Ok, I have this new deal but nothing is closed yet.
ARV = 240 000
asking price = 200 000
morgage = 105 000
zero repairs
Seller wanted nothign to do with subject to. He had 100 000 in debts other than the mortgage (not attached to the property).
He accepted this other offer:
120 000 cash at closing (I have a private lender lined up at 7%)
He will take back a 2nd for 75 000$, no payments, no interest until we sell the house.
Exit strategy: just sell the house round robin auction style. If we sell it at 220 000 we still make 20 000.
I always hate the idea of having to put up so much money at closing but this still looks like a not so bad deal…
My question is, if the house needs no repairs, why the $240K ARV? Or do you mean that he is already discounting the price off of fair market value of $240? And how sure are you of that number?
And what is the other offer he accepted - was this from you, or another party?
Our first offer was doing it subject to, “relieving you of your mortgage debt”.
he wanted nothing to do with having another mortgage on his name even though he would have received more money at closing if he allowed us to do so… I couldn’t figure this one out. Obviously my approach to the whole relieving him of his debt by taking it over wasn’t well presented.
Lesson learned.
He wanted to get rid of the property as quickly as possible and would take the discount as such. He couldn’t afford to make payments on the house as well as his other credit card debts anymore.
I’ve looked at 4-5 other comparables and 240K is a fair number. Some properties have sold for 250-260.
still - his asking price is only about 16% off ARV. You should be offering him around $170 - although with his $100K in debts, this is not likely to be something he is interested in, but you could try.
This 15% is really tight with fees and such for closings. And supposed you cannot get $240 for the house? And you have to hold it for a while paying the mortgage?