Your opinion on this offer from a buyer - Posted by Grace

Posted by Randy on October 09, 2003 at 10:03:29:

Good Idea? Wrap the other property into this purchase. I like it.

Your opinion on this offer from a buyer - Posted by Grace

Posted by Grace on October 09, 2003 at 02:52:34:

I got an offer today for my house of $199,900 (market $204,000):

Contract for Deed
House is still yours until it’s paid in full
$189,000 sales price
360 payments of $1500
cash $173,286 in 45 days.

The buyer don’t want to use his credit to apply
for a loan. The couple planning to use this house
for their family (2 children) and for their photography business at home. This is a more affluent neighborhood than
where they are living right now and he claims he makes
$50,000/month cash business( I will belive when I see it).
They said they purchased the current house with owner
financing 3 years ago and finally got a loan, paid it off
and will rent it out when they move out. They said they
remodeled each house they lived in into studio rooms and corners and even yard for

Three things are missing in this offer:
No downpayment
Not figured in Property tax and insurance
No balloon date.

This is what I would counter:

  • Will accept the $189,900 and $1500/month offer with:
    -$5000 down (he will bark on any down payment)
    -If buyer picks up property tax and insurance
    we will be willing to give them the deed now.
    (buyer seems like to have the deed, but think
    it’s too much to ask)
    -We will owner financing for 2 years. If they need
    to extend, the sale price need to be adjusted
    to $199,900 (still below then market price)
    and $215,000 if over 5 years. (he will bark on this too)

I would much appreciate if you would comment on my counter. and what will
you do if you got this offer?


Re: Your opinion on this offer from a buyer - Posted by Mark (SDCA)

Posted by Mark (SDCA) on October 09, 2003 at 15:15:30:

If he makes 50K/ MONTH at his business then he would have a 20K down payment in 2 weeks. Why would he bark at THAT?

two for one - Posted by Doug,ky

Posted by Doug,ky on October 09, 2003 at 13:09:46:

When offering owner financing you should be in the driver’s seat. Set your terms and go form there. One option you could use for more security would be to have your buyer give you a performance mortgage on one of his other properties. That way if he doesn’t pay you get two properties for one. This sounds like a winner to me.


Re: Your opinion on this offer from a buyer - Posted by Mike G

Posted by Mike G on October 09, 2003 at 13:08:52:

First of all, what are your goals w/ this property?

I’m assuming when you say you received an offer that you do in fact have this property for sale and that he isn’t just making an offer to you b/c it looks run down or something. You say FMV is 204k. Is that your asking price? Is this the only buyer in town? Are you a motivated seller?

What is it that you want? Cash now or cash flow? What do you plan to do w/ the proceeds if you sold for cash now?

Just b/c this guy made you an offer doesn’t mean you need to play his game. It’s not like you need to counter. If I were asking 204k and he proposed an owner finance deal, if selling w/ owner finance was consistent w/ my goals for the property, I’d counter at 215k+…and the terms would include at least 10% down and higher interest rate w/ a 2-5 yr balloon.

If this guy truly needs owner finance b/c he can’t obtain conventional financing, he should be desperate enough to pay a premium to FMV. I’m betting this guy is an investor, and odds are any deal you do w/ him will not be in your favor.

[By the way, how in the world does he expect to be able to pay 173k cash in 45 days (his other offer)? That’s too much for hard money. And he already said he can’t obtain bank financing. I’d call him out on it. Ask him if he’s planning to wholesale to another buyer. Typically only investors make multiple offers.]

Re: Your opinion on this offer from a buyer - Posted by wpage

Posted by wpage on October 09, 2003 at 09:26:42:

Grace I would consider 2 options to sell this property. The best and safest way for you to sell to this person would be on a lease option; getting a non-refundable deposit of at least 8k to 10k. If this guy is making 50k a month cash business then I am sure he could come up with a downpayment. If you do this option make sure that you do a good contract for the option and a separate lease so that if he does not pay you can do an eviction.
Your 2nd. option is to give him the deed with or without a down payment but I would verify that he indeed does own the other property free and clear and I would put a collateral mortgage on that property also. This way if he stops paying you could foreclose on both properties. If he does not want to do either of these options on your terms then find another buyer.
good luck wpage

Let Him Bark? - Posted by Randy

Posted by Randy on October 09, 2003 at 09:18:04:

You are being far too easy in my opinion! First off if he REALLY makes $50k/month and can?t make a down payment? Proof of income is as simple as last 2 months bank statements? he should have $100k in deposits ? NO?

If he makes this fabulous income in a cash business ? why did he have problems getting a loan or finally paying off the current residence?

You are offering seller financing and selling at a discount?. The price goes UP when you offer terms, Not down.

The buyer must pay taxes and insurance on a CFD.

NO Deed until the CFD is paid off.

10% - 20% Down? You say they remodeled each house they lived in into studio rooms and corners and even yard for photography. Your going to have to restore it to it?s present state if they fail to perform and you get it back.

Offer $209k @9% PI= $1,601.85 360 mos / 5 year balloon. 10 % Down.

Re: Your opinion on this offer from a buyer - Posted by phil fernandez

Posted by phil fernandez on October 09, 2003 at 09:08:43:

I would never sell a house to anyone who does not have a downpayment. With nothing invested in the house your buyer could easily just walk away. As Doug said, a $5,000 downpayment on a $200,000 is chicken feed. I’d want at least a $20,000 ( 10% of the sales price ) for my minimal acceptable downpayment.

Why can’t your buyer go to the bank. There’s a program for practically everyone today.

Re: Your opinion on this offer from a buyer - Posted by Doug Pretorius

Posted by Doug Pretorius on October 09, 2003 at 07:56:31:

Being an investor who sells on short-term (3 year) owner financing and gets a lot of calls from potential buyers. I talk to plenty of people that don’t have a down payment. Most of them aren’t worth your time.

$5k on $200k is a tiny down payment, and you shouldn’t have to lower your price if you’re willing to sell on those kinds of terms. In fact, if your market is half-way decent, you should be able to sell for $10-$20k over current market value.

My advice is keep the deed. If you sell to this buyer with these numbers, they will have very little to lose by walking away, and then you’re stuck trying to foreclose on your note. Better to have the deed.

Depending on the laws in your area, you may want to sell on Lease/Option instead of Contract for Deed, as it will be easier and faster to get them out in case of trouble (eviction instead of foreclosure).

Re: Your opinion on this offer from a buyer - Posted by ken in sc

Posted by ken in sc on October 09, 2003 at 07:51:06:

He is offering an 8.85% interest rate. If you have underlying financing that allows you to make a profit at that rate and dont mind cash flow vs profit now, then you could consider it. I would definently want a dwnpayment or other collateral. I would definently make them provide insurance and pay for taxes. I would NOT deed him the house until it is paid. I would counter with a 2 to 5 year balloon. I would get good legal advice as this person appears to understand RE and you do not want to get taken.