Posted by IB (NJ) on July 10, 2002 at 15:30:47:
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Should I Let Seller Stay? - Posted by IB (NJ)
Posted by IB (NJ) on July 10, 2002 at 07:35:54:
I?m in the middle of negotiating with an elderly woman to buy her huge 3 family from her. It?s been in the family for 30 years and sits on a double lot. The ARV of the house is about $150k. Repair cost should be around $25-30k. I can rip down the decaying (roof and garage doors) garage and build another house on the extra lot (A good way to get into building). She doesn?t seem particularly attached to the house and owns no mortgage on it (she inherited the property). She just wants to sell, retire from her job (in 17 months) and either move into a retirement home or an apartment.
I was thinking of offering her $50k cash that she could receive in about 7 days and letting her stay in the house for another 30-60 days. She seems to be more concerned with how and where she will move to than the price. Thus, I would offer to pay her moving expenses and maybe first month rent on her new apartment (I?ll probably hold onto the 1 month rent as a plan B negotiating tool).
Any problems associated with letting her stay another 30-60 days after closing? I usually don?t like doing this but the profit potential in this seems to far out weigh the risk. What do you all think?
Re: Should I Let Seller Stay? - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on July 10, 2002 at 10:12:57:
I like what Jim says, if you are going to let the owner stay. Set a date in the contract for closing and a date of possession. Give her what ever time line you both negotiate and set that for the possession date. Keep the majority of the money in escrow and have a per day penalty for staying beyond the possession date so you have something to enforce should things go wrong. I wouldn’t give any major money to her until she moves out and the contract could be written so that she can get a token $5k up front to take care of her affairs and prepare to move, with the balance upon giving up possession.
Re: Should I Let Seller Stay? - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on July 10, 2002 at 08:13:14:
If you decide to let her stay after closing, you should be aware that there is some risk involved.
One way that I mitigate that risk is to retain a portion of the sale proceeds in escrow after closing until possession is surrendered. As an example, let’s say the seller is going to net $47K from the sale. I’d agree to release $25K at closing and the remaining $22K upon possession. This gives the seller a compelling incentive to move out and leave the place in good shape.
Best of Success!!
Jim Kennedy,
Houston, TX
Re: Should I Let Seller Stay? - Posted by Clair-MO
Posted by Clair-MO on July 10, 2002 at 07:40:59:
IB, If she has no where else to go. Let her stay another 30 to 60 days for her to find some place to go too. I think it is very commendable on your part to let her stay those extra days!