SEATTLE WA. INVESTORS…SLEEPING??? - Posted by JohnBoy
Posted by JohnBoy on July 27, 2001 at 16:27:18:
Are you Seattle investors sleeping over there or what???
LOL
I have a cousin who was transfered to the Seattle area with his job. He calls me and says he needs to run something by me because he doesn’t know anything about real estate.
He says he sees this ad in the paper on a home for sale that said:
Assume My Loan!
So he calls on the ad and then goes over to look at the property. The seller was moving back to the Midwest. They just purchased the property 6 months ago. All he wanted was for someone to just assume his loan. His loan is an assumeable loan.
So my cousin calls his bank and his bank pulls his credit and tells him, no problem, you can assume this loan. All you will need is to pay a $500 assumption fee and probably have pay about $500 for title and everything. The bank said they just need a copy of the purchase contract to get everything rolling.
He calls me to ask about the purchase contract. He wanted to know what he would need a purchase contract for if he was just assuming the loan. I told you he didn’t know anything about real estate!
So I tell him, yep, you still need a purchase contract because you are buying the home. Only in this case you will be just assuming the existing loan without you having to apply for your own loan and come up with a down payment, pay a bunch of points and closing costs. You’ll be ahead by about $6k bucks by saving on all those costs.
This home is two years old and is the $170k bracket. The seller had paid extra points when they got the loan to buy down the interest rate when they purchased it.
The balance on the mortgage is about $8k below market value. Nothing great there being a $170k home, but what they hey! It’s an assumable loan that he was already approved for by the sellers lender over the phone!
He said the seller was filling out a purchase contract, but my cousin wanted to have an attorney look it over before he signed it. Good idea, but I said, hold on there little cuz! You don’t want be screwing around with this by waiting for your attorney to look this over before getting this thing tied up QUICK before someone else jumps on this thing! You can’t steal in slow motion cuz. You NEED to get this thing tied up NOW!
So I told him to get over there and just sign the contract. Just add in a clause stating acceptance of this contract is subject to buyer’s attorney’s approval. That way if there’s something in the contract you don’t understand or like, your attorney can cancel it by not approving it! You will have the seller tied to the contract where he couldn’t sell the home to someone else that comes along and might offer him a better deal. They might offer the guy a little cash just to get the deal!
So that’s what he did. Then he took it to his attorney to look over. His attorney asked him who told him to put that subject to attorney’s approval clause in the contract? He said, oh, my cousin did, he’s into this real estate stuff! His attorney laughed and said, smart guy! Do you realize if you decided you wanted to back out of this at any time before the closing all I have to do is say I don’t approve of the contract and you’re out?? But the seller, he’s bound to this if you decide to go through with it! LOL
Anyway, it’s not a creative way he’s buying this since it is an assumable loan, but he’s getting this thing below market value, having to put up NO down payment, it’s a NICE house in the neighborhood they wanted to buy a home in, (he’
s been renting until they found something they liked) and it’s only going to cost him at most, $1,100.00 bucks to get into this house!
And get this. This is the best part. The loan he’s assuming is at 6.38% on a 30 year fixed!!!
Here’s a guy that is the consrvative type and lives with the belief that if it sounds to good to be true than it is…and he just happens to see an ad in the paper and ends up buying a home with no dpown payment and just waltzes in and assumes a 30 year fixed rate loan at 6.38% and gets the property at $8k below market value and saves himself another $6k+ in closing costs!!!
Isn’t is funny when you think about it? So many people out there beating down the bushes looking to find deals like this and this guy that knows nothing about real estate and has no desire to get into it, just walks right into this deal putting no money down other than the assumption fee and closing costs!!!
So what I would like to know is, WHERE ARE YOU SEATTLE INVESTORS AT…SLEEPING AT THE WHEEL OUT THERE OR WHAT??? LOL
Do you realize how much cash flow this thing could have made by taking this loan over and then selling this on contract to your buyer??? Somewhere to the tune of $600 per month cash flow!