Posted by Tom Nagle on June 26, 2001 at 09:19:48:
Unless you have an FHA buyer or an “A” buyer, seasoning will be an issue that you have to deal with in PA. I would flip it and go on to your next deal.
Tom
Can I sell with Seller credit for repairs? - Posted by SueC
Posted by SueC on June 25, 2001 at 12:24:03:
I put my first property under agreement (who-hoo!) and I was planning to flip it to another investor, but then someone gave me another idea about selling it as a “handyman special”. Here’s my query:
The house has some fire damage, mainly the back porch and the kitchen. No real structural problems though. ARV is $35-38K. I am paying $3,500. I thought of advertising it as a handyman special with seller credit for repairs: offer it at $25K with a $5K giveback for fix. But, I’m not sure how this would work at closing: The buyer’s lender writes me a check for the $25K, and I write a separate check for $5K?
Am I making too much trouble for myself as a beginner?
Maybe an FHA 203K candidate… - Posted by JT - IN
Posted by JT - IN on June 25, 2001 at 21:44:50:
Sue:
What about the use of an FHA 203K loan, whereby the buyer/borrower, a retail owner occupant, could qualify for an FHA loan and fix-up costs.
I have a current property which we were considering this approach on, so we had an FHA Appraiser, who works with Wells Fargo Mtg., give a preliminary inspection, (for $ 100 bucks), as to whether and specifically what would fly with FHA 203K program. Seemed pretty simple, and if there is enough upside for a retail buyer, this may attract them to the property. The posibility of a 203K and an Ameridream program could get someone in with NO money down, provided they have decent credit.
Good Luck and congrats on putting this deal together. Like the saying goes, it’s always easier to make the 2nd one; usually referred to as in making the 2nd million, but applicable to making the 2nd house deal happen, as well.
JT - IN
Re: Can I sell with Seller credit for repairs? - Posted by Dee-Texas
Posted by Dee-Texas on June 25, 2001 at 16:31:35:
Hi Sue and Congrats!!
Sounds like this price of house would be a good USDA or Rural Housing (if you have time to wait) They will pay for repairs and give them the down payment. In other words if FMV is $35K and your asking $25K, USDA can give money for downpayment and repairs up to $35K and you get your $25K. If it doesn’t work on this one, maybe one down the line. I’m looking at them for refinancing some of my people.
Best Success,
Dee-Texas
Re: Can I sell with Seller credit for repairs? - Posted by Carey_PA
Posted by Carey_PA on June 25, 2001 at 15:58:55:
Sue,
That’s a great idea, just market it to the retail buyer that’s looking for a good deal!
I believe that everything would be taken care of at closing, you wouldn’t have to write the buyer a check, the appropriate funds would go to you at the end ($20k) and your buyer would get a check for $5k, the title company would take care of it all…you would just end up with your check and they buyer would end up with theirs.
Just like if you were to do a closing for me, the title company would hand me my check for my profit and they would hand you your check for your services (that they got from the HUD) and then that’s that. I don’t take my profit and THEN pay you…I hope I’m making some sense!
See ya thursday!
CAREY
Re: Can I sell with Seller credit for repairs? - Posted by BillW.
Posted by BillW. on June 25, 2001 at 15:18:57:
Sue, Congrats.
Why not just offer it for 20k as-is? No kickback.
You’ll probably need to seek out a handyman buyer who actually wants to either live in it or use it as a rental. Check also with landlords who are also general contractors. The spread between 20K and ARV is probably too small to attract investor type rehabbers because they will want 15-20K minimum profits for their work and efforts. Good luck.
BillW.
Re: Can I sell with Seller credit for repairs? - Posted by Matt B
Posted by Matt B on June 25, 2001 at 13:43:55:
CONGRATULATIONS, Sue! I’m sorry I don’t have much input to give on this type of deal, but I did want to express my congratulations to you for your first deal under contract.
One question though. With fire damage, I would assume that the repairs would be a little more extensive. Are you sure that this deal would support a $25,000 asking price? Of course, I avoid properties that need repairs, but the ARV looks a little too small to support your asking price with repairs. I’m not doubting you, just kind of wondering how you came up with your asking price. What are your estimates on repairs?
Re: Can I sell with Seller credit for repairs? - Posted by michael
Posted by michael on June 25, 2001 at 12:41:50:
Sue,
Unless you know of a private lender that will finance your buyer, it will be hard to find an mortgage lender who will give a loan without title seasoning. If I were you I would go for the quick flip and run.
Good luck!
Michael KY.
Re: Can I sell with Seller credit for repairs? - Posted by SueC
Posted by SueC on June 25, 2001 at 13:26:17:
Michael, thanks for the feedback, but I haven’t heard that seasoning is as much of an issue here in my area of PA. More of a problem will be that it is a rehab, and I don’t think a traditional bank will write a conventional loan, but I do know lenders who will work with such a property.