Posted by Michael on February 15, 2000 at 09:55:31:
nt
Need suggestions and alternatives - Posted by Dave_AZ
Posted by Dave_AZ on February 14, 2000 at 22:36:12:
A friend of mine contacted me and wants to sell me his home. The particulars are:
sell price: $100k (firm)
2 mortgages: 1st 7%/30years still owes @40k, seller says it is assumeable. 2nd ARM present 7% still owes 37K.
1100 sq ft.
3 bedroom, 1 3/4 bath
carport
stove and ref to stay, washer/dryer negotiable.
in ground spinkler system (a plus in Aridzona)
24x34 shed
needs work on roof
wants 10k in order to place down payment on a new house in another state. will finance 13k.
Comps currently unavailable from OCTITLE but according to him comps in the area are in the neighborhood of 110k (but also admits the other homes are a little larger).
I realize the numbers leave a very thin deal. Was looking at possibly assuming the first, getting 2nd to discount (I hope) and refinance, having him take back the full 23k and have him sell note at the closing table or shortly after (I don’t have 10k and won’t want to use it if I did).
Other is to convince him the comps don’t mean anything since he is comparing apples to oranges (small to large) and have him accept 87-90k.
Need any ideas. Even the ones that say I am out of my mind on this one.
Dave
Re: Need suggestions and alternatives - Posted by Stacy (AZ)
Posted by Stacy (AZ) on February 15, 2000 at 12:30:08:
Dave-
Not a complete analysis of your deal, but some quick thoughts…
I agree with Michael, you need comps, but I bet you knew this.
Getting the second to discount if the payments are current is not a good bet on an institutional second, which I assume this is becasue it’s an ARM. It’s not even a sure thing if the loan is in default. I think you were counting on this to get your deal to work at full price, so in my opinion, full price is not an option.
As you said, the deal is very thin, and I would add the seller doesn’t seem motivated. Sounds like he means “firm”. But by making a low offer you could tell how motivated he is (and test your friendship at the same time).
Unless he would consider a sharp discount, I wouldn’t bother with this deal, if it was me. Even if he accepted $87K, that leaves you only $13K for repairs, closing costs, holding costs, and selling expenses.
I have been assuming you plan to flip this. If you are looking to rent or L/O the property, that’s a whole different subject. What are your plans?
Stacy