Thinking out loud about a deal… - Posted by Jim Beavens
Posted by Jim Beavens on June 14, 2000 at 23:45:27:
I talked to a seller today about a 3,600(!) sq.ft house. I was inspired to call on this ad because the asking price is $225k, and around here it’s kind of rare to see prices less than $90-$100/sq.ft (if you’re from Oregon, this is in Beaverton). Also, the ad mentioned flexible owner-carry terms. Anyway, here are the details on the house:
The house was built in 1956, and this seller is the original owner. He’s had it for 45 years, and owns it free and clear.
He moved out last August and moved into a retirement community. It’s now vacant (although he’s obviously not making any payments ;).
It appraised one year ago for $243,500 (he mentioned that he’s added 2 additions over the years, so I suspect he’s improved it more than comparable homes in the neighborhood). A current value of $250K wouldn’t be out of the question.
He said that if a buyer got a first mortgage for $150K, he would be willing to hold a $75K second, with interest-only payments and a 5-year balloon.
Based on that last item, I determined that he was pretty flexible, so I made an appointment to meet him at the house tomorrow. Now I wish I had gotten more information on what exactly his needs are, but oh well I’m still learning. =) I’ll just find out tomorrow. He didn’t sound terribly motivated, but he did sound easy-going and flexible. I just get the impression he doesn’t care a great deal, because he knows no matter what he’s getting a whole lot of money. =)
What I need are suggestions on different kinds of offers I can make. It seems like the sky is the limit with something like this.
- $175K cash only.
- $150K cash with a $50K second (I’ll give you your cash but for a lower price
- $100K cash with a $125K second (I’ll give your price but with less cash).
- Lease-option for $225K. This is the most compelling to me, because the payments can potentially be a LOT lower. In fact, if he went for this, depending on what the payments were, I could see me moving into such a house for myself (my wife’s been bugging me that she wants to move, and man that just keeps screwing up how I look at deals ;).
Anyway, I just wanted to get my thoughts organized, and figured I might as well do it here on the board in case anybody has any thoughts. I realize that with what he’s asking, this deal is fairly skinny, but I figure I could use the negotiation practice anyway. =)