Posted by sally Thompson on September 02, 2005 at 19:22:26:
Well…
I’m kinda wondering if they might be able to pay off the excess. I’m
thinking they might be able to. In the course of the conversation, I
know she said something about paying off something in the way of
25K.
Seller seriously upside down - Posted by Sally Thompson
Posted by Sally Thompson on September 02, 2005 at 11:35:22:
Hi all…
I found a house that I want to buy for myself and fix up. Here’s the situation:
House built in 1986 with dirt cheap materials, etc. (I’ve seen mobile homes
with nicer components than this house) As example, the kitchen and
bathroom cabinets are terrible - doors aren’t even real wood - and doors
don’t match cabinets, wood edges are in nasty shape, etc. Some windows
need replacing, The current owner literally cut a hole into a large window for
an airconditioner. No basement. All wood trim, carpeting, cabinets, closet
doors, etc need to be replaced. Appliances don’t match in color. No
washer/dryer. Small garage. You get the picture. The yard is OK, but needs
some work. Nice neighborhood. All houses around this one look much
better than this property. Exterior isn’t too bad, at least.
Basically there is no feature in the house that I could say “that’s cool” about
other than the concrete slab outside that allows an RV to be parked alongside
the garage.
House was bought by seller in 2001 for $177,000.
Seller moved out about a year and half ago, and has had two disasterous
experiences (so they say) with tenants.
Seller did a second mortgage on the place so now it’s encumbered by
$223,000. Seller is supposedly making about $1,700 a month in payments.
Seller tried to sell it about 6 months ago for $209k and couldn’t dump it
(basically her words).
House is vacant again. I had a nice talk with the seller, and she said she and
her hubby will consider anything so they don’t have to make double mortgage
payments. (on their current residence and this one). She’s OK with Owner
Carry, Lease Option, anything. 
Seller said repeatedly that they know they can’t get their money back out of
this one.
They were renting it for $1,400… but she said she’d even be OK with $1,300.
(desparate).
Anyway, my opinion is that on a good day, this house has a chance of selling
at $195-200k, take away realtor commissions and the seller would have
about $185k. I’m thinking of offering $185k on an owner carry. I want to
keep the payment low enough (as close to $1,000 as I can get) so I can still
afford to stick another $300-500 a month into fixing this house up to be
presentable.
I think the sellers would go for this offer - BUT -
My big question is what happens with that other $38,000 in mortgages?
What if I make my obligation to the seller but they default/bankrupt/whatever
and there is a problem with the other $38k?
They have another home, they run their own business (which seems to be
doing OK - they have horses, etc)
Is there a way for the land trust thing to work here?
Any thoughts would be appreciated. Thanks in advance!
Sally
Re: Seller seriously upside down - Posted by luke-NC
Posted by luke-NC on September 02, 2005 at 20:10:28:
I’d take it on, if they are willing to pay $400/month in order to rent it out, they’d probably pay $500/month.
It’s either them getting a loan to pay you $38k to take on the home or them signing a note and mortgage with you secured by their current home and/or business for the $38k with a $500/mo payment. Basically make sure if they don’t pay you don’t pay this mortgage.
If things fall through or they file bankruptcy in the future, at least you’ll have some leverage with that security. Even then, you could work out a short sale with the lender in that case.
Re: Seller seriously upside down - Posted by ken
Posted by ken on September 02, 2005 at 17:27:22:
They will have to take the money out of their pocket to clear it up.It does not sound like that is possible.In order to carry the mortgage they need it paid off,if you did a lease option at $1000 per month they would need to come up with $700 per month and i do not see them being able or willing to do that long.I am sure if you get involved in this deal you will end up on the losing end.Sometimes the best deal is the deal you did not do.Run away