Posted by Eric C on December 17, 2005 at 13:36:00:
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Questions About an Offer Rec’d Today - Posted by Sailor
Posted by Sailor on December 16, 2005 at 22:24:41:
Rec’d an offer today on a FSBO parcel of raw land, & I’m not sure whether the financing contingency is reasonable. According to the RE agent, buyer is pre-approved, but the offer specifies a loan amount that would constitute 99% financing. I don’t have much confidence in the ability of the buyer’s agent, so as it nears midnight & I am looking @ the papers I picked up late this afternoon & wondering if that is feasible on undeveloped property. I am in coastal NC, & I know that in this area financing raw land is easier than some other places. What is ballpark reasonable to expect as a down payment in an offer (deposit is 1%)? What is a reasonable timeframe for confirmation of financing? Interest rate? (Offer limited to 7%, which seems low to me.)
I’ve only done ca$h purchases for past 15 years, usually holding for years, & now that I’m long since retired I am not that active. W/one exception as seller, I just haven’t been involved in financing from either side in the past decade. In case it w/help, I have some pics & a bit of info on the property posted in the 1st album at:
http://www.picturetrail.com/sailorpics
TIA for any input–
Tye
Re: Questions About an Offer Rec’d Today - Posted by Killer Joe
Posted by Killer Joe on December 17, 2005 at 10:03:00:
Tye,
It sounds like your buyer and their agent have unreasonable expectations regarding the purchase of raw land. This could be a case of the pair assuming that preapproval encompasses ANY real estate transaction.
A 7% cap on financing is a reasonable contingency if this was an improved property, which this is not.
A quick way to flush this one out is to have them get a letter from the lender stating that they are approved for the purchase of raw land, and at the terms specified. My guess? It ain’t gonna happen…
Your buddy,
KJ
Re: Questions About an Offer Rec’d Today - Posted by Sailor
Posted by Sailor on December 17, 2005 at 15:14:00:
Thanks, that’s what I thought. I did request such a letter when I met w/the agent this morning. Because it is the weekend I can’t check w/the local banks until Monday. I know there is a great variation in financing ease on land, depending on locality. It is usually quite easy here, w/good terms & low down, probably because custom homes are the only kind built. I just thought 7% sounded really low, but most buyers for property here are out-of-state, & I don’t know where he is getting his financing. Supposedly he is working w/a specialist in land. I’ve had a lot of response to this property, which is in a hot area, so if we go to escrow I’ll take back-up offers.
Thanks for the info, Joe! Hope we get together again soon–
Tye