Working a sweet deal need advice - Posted by Michelle

Posted by Michelle on April 26, 2006 at 07:25:59:

Update: hole foundation not stable must either repour or most likely will fill the hole back in and return to the original 2car garage.

Working a sweet deal need advice - Posted by Michelle

Posted by Michelle on April 25, 2006 at 12:58:43:

Have a contract on house for 183,000 with ARV $260,000 at current sq ft of 1895. Previous owner added 1038 sq ft which I need to finish remodel on and with 3000sq ft the new ARV will be much higher. The highest home in a 1.5mi radius at 1895 sq ft sold for 289K.

Three questions:

I have a hole 21’ by 15’ inside where the garage used to be, and I need to convert it into a bsmt rec room. Contractor estimates for framing this cinderblock/concrete floor hole, finishing it to sheet rock, ceiling with existing skylights, and stairs ----- $30,000. What or how could I do this cheaper b/c am also finishing kitch/greatroom (gutted) and MBR incl bath area that only has plumbing run.

Owner is carrying 123K (he owns the house outright) until I rehab and sell. I have the contract but am not recorded as owner. Do I have to be? One of my HMLenders wants me to be recorded and he wants to be in first position but isn’t the owner already in first position?

How do I work the closing so that my 183K price is not disclosed so it doesn’t affect property values? (cz I’m looking at another home in the area). A simultaneous close as I understand it will disclose my purchase price on public record.



Re: Working a sweet deal need advice - Posted by CD

Posted by CD on April 26, 2006 at 08:05:58:

I might be able to help with a couple of questions . . . working last to first.

First of all, the low purchase price shouldn’t effect property values. Appraisers will see that it was sold well below market value, and discount its’ use as a comparable. Typically appraisers will weed out sales that are either extremely high, or in your case, extremely low. Furthermore, appraisers don’t like to use comparables that need remodeling, because there is not a lot of properties that all need the same repairs - MBR finished, garage finished, etc. It just requires too many adjustments in order to make the properties comparable.

You didn’t specify the seller’s exact interest in the property. Regardless if it is a contract for deed, or a seller-held mortgage, you have legal ownership of the property, although only you and the seller have legitimate proof. However, until you record the deed it cannot be sold, and without public notice of ownership (recording), no lender will loan you money on something that you “say” you own.

It sounds as if the seller is currently in the first position. The HML wil have to put $123k plus whatever cash out you want in order to lend the money. This will pay the seller off, and put the HML into 1st.

As far as the repairs, get as many quotes from reputable contractors as you can.

Hope this helps.