FSBO & Post Settlement Occupancy Agreement

I recently sent letters to a few select homeowners to see if any of them would be interested in selling privately. (FSBO). My vision was to get a desirable piece of property cheap. I sent letters saying I would purchase “as-is”, was flexible with settlement dates, and we could save on the realtor’s 6% commission. Well, an interested owner contacted me, but here’s my predicament…

House Market Value: $275k
Sale price: $263
Primary home – 1st time home buyer

They will not be ready to move out until approximately April. I have thought about a Post Settlement Occupancy agreement (November Settlement), but then I would have to pay the difference between their mortgage and mine during that occupancy period (~$500/month). I could request we add 3% assist to the Sale price to mitigate my out of pocket expenses during this 4 month period, but I’m still paying for it! (maybe they would be willing to lower the sales price a little more, but I doubt it …)


  1. Is there a simpler and cheaper way to structure this agreement?

I’m reluctant to wait until April to settle because:

 a. Interest rates are going up!
 b. They may back out of the deal if they can sell for more in 6 months!  
  1. Does a sales agreement contractually bind them to sell you their house at the specified price, or can they back out at any time?

  2. Will I have to pay taxes on the money they are contributing to the mortgage during that period? (like a renter)

  3. Can we defer the tax and insurance escrow at settlement since they would be responsible for it during that time?

Any advice would be appreciated…

Thanks - Jim

Howdy JimH:

Wow you found a great deal. Only losing $500 per month and a whole $12K below retail. I will give you $50K and take over the deal so I can lose some money too. I need some tax write off.

What are your plans after they move out and it is vacant. I want some of that loss too of $3000 plus per month.

Sorry to be so cruel but how do you even consider doing a deal like this. Negative cash flow and you have to get a new loan as well. I would not even consider it with zero down no qualifying.

Maybe I wasn’t clear, but I intend to live there long-term when they move out. It’s not a “deal”, it’s just my primary residence in a great location. I’ll be paying a mortgage like everyone else, and also gaining a little extra equity instantaneously. I don’t see any problem with that… It’s better than paying full price for your first house!

Right now, I’m renting - now that’s funny!

are you getting the property Sub2 of financing? How much money is the seller looking for out of this deal. Why are they Selling? Why do they need the money? What are their plan after they move?

You need to find their pain, It seems you missed this vital step!