How much to close on a 2nd? - Posted by george

Posted by dealmaekr on January 20, 2008 at 09:15:11:

Oh, I understand why you did it, not saying I wouldn’t have done it in your situation, but probably not.

I’ve bought lots of seconds, from people in your situation, generally for 30 cents on the dollar, and always with either lots of equity or a ppty I really wanted. Nice returns on the investments I’ve made.

Now however, I buy for cash, and seller finance the first when I sell. No need for a second, just collect the down and charge a higher interest rate if the buyer doesn’t have enough skin in the game. That way I always KNOW who the first it, and whether or not it’s current.


How much to close on a 2nd? - Posted by george

Posted by george on January 19, 2008 at 04:55:31:

I sold a house and took back a “throwaway second” for $15k. The buyer stopped paying me, but is struggling paying the lender on the first. It’s a nice $245k house, the first is around $180k.

The spread is now close enough to where I might consider foreclosing on my second and taking the house back. But I have no idea what the expense would be.

Can someone give me a rough idea? I’m in Texas.


Re: How much to close on a 2nd? - Posted by Natalie-VA

Posted by Natalie-VA on January 22, 2008 at 07:23:40:

In my area, a house worth 245k wouldn’t sell at auction for more than the 170s. You might end up throwing good money away if you take it to auction.


Foreclose/Trustee’s sale - Posted by dealmaker

Posted by dealmaker on January 19, 2008 at 09:30:04:

The last one I did cost me about $1100 IIRC. Of course you’re then in the position of having to get the first if you actually want the house “back”. The buyer still owns it as long as he’s paying on it. I guess technically you’d own it “subject to”, now that I think more about it.

That’s why I never take 2nds, only firsts.


Re: Foreclose/Trustee’s sale - Posted by george

Posted by george on January 19, 2008 at 12:47:33:

Thanks, Dealmaker. This gives me an idea. I’ll be on the fence deciding whether or not it’s worth taking back.

Of course, I would be getting the deed, but be responsible for the payments on the first. Was this a temporary senior moment?

I call this a “throwaway” because if they don’t pay I wasn’t counting on it. I never think of a 2nd as real money.

Don’t ever say never to 2nds. Here’s why: Sometimes in negotiating I will have reached my selling price as far as I am concerned. But then I will say that we are so close, that I would take a no-interest 5yr second note.(even tho they’ve reached my price.) This is usually okay with them since their down or monthly payment is not affected.

Then 5 yrs down the road, (or less if they refi or sell,) I get an unexpected $5k I wouldn’t have gotten otherwise.

Never say never. You might be passing up a lot of free money.