I’m working with a seller who has no mortgage (Free & Clear). The seller’s is trying to sell the house but is not having much luck. The sellers mom is actually the owner but she is bed rest due to her condition. So the seller explain to me that the money from the sell will go into a trust. So when the mom past the funds will go to her children. Now I like to buy this property on a lease option or owner financing, the seller is flexible on the price. Now the seller has a agent that I think is telling them not to do so. This house is not great shape but not in bad shape it can use a little updating. Overall the house is in good shape. All the agent is trying to do is get his commission on a house thats clearly overpriced at the time. The seller is asking 185,000 with the average house in the town are going for 170,000 fix up. I was think do the updating and put a section 8 tenant in the house. So I guess my question is how would you handle this?
Show him the comps and ask him to have his agent explain how he came up with the sale price. I usually discredit the agents in such situations, which is not hard since the house did not sell. I usually tell them I cannot negotiate due to the presense of an agent because otherwise he would owe him a commission and ask him to see if he can get out of the listing if he finds the buyer.
Buy it on owner financing for the full asking price of $185k but at 0% interest, or at the rate he would get in a trust, which should be very low. If you plan on keeping it, you will be paying it down quickly since you will be paying less interest.
A couple more thoughts:
When an agent is involved, especially if they have a friendship or family tie to the seller, it is important to get them on your side. Show them how they will make a comission immediately or over time. Also, always make an offer that makes sense to you. In this current market, there will be plenty more deals in the coming 12 - 18 months, so offer what makes sense and move on if the seller cannot or will not bend.
That’s a good price. Make sure that your total monthly payments don’t exceed 1000 and try to get at least 30k in profits after all costs of buying and selling are accounted for.
I think you’ll have some issues if you do a lease purchase and the owner dies. The executor of the estate can then make changes per the wishes of her heirs. I would buy it via owner financing, that way you’ll have the deed. Make sure that you use your closing attorney to draw up the closing docs and the promissary note/mortgage.