Need insight on Deal! Please Help!! - Posted by William

Posted by js-Indianapolis on September 12, 2002 at 16:16:16:

I just get the feeling that this one could go sideways, in a hurry. Something just tells me you need to do a little more work on evaluating the house.

As well as evaluating the seller. He needs 15K to buy an apartment, and can’t just get that in an equity line of credit off a house that has 40K in equity?

I’d be oh so careful. I get the feeling this guy is seriously controlling you, unstead of you staying in control. He said go get me 15K, and close by December, or I’m going to sell it to someone who can cash me out in less than 30 days? Hmmmm…why is he holding it until December? He can get rid of it to someone else, probably for more $$ if it’s worth 155k, and close quicker than December. And he’s an investor? He doesn’t know how to sell a house fast for 75% of market value? Doesn’t have anyone he knows with $$. Hmm…

I’m not seeing his motivation, so therefore I get the feeling he’s setting you up for a hosing.

Step away from the situation and think about before running around following this guy’s orders.

Need insight on Deal! Please Help!! - Posted by William

Posted by William on September 12, 2002 at 08:30:36:

Need insight on Owner Financing Deal!!!

Need some quick insight on how this works. Have a seller that is willing to finance a portion of the deal. Property is $115K. As incentive to assist me in financing I am offering him $15K if he will hold a note for the 100K until the end of December. Due to my credit situation I won?t be able to get a loan until the end of Dec, but will be able to refi and cash him out on the back end then.

If he agrees to finance the 100K and there are no banks needed, how do I proceed with the closing? Do I merely give him the 15K and have the property deeded over to me. Or will I still need to go through a closing of some sort and pay closing cost. I thought one of the benefits of Owner financing is the levitation of closing costs and such.

Can someone please help me with this? I don?t want to loose this deal?. The house is worth $155.

Is there a better way of working this deal?

Please help

Re: Need insight on Deal! Please Help!! - Posted by phil fernandez

Posted by phil fernandez on September 12, 2002 at 10:05:17:

I too feel that your timeframe for refinancing the seller out of the deal is too tight. Are you sure that you will be financable by Dec. You’re only talking about 3 months here. If you can’t get financing in Dec., you risk losing your original $15,000 plus being foreclosed on, damaging your credit.

Ed’s option idea makes much more sense and controls your risk.

As far as closing costs associated with owner financing, these costs should be less than bank financing. You will still have some closing costs depending on what state you are in. But you won’t have to pay points, appraisals, bank title insurance and other junk fees. Check with a local real estate attorney. You will still want to close the owner financed deal through an attorney.

Re: Are you sure - Posted by Ed Copp

Posted by Ed Copp on September 12, 2002 at 09:27:19:

that your credit will be O.K. in 3 months? I’m not.

I would suggest buying an option on the property until the first of the year or longer. I would not risk the $15,000 without a firm committment. Up to say $1,000 for an option would be a lot more reasonable risk to take.

Re: Need insight on Deal! Please Help!! - Posted by Jason

Posted by Jason on September 12, 2002 at 09:19:48:

ask your lawyer the detail of obtaining ownership in your state. If you are goign to pay him to do the closing anyway, he should have the answers.

Re: Need insight on Deal! Please Help!! - Posted by William

Posted by William on September 12, 2002 at 15:11:57:

The only reason why i am offering him this is to motivate him to hold some paper on the deal… He won’t except an option because he is trying to cash out and buy an apartment building. If i don’t get it now i will loose it to anothe investor.
Plus with a option i will only have a portion of the rent going toward the principle…
There is no doubt about me closing the deal once the alotted time frame is up, but i think i will try to extend it a year instead of 3 months.
I am call closing attorneys as we speak… think i’ve found one.
I intend to pull my 15K back out during the refi.

Re: Need insight on Deal! Please Help!! - Posted by phil fernandez

Posted by phil fernandez on September 12, 2002 at 17:42:51:

William,

I wouldn’t call a seller offering you 3 months of owner financing, holding paper. You could basically have a purchase and sales agreement with a closing in three months accomplish the same thing. Having your seller holding paper wuld be more like him financing you on a 20 year amortization schedule with a 5 year balloon or some similar arrangement. All your seller is doing is giving you very very limited interim financing. And it’s so limited to a small timeframe that he almost hopes you fail so he can keep your $15,000 cash and do it all over again with the next guy.

Remember this is not the only deal out there. If I were in your shoes, I’d call his bluff and demand longer owner financing and see if in fact he has another buyer out there. Are you sure the property is worth the $155,000. If it is why is he willing to sell it to you so cheaply. Just questions to ponder.