Help me with this owner finance offer please

OK heres the deal. My wife and I are Broker/Realtors and want to buy this house that was listed for $549,000 and has been listed for a couple of years. Needs a ton of updating but other than that beautiful brick home on 3 acres. Here’s what I want to offer $375,000 with no selling commission $80,000 down for total of $295,000. Buyer to pay seller 36 principle reduction only payments of $1500 each from the $295,000. Leaving a balance of $241,000 to be financed at the end of the commitment.

Here’s My question? This works good I’m sure if there are no other lenders or leins on the home. However if there is how do we work this? I can’t be sure that they would continue to pay the note to the bank? How to we file the deed? How can i not get screwed? Thanks for everyone’s help…

Your offer sounds VERY confusing and only in your court. If you are going to ask the owner to hold a 2nd to help you purchase the house then you need to give them something as well. If the house has been listed for 2 yrs? you said??? Man, is this really a deal you want to get into? Do they live there? If its vacant, im guessing they probably wont come down much… and your a realtor - your asking the realtor who has it listed for 2 yrs. to just not get a commission? is that normal?

You can get very screwed here if they have a mortgage on property, and you count on them to make the payments.

You would get the deed and ask them if YOU can make the payments direct to the mortgage company yourself. You would need to do a Take over, subject to… Go to county records, you can pretty much tell if they owe anything or not

Yes I am a Realtor.
House asking price $399,000
offer with no commish $375,000
give them $80,000 cash at close
Leaving a balance of $295,000
36 direct principle payments of $1500 ea. ($54,000)
Leaving balace at the end of 3 years of $241,000
that I can finance with a lender.

I can see this working if there are no liens but if there are I’m sure we would need to rethink things.
They get their house sold FINALLY and $80k at closing. and Yes we would be owner occupant.
Basically they sell for $375,000 with $80K upfront
thanks for the input

ok, so you need to find out what they owe and take that balance over subject to the existing mortgage, and have then hold a second mortgage for you at the balance that is owed. That way YOU are making the payments on the 1st direct to mtg. company, (never have to worry about it falling behind) and then you make the payments to them on the 2nd.

If they try to say- well how will we know you are going to actally make the payments… well, why would i put 80K down on a property that Im just going to let go???

The title company you go through will be able to draw up the 2nd note for you. Just make sure you use a title company that deals with investors.

This isn’t really a $375,000 offer but more like a $320,000 offer. You are missing the time value of money and if the seller has any financial skills he will call you on this. This is a three year no interest loan, a great deal for you but not the seller. If you factor in a cost of funds of say 7% and discount the cash stream of your payments ($80k + $1,500/mth + $241k in three years) the actual sale price is more in the area of $320,000.

On that same note let’s figure the loss of money of having this property on the market for over two years. It’s not the current owners primary residence. I would think they would be willing to blow it out based on their discounts over the two years for just a $25K additional discount. Maybe Im not thinking straight but that wouldnt be the first time. lol

I don’t disagree that the owners may quickly accept this offer given the property has been on the market for two years. I just want to point out that the proposed structure of your offer (3yr interest free loan) provides a significant financial savings to you which is almost twice as large as the $25k discount built into the front end of your offer. Depending upon the seller this may be acceptable/unacceptable or go unnoticed. Good Luck.

Thanks everyones input. I’ll keep you posted.