i bought a 4-unit property 6 mo’s ago (OO). did some rehab. I decided to test the market and put an ad in the paper. asking 330k. got a few calls(building up that database) one definitely interested but wanted to negotiate price. I wasn’t expecting to get 330k but when a tenant found out i was selling said they wanted the property at 330k. i was gonna try to L/O it out. but they want to buy it outright. i have a property lined up but can’t move for 6 mo’s. The tenant is the daughter of a realtor which made me nervous. What is the next step or process from here. What contract should i be using? can i have it where i don’t have to pay rent for the 6 mo’s? some work is still being done(siding & electrical) do i put that in the contract? also what type of closing costs am i looking at? i figured 3% of 330k (9,900) does that seem right? am i really gonna walk away with 40k minus repairs(5-10k), so 30k profit? any help would be greatly appreciated. thank you.
George
Howdy again George:
Sounds like a good deal for you. You can ask for six months free rent in the contract under special provisions. Anything is negotiable in a sales contract. You can get the sales from from your local Board of Realtors ot a title company or your buyers Realtor parents. Do not let the fact that they are Realtors scare you. You are protected from their unfair treatment if they receive a fee or are involved in the transaction as principals by the Board of Realtors and a strong recovery fund. Most Realtors are honest and above board and will deal with you fairly.
Your closing costs should not be as high as 3% if you are not paying brokerage commission. Your biggest expense will be the title policy maybe a few grand. Check with the title company. If you have a survey that is not too old you may be able to use it to save a few hundred. Most likely you will share the other closing costs that are not involved with the buyer obtaining their new loan. These will be filing fees, Fed X fees, and title company escrow charges which will average less that $500 total to be split. You will usually pay to prepare the deed maybe $100 at most. There should not be much else unless you are in a Homeowners Assoc which could add a few hundred more.
You should include all work to be done and even allow for an inspection to be done by the buyer including a termite report. You can limit the amount you want to spend on any repairs to any amount you want that is agreeable to the buyer too of course.
That about all I know for now. If I think of anything else I will let you know. Go ahead and contact a title company and get their input too.