New Foray Into Investing
I have been providing financing for investors, but never investing myself.
Here is my first deal (maybe)...
I have a friend who wants to move from Dallas to Seattle in the worst way. She put her house up for sale with a realtor in April. No bites. She is getting desparate now. The realtor has it under contract until the end of the year.
She dropped the price from 350K, to 320K to 300K.
OK, an investor friend told me to offer her 290K. Put it under contract to sell right away and get it sold for 300K before 30 days is up. I asked why I could sell it in 30 days when the realtor has not sold it in months! He says because I can do sub-prime lending and I would also be able to finance it myself (owner financing)
OK gurus, how does this sound to you? Good? risky? Forget it?
My investor friend does about 5 houses a week like this in Tyler Texas and I do all of the financing for him.
Thanks 
Sounds like a standard deal. Make sure he walks you through the process since its your first. There are little quirky things that could get you in trouble. Have him set up the contract, and I would ask for 60 days, not thirty.
Good Luck,
Kyle
I forgot to ask, how do I deal with the realtor contract??
Have her do an unconditional withdraw.
Sorry to be a pain, but what is an uncoditional withdrawal?
Also, you are not going to believe this, but the seller (my friend) INSISTS on paying the realtor the 18K regardless if I buy it or the realtor sells it!!
My friend says she feels obligated to do so since the realtor did have it listed for so long. Pretty nice eh?
an unconditiional withdrawal, or what i like to call "a release of listing agreement" is i guess the same thing. where you pay off the realtor so she can remove it from her listing. Usually i heard that it costs about 5-600 bucks for the realtor, so my advice would be to just break the realtor even.
If you friend (seller) wants to give her portion of the profits to the realtor for really... doing nothing but listing it and not selling it for months, then by all means, its her money right?
A good exit strategy also that i've learned and read about and hope to impliment, is that with a home thats above 150-200k would be a good candidate to auction off. OR you can do a fax blast to brokers in the area to see if they can send you some of their customers who are looking for house and cant quite qualify for loans. (owner finance until they can re-fin) Martketing your house well is how your house will sell, no marketing, no sell.
just my thought anyway.
[addsig]
An unconditional release of listing shouldn't cost you anything.
IF the realtor has been the property for awhile (and apparently has), and been unable to sell it, then it is completely within the rights of the seller to ask for this release.
Most agents will sign this. IF the agent wants to agrue about it, I'd suggest going to their broker. It's simply not in the best interest of the realty company to try to skim money off of a property that they've been unable to sell. Can we all say, "Bad advertising"?
Roger
OK...this is the deal now. My friend (who is too generous if you ask me) wants me to go through the realtor so they get their 6%. Question is, can I put this house under a contract for 60 days through the realtor?
I am confused~!
Yes, you can set the the closing date for whatever amount of time that you want. Of course the seller will have to agree to it.
[addsig]
10K and run? If the home is seriously valued at $350+. and was poorly marketed, and the seller is falling for the realtors sob story, we would structure and advertise the deal this way:
"OWNER Financing $360K executive home, will carry $50K on E-Z terms, interest only payments, @ 7% on 5 year balloon. 312-555-xxxx"
Net Results: $310K first and $50K second, at closing seller receives $290K less their snookered commission payment to the realtor, you receive $20K cash and a note secured by real estate for $50K and a generous monthly cash flow for 5 years.
Use the free equity and don't give it away to someone else.
Eric & Rosa
[addsig]
Talk about motivated seller.... I can't believe that your friend is going to give the real estate agent his/her commission for what sounds like nothing.
I'm a licensed real estate agent in Dallas and I can't believe the luck of some of my peers to get such good deals. I'm sure I could have bought her at least one prospect from my buyers list who was interested. (i'm not trying to offer my service here either.)
We all learned in our training that we are owed our commissions when you present the seller(your friend) "a willing and able customer (buyer)" . If that happens and then the seller backs out for no apparent reason, then the commission has been earned and should be paid. This does not sound like the case in your friend situation.
I wish I had such gracious clients ...you must put me in touch with your circle of friends
Hay Eric & Rosa,
I had a small deal like this, with cash and note, no lender involved. The house was vacant.
In this case the house is occupied and a lender would be involved.
Questions: Would this deal be done on Assignment or Simultaneous Close? Will lender frown on my assignment fee, even though I'm carrying a lot back? On similtaneous, how would I convey to my buyer that they need to get a non seasoning lender? Since OO how do I deal with my seller on showing the house to my prosective buyers?
TIA
[addsig]
Quote:
On 2003-11-03 14:12, classimg wrote:
Net Results: $310K first and $50K second, at closing seller receives $290K less their snookered commission payment to the realtor, you receive $20K cash and a note secured by real estate for $50K and a generous monthly cash flow for 5 years.
Eric & Rosa, or anyone,
I'm very green in real estate so rest assured this is an honest question .
Could you please explain the advantage to the buyer of structuring the deal this way? The total monthly payments would be the same at just under 6.5% on the $310K.
Is it structured this way to assist the buyer in qualifying for conventional financing?
Tim