re OK with carrying a second in the amount of 20%. Keep in mind there are some lenders who will make that 20% loan themselves…something the buyer or the Realtor might not be aware of.
If you’re OK with the idea of carrying the 20%…you accept the offer…but you put it on a tight rein. You accept subject to a condition that he provide you with an acceptable pre-approval letter within let’s say 5 days. Further, you continue to market the property looking for a back-up offer. Perhaps you even insert a kick-out clause…meaning if you find an acceptable back-up offer, the buyer would have 48 hours to remove his financial contingency.
Appraisals can be ordered quickly…you’ll know soon enough whether the property will appraise. I’ve seen many properties appraise for more than I thought they would (or should).
And by the way, I’ve had very few seconds default…but then again I’m not passive in my collection efforts.
JPiper
JPiper
Not so cynical - Posted by Bud Branstetter
Posted by Bud Branstetter on May 19, 2000 at 22:23:13:
I can see his reason for doing it this way. He can get in with no cash down. There are mortgage companies(and note buyers) that will do it. Your concern should be will he perform on the second. If you get a 1003 filled out and a credit report you can judge for yourself.
In order to make sure you don’t get wiped out have a third party collect and forward the payment on the first. Foreclose at the first need. Be able to contact the first mortgage to check yourself also. Send the mortgagee a letter that you would like to be notified if they default. See if your state has a procedure that you can file a notice at the courthouse that you must be notified of any foreclosure. Add a clause that a default in the first is a default in the junior liens.
Break your 20% down into a 10% 2nd and a 10% 3rd. Sell the 2nd after it is aged. Or use them to trade for down on houses or cars.
Then you can also decide how long you want to wait for a buyer to cash you out.
Re: If it smells like fish it probably is! - Posted by Lori Samson
Posted by Lori Samson on May 19, 2000 at 17:09:05:
I keep thinking of why they would want to over pay with good credit too. I always tell people that out of the 3-4 thousand calls I’ve received from potiental buyers that only 3-4 people have ever said they have good credit and I’ll bet 2 of them lied! See if it is the motivation of the agent to raise the price, for you would have to pay commission on that higher price. It still makes no sense! I figure if they really want to do it and you will still get the 89.9K then who cares how stupid it seems to us!I will say that every second, without exception,that I have done have all defaulted. I just personally will not do them anymore. I have lost over 60k in lost seconds. I even had one that I went by one day and found the front door laying in the livingroom floor. I checked on it and found out that it was forclosed on months earier and we never knew anything. I kissed off a 9500 second. If it really is bothering you then move on. Lori
New Information - I screwed up - Posted by ChuckP
Posted by ChuckP on May 20, 2000 at 09:29:30:
I think that I may have screwed up. My current realtor, who will be replaced after this deal, gave me bad comps. The house WILL appraise for 94K, so I under priced it by 4K. A house around the block just like it sold for 94K five days ago, plus I upgraded the house so I probably could have asked for 96 or 97K. As is, I have about 26K equity.
I have talked to his lender and they sent me an approval letter. The lender does have a history of closing deals, so I guess that’s good.
Also, he has agreed to a credit check, so I will pull his credit.
I will also add clauses stating that I have the unqualified right of refusal if the house does not appraise and if his credit does not meet my qualifications for the second. I will also add the clause that a default on the first retroactively defaults the junior liens.
Thanks and I will keep you guys posted as things develop.
Chuck