Posted by Maurice (Ca) on May 30, 1999 at 16:01:45:
Thanks for your input, it really helps to get different angles. I’m going to make the offer to him today. I’ll let everyone know hot it goes.
Seller Financing ? - Posted by Maurice (Ca)
Posted by Maurice (Ca) on May 30, 1999 at 12:55:04:
Hello All:
Here’s the situation (and yes I did ask this question in news group II, but things have changed):
A seller asking $109,000 for a 3br/2ba/2 car gar (SFH); He owns free & clear; house next door just appraised at $108,000 (a bit smaller though)& I ran comps & his asking price is about at market value; He’s a tired land-lord who’s wife unfortunately died a year ago & he just wants to move back to his home in Torrance; he’s very sick (health-wise) & deppressed; he doesn’t care whether he gets all cash up front or whether he carries, he just wants his full asking price: if he carries, he’s only asking 7% interest for 30 years, no balloon, no prepayment penalty. But you have to have good credit (he just evicted a person that trashed his home); I don’t have good credit; he also wants $5,000 deposit ( I don’t have that either).
Because he feels he only has about 2 years left to live, he just wants to make sure that money is coming in for his 27 year old son. I explained my credit situation with him & asked if he’d consider a lease-option…he said no, because he doesn’t want to land-lord. I explained the benefits, but he just wasn’t buying it. I tried different approaches & we finally found a common ground: he’s too sick to really market this house aggressively, yet the potential buyer needs decent credit; And I feel that I COULD aggressively market the house & find him someone to fit his criteria that would have the deposit. The house has no repair needs & is in great condition (easy to show) & rents in this area supports up to $950.
So, I thought I could sign a contract with him with $100 earnest deposit under the following:
In 30 days he’ll get $5,000 which will pre-pay for the next several months; he’ll carry for 30 years at 7% interest, no balloon, no prepayment penalty.
What that would do is give me time to market like crazy & find someone with decent credit & a deposit of let’s say $10,000 & I’ll either charge 9% interest to them (small monthly cash-flow) or just flip them the contract for a fee.
I would like to know if this is good way to set this up…if not, I’d appreciate any advice. And if this is ok to do, then would this have to go through escrow? How would this be set up? How should I word the contract?
This aspect is very new to me, yet I know this has potential. Thanks in advance.
Re: Seller Financing ? - Posted by Bud Branstetter
Posted by Bud Branstetter on May 30, 1999 at 15:05:44:
Make sure that will allow the option contract to have someone assume the note created so that you can wrap it. You can shorten the time period or balloon to increase the cash flow and make it more valuable. You can ask for more that 30 days as it may take 45.
I would also suggest to him that he put the note in a trust so that it becomes personal property and does not have to go through probate.