OPTION TO BUY - Posted by Matt(MI)

Real Estate Investing
1

Posted by John (Rome) on June 30, 2003 at 15:51:27:

try offering $1. :slight_smile:

J

2

OPTION TO BUY - Posted by Matt(MI)

Posted by Matt(MI) on June 30, 2003 at 13:27:55:

Hi, I have a seller back 2 payments…going on 3rd.
He has home w/50k MV and he paid 44,500 about a year or 2 ago. I haven’t seen it yet, but it’s a 2bd. on crawl space.

I’m thinking of signing option to buy and then flip to someone with ability to buy outright. I would do L/O but his pmt. is 375.00 and 47.00 taxes.

Problem: Seller has no job(laid off) and July 1 he’lll be back 3 payments. This looks like foreclosure deal.

Should I:

  1. Sign Option at 44k and Market home for him…do quick sale
    OR
  2. Negotiate a sale with his lender telling them he’s going to foreclosure anyway(try to buy btwn 30-35k)

HAS ANYONE HAD EXPERIENCE IN A SITUATION LIKE THIS?

Thanks in Advance.

Matt

3

Re: OPTION TO BUY - Posted by Dee-Texas

Posted by Dee-Texas on July 01, 2003 at 07:18:14:

Some questions:
What is the property worth in the neighborhood?
How much can you get in rent in that area?
Does the payment include insurance and taxes?
What interest rate is the owner paying.
This one looks mortgaged to the hilt.
The only way this would make sense is that it’s worth much more than what’s owed, you can rent it for much more than payments AND the owner has 4% interest on a 30 year note…just by the looks of the payment this doesn’t seem likely.
Don’t make his problems yours…check everything out and if it doesn’t make sense, let it go to foreclosure and then work on a short sale.
REMEMBER ALL NEWBIES…MAKE YOUR MONEY ON THE BUY. you can weather most any storm in RE if you do this ONE thing.
Great $uccess,
Dee-Texas

4

Re: OPTION TO BUY - Posted by Brent_IL

Posted by Brent_IL on June 30, 2003 at 17:41:34:

More info is necessary to formulate a good offer. When he bought the house a year, or two ago, did he make a 20% down payment or did he put 3% down? If the insurance isn’t included in the $375 payment, the guy has no equity for him to worry about. Costs of sale will be greater than his imagined equity. Three payments and clearing up his credit is enough.

You need to find out the total amount of the liens to know if you can sell at $44K.

5

Re: OPTION TO BUY - Posted by Randy

Posted by Randy on June 30, 2003 at 14:19:29:

Others here have way more experience than I, so you may get a more informed opinion. If he?s willing, a purchase agreement (for the best price you can get, at this point you haven?t said if he?s willing to GIVE YOU his $6-$7k equity) ? Put your ?Subject to partners approval? or other escape clause, tie it up for a short time and try to flip it.

You CAN NOT talk to his lender unless you get a ?release to disclose information? from him. Put your self in his shoes for a minute? if someone went to your lender, they disclosed confidential information about your loan? Can You Spell Law Suit?

Besides being illegal? it?s unethical! There are a lot of ways of making money in RE without doing so at another?s expense. Talk to the seller, see what he NEEDS, then try to structure a win/win? not I win ? YOU LOSE.

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Re: OPTION TO BUY - Posted by MATT(MI)

Posted by MATT(MI) on July 01, 2003 at 11:32:12:

Thanks DEE! =O)

7

Re: OPTION TO BUY - Posted by MATT(MI)

Posted by MATT(MI) on June 30, 2003 at 14:39:42:

He would like to preserve his credit. At this point he’s gonna let it go back though. I think he might just deed it to me, although I’m sure they would like some consideration for it.