First 2 deals HELP! - Posted by Abby G.(CA)

Posted by Vic on June 08, 2000 at 02:02:48:



To answer your question about qualifying. In all likliehood the bank is going to ask for some kind of proof that you would qualify for that kind of a loan. Remember the bank is selling the house to “you”, not to anyone else. They could care less what you want to do with it. You are asking them to take their house off the mkt. because you want to buy it. They’re alot more likely to do this if they know you can qualify for a loan.

Now with that said, providing proof shouldn’t be all that difficult. Just get a mtg. broker to write a letter saying that you’re qual’d for that much of a loan. Then later, if things fall apart & you don’t want to buy it, just get another letter stating that you didn’t quite fit their parameters for a loan. (I wouldn’t do this too often though, cuz if you do, word will get around.) This should suffice for the bank. They may want to follow up though with phone calls to your mtg. broker to make sure things are progressing, so be prepared for that.

You also said something else that disturbs me. You said you sent the buyers to go look at this house. What happens if they go look at the house & then make a deal with the seller directly? Have you protected yourself in any way (such as a non-circumvent agmt.)? or are you just relying on buyer’s word? I certainly hope it’s not the latter, because you’ll be in for the shock of your life when the buyer goes around you. It happens many, many times. You have to protect yourself at all times in this biz. Never forget that!

It sounds like your buyer can qualify for the house based on what you’re telling me. I would however, want to make sure that they actually have that much cash in the bank before you sign any contracts. Just get them to sign a letter that says that the bank gives you permission to verify that those funds are actually in their acct. Then take this form to bank & verify the funds.

Abby, I would also contact their mtg. broker/bank & make sure they qualify there as well. Never assume that a buyer knows what they are talking about when it comes to financing. Most have no clue what’s involved with getting financing for a house.

As for the price. I really don’t know if that’s a good deal or not. How much is that extra land really worth? That would be the thing to find out. I’m not real sure how you would do that though. Perhaps you could get an appraisal, but that’s only going to be one person’s opinion. I think the bottom line though will be how much can you buy it for & how much will your buyers pay for it. Once you know this then you can make a good decision if the risk is worth it. Make sure you do all your homework on this one though. You don’t want to end up losing a deposit if it can be avoided. If you have a real estate friend, you may want to ask them to help you on this, as it sounds like it could get a bit complicated.

I hope this post doesn’t discourage you in any way, because it’s not meant to do that. Just want to make sure you know what you’re getting in to & help you avoid some mistakes.

Good Luck & let me know the outcome.


First 2 deals HELP! - Posted by Abby G.(CA)

Posted by Abby G.(CA) on June 06, 2000 at 18:16:32:

First of all thanks ahead of time. I’m new to this but, I feel I have read enough to jump into the shark tank! OK here are my two deals…

#1 Buyer who called my ad and is looking for a house with a large yard. They have money to put down and or they would like to use their VA loan if possible. They want a 2 bd 1ba with ability to add on or 3 bd 1 ba. The main concern is the large yard and payments need to be below $1500 per month.

I found a property and it’s owned by a corporation and handled by a realtor. They want 185k it’s a 2bd w bonus room and large yard. I thought I could get the property under contract and sell the contract to them.
Question 1.How much do I ask for to sell the contract?
2. How much earnest money should I put down to secure the place? Since I already have a buyer how would you work this?

DEAL #2 Buyer ran add in paper saying she’s looking for a 3-4 bd house and wants owner to carry back. I called and asked why? She was pre-qualified for 130k but, houses in market are going for 189-215k. I thought I would find a home wholesale or retail, have her use her loan for 130k and I can get a loan for the difference then, carry back the mortgage payments to the balance with a 12.75% yeild. Does this make any sense? Can it be done? How should I structure the paper work on this???

THANKS :slight_smile: Abby G.

Re: First 2 deals HELP! - Posted by Vic

Posted by Vic on June 07, 2000 at 02:49:40:


Deal #1. Before you sign your name on a contract, make sure that the buyer wants to buy that particular house, otherwise you could end up stuck with it. Just get a non-circumvent agmt. signed with the seller which states that the seller cannot go around you to sell that house to your buyer.

As for how much you sell that house to your buyer for depends on you & the appraisal. The pmt. for a 185K house though, is going to be more than $1500 once you add in ins., taxes, etc. At 8.75 APR, the pmt. for just principal & int. is $1455.95. Ins. would probably be another $75-$125/mo. plus taxes & PMI. the total pmt. may be closer to $1650 - $1700/mo. This is assuming a $185K VA loan with no down pmt. By the way, how do you even know if they qualify for that much of a loan?

If you want to put the place under contract & then assign the contract to them, the amt. you charge them is totally up to you. I would think that you’d want to at least get $8K -$10K minimum for your trouble.

I think you may be jumping a lil too quick at this. Your first step should be to get these people to a mtg. broker to see how much they qualify for, then work on getting that house under contract. Also, theyre asking $185K for the house, but how much is it really worth? You need to find out the FMV before you do anything with this house.

Another problem you may have is that if you buy this house from a bank, they may want to see a letter or something from your mtg. broker that says that “you” are qualified to get that kind of a mtg. After all, they are selling the house to you, not to your buyer.

These are only some of the areas that you’d better take a look at before you go any further. Do your due dilligence so that you don’t end up on the losing end.

Good Luck,

Owner Carry back - Posted by Abby G.(CA)

Posted by Abby G.(CA) on June 06, 2000 at 18:45:40:

I forgot another scenario on the second deal… I was also thinking of simply flipping this property to her. Meaning I’d find the property and owner willing to carry the second portion of the loan. Wouldn’t that mean that the bank gives her 130k to purchase this house–she gives it cash towards the principal and I wanted to ask for 10k to sell her the contract that I set up at closing of the first mortgage with the bank. Does anyone know if I’m dreaming up schemes or does this sound legitimate?

Re: First 2 deals HELP! - Posted by Abby G.(CA)

Posted by Abby G.(CA) on June 07, 2000 at 15:52:38:

Thank You very much! So, you mean that before I can flip properties I actually have to qualify just to put the house under contract?

As far as the qualifying goes, they qualify for 105k on a VA loan and they have cash to pay the rest. In addition, the FMV of the house is btw. 170-180 although, that lot is 1000 sq ft larger than the average house in the area. I sent the family to look at the house before I get it under contract. I’ll keep you posted THANKS!