Posted by Mark Haugsten on August 30, 2005 at 22:32:03:
I was replying one post off, to BF. Trying to bring up deadlines, and erect true expectations, demands, and penalties into the ‘work as downpayment’ deals.
Just as Lonnie states the seller is ‘employing’ the buyer to bring him a check, this action ‘employs’ him to bring the repairs up to date.
work for down payment - Posted by BF (OH)
Posted by BF (OH) on August 30, 2005 at 12:51:45:
Do any of you allow buyer’s to do repairs on the home they are buying as part of their down payment? If so, how do you do handle it?
I’ve got one of these right now - Posted by Steve-WA
Posted by Steve-WA on August 31, 2005 at 09:54:14:
which of two ways to go . . . hmmmmm
200 down, take it as is, or
buy the materials, pay him 300 to do the work, inspect to ensure its G2G, and take 200 dp and move him in
I am thinking what’s easy - - - in & out, go do more deals . . .
Handyman special - Posted by Karl (Oh)
Posted by Karl (Oh) on August 30, 2005 at 19:09:45:
Don’t we just call these handyman specials? If a home needs work, and the buyer will do the work for a lower downpayment, terrific, I just put the deal together and move on. I write into the purchase agreement that the buyer is agreeing to take the home AS-IS, and that the buyer is responsible for such and such repair work on the home before occupancy. If the buyer does the work or doesn’t do the work, who cares. Its his home. I just want my payments every month. If I get the home back without the work ever being done, its no skin off my nose.
This only applies to work that’s needed on the inside. If the park is requiring some type of repair on the outside, I never leave it up to the buyer. I always take care of it before I sell the home. Otherwise the buyer will never get around to doing it, and then we’ll both look bad.
Re: work for down payment - Posted by Lyal
Posted by Lyal on August 30, 2005 at 13:42:08:
Read the “tenant rebate for roof work” thread further down.
In most cases, it’s not a good idea. As Tony says, for some reason they thing they’re doing you a favor and do shoddy work that you’ll need to correct later.
Add to that the liability of them getting hurt whilst working for you… just not worth it.
Re: Handyman special - Posted by Mark Haugsten
Posted by Mark Haugsten on August 30, 2005 at 21:16:46:
Also, remember to include a time frame. I don’t know why so many people allow their repair downpayment to never be paid.
If the downpayment needed to be paid within 6 weeks, you would expect it, wouldnt you? You could add a little extension, to be sure, but the down payment has to arrive at some point!! Why not with your ‘repairs’?
I would ask the buyer when he wants to have this done. Lets say his response is 6 weeks, because he is busy.
Give him 8 weeks and find an agreeable amount of money the down payment is discounted for the work. Example, $500. Specifically write down the coorelation between the 2 in the contract.
Have him agree that the work or the $500 is going to be due in 8 weeks, and if he needs more time for either he can inform you in writing (include a form letter), and get 2 more weeks free.
I would use this as leverage to get my home fixed, not to get money. Work and deadlines go hand in hand, so people understand them.
My monetary recourse would be if the work is not completed, then payments go up on the loan to reflect the unpaid dowpayment. Ie., if $3000 is being paid over 2 years at $141.22, now the payments go up to $176.58 to payoff $3500 within the same time frame. Also, add this bit of knowledge to the missus, and communicate with them both about the work. The rising monthly payment will be more of an incentive. Leave open the prospect of reducing the payment when the work is done, so if the 2 months becomes a year, then when you see it actually did get done, then that month the payments go back down, and keep emphasizing how they can reduce their payments.
Just my .02
Re: work for down payment - Posted by Michael(KCMO)
Posted by Michael(KCMO) on August 30, 2005 at 14:09:45:
While I agree w/ the liability aspect of what you say, I think in this case it’s a bit different than the other thread you mentioned
In that case it was a tenant and you, as owner, would still be responsible for the home condition. But in the case of a buyer, they will ultimately end up responsible for the quality (or lack of) of the repair that they do.
I have done this in a few cases. It is usually only cases in which I have very little in the home and don’t have much to lose or in cases in which they have ALMOST enough dn pmt but I’d like just a tad more to convince me to sell to them.
I require the work to be done up front and completed by a certain date to MY satisfaction. If the work isn’t done then it would be the same as them putting down a deposit and then not following through to close - the lose it.
The advantage to me is that I can then charge a bit more for the home. After all, it’s in better condition now.
My personal opinion,
Re: Handyman special - Posted by Karl (Oh)
Posted by Karl (Oh) on August 30, 2005 at 22:25:46:
You must not have read my post, or you meant to reply under someone else’s post.
If a buyer is willing to do repair work on a home in exchange for a lower downpayment, throw him in the home and be done with it. Collect your monthly payments and move on to the next deal.
Am I missing something?
I second this… - Posted by Marty (MO)
Posted by Marty (MO) on August 30, 2005 at 18:06:17:
we’ve done the same thing- if the home needs doors, skirting, and plumbing… we’d buy the doors- if they were satisfactorily installed, we’d buy the skirting. Then, after that’s completed, we’d buy the supplies for the next step.
The key, I think, is to make sure the deadlines are clearly spelled out. We’ve only done it a few times and I prefer not to go through the possible headaches.
It’s a good, creative tool for a real hard to sell home, in my opinion.