Posted by jeff on July 06, 2002 at 20:10:45:
to the best of my knowledge on that post, he is gonna be sellnig the property for 110K, but it will only be appraised for 100K even after the sale. he is not going to be jacknig up the appraisal price, just sellnig above the appraisal. he is gonna be sellnig his 88K not for 70K which will give the note buyer a 70% LTV using this 100K appraised value. the buyer brings 22K to the closing table and the rest is funded by the carry back note proposed here, which is being sold at the table also.
i see where hes going with this, bad credit equals willingness to pay above FMV with owner financing terms. but i ahev to agree with phil here, its unlikely that very many people have 22 laying in the couch cushions waiting to be handed to you for your creative terms. once you factor in the credit unworthiness of the buyers, that further disposes of this possibility.
you may get this accomplished, it is theoretically possible, but its gonna be tough for several reasons. the main three i see here are the above FMV selling price, the 22K needed at the closing table in cash, and the liklihood of fniding a buyer for the disounted note. this note while being at 70% LTV of the house itself, is only discounted 18K for the buyer. this is somewhere in the range of 80% LTV of the actual lien placed on the property for your note. the other 10% that makes up the difference of the LTV’s is equity owned by the buyers once they hand you 22K and is not recoverable by the note buyer, although it does give them greater security for repayment and recovery of their cash invested since the property is actually worth that other 10% on the auction floor.
oh yeah 11%? thatll kill the deal more than likely without a motivated buyer waiting in the wings.