Is This Legitimate And Worth My While?
I'm a homeowner in Southern California. I'm interested in selling this summer but expect no problems and am having no trouble with my payments. Basically, I'm not immediately motivated.
I've been approached by an agent who wants me to take all the cash out of my home and then put the property in a trust where the property would basically be owned by a buyer, the agent and myself. The buyer would make payments for twelve months to establish credit, and then refinance the property with sole ownership. I would walk away with my cash now and not pay any fees for selling the home. The agent makes a commission from the buyer when the buyer refinances? and the buyer gets to buy my home in a year at today's price.
Is this above board/legitimate and in my best interests? I confess that the idea sounds attractive because I can avoid 15-20 thousand in seller's expenses. The buyer wins and the agent wins.
Thoughts?
Thanks,
:-?
It largely could be done legally and transparently.
There are added risks.
If there is a problem and the buyer (who looks to be a renter for a period of 12 months) fails to make payments then what will you do?
You save 20K max. Estimate what it might cost you if it goes wrong.
BTW - If you sell are you expecting to buy? Do you expect to be able to buy without a new loan? If you need a new loan will you be able to get one while maintaining the financing on the present place?
If you do not need the cash and want to wait a year you could sell on terms yourself or work out a deal with the agent. I am saying you do not refinance so the cash flow is more in line. The buyer gets an option to buy in a year and if they do not perform you have the option money.
Bottom line is you are taking on some risks in exchange for 20K is reduced fees. Know the risks before you judge if the 20K is compensation.
John
[addsig]
Is this an agent or a CRE investor? What you describe sounds like a subject-to deal (which means a contract subject to existing financing).
True, you will save alot of seller expenses, but some things to consider:
1. Your mortgage is probably not assumable. So if someone else gets the deed and starts making payments without being qualified by the mortgage holder, they may enact the due-on-sale clause.
2. It's risky to allow someone who's trying to establish credit to use something that bears prominently on your credit report as the vehicle.
3. You're not in a bind. Why chance it?
If the payments aren't killing you and you want to sell, just sell it. You may incur some seller expenses, but it beats sweating for a year (actually, more like 18-24 months).
Just my opinion.
[addsig]
I agree with the other replies but would advise you in a much stronger manner. There are just too many things that can go wrong with this transaction. It is way too risky. I would never agree to something like this on any of my properties. The only people that do this kind of sale are those that are extremely motivated to sell. From your description of your situation, you don't fit that category. I would walk away
The buyer and the agent does not need to be owners for this to work.
Remember they will own a portion of the property. If anything goes wrong then how will you sell the house without their consent?
You will still be liable for the loan.
If you are going to do this then you can Lease option or owner finance the buyer.
The agent will then get a commission when the buyer can get new financing.
There is no need for the agent and buyer to be part owners.
You definately don't need the agent to do this.
Save the commission you would pay and do it yourself.