Posted by Ryan on February 09, 2004 at 13:41:01:
Richard,
Considering the comps you are using are from a good source such as a realtor I would say you have a good deal.
The first question I would ask you is how is your credit and what sort of working capital do you have to invest. Considering you would have around 79K in equity when you buy it I would tie the property up immediately with a contract pending an inspection. This way you have a way out. I would advise that you check title and verify he is disclosing all liens on the property if you are considering handing him the cash and taking the property subject-to. This would avoid any loan approval if your credit is poor.
If you purchase the property with conventional financing a bank will title insurance which will check title before closing.
Richard considering you do not have a lot of experience I would get an inspection to make sure there is nothing wrong with the property. Also it may be to your advantage to ask when he purchased the property. If he only purchased a couple of years ago did he put a substantial amount down. If not why did he get it so cheap. If he has owned it for a very long time his equity is understandable. I would ask a realtor to pull comps on properties that have sold in the last year around the property just to verify value.
I hope this helps.