I got a call from a FSBO from one of my letters today. That alone was exciting enough since he’s the second person this week to call, and theose two are the first people I have ever got to call.
Anyway he owns the house free and clear, and needs to sell because he is building a new house. Right now he lives in the phoenix area, and wil be moving to northern Arizona. He said he needs all the equity now because that money will be put into the new house. It comps around 390,000 and he said the least he’d take is 370,000. He also wants to have the house leased back to him until the close of his new house which is estimated of Jan 07. Im not seeing how this would be a great deal, but Im am not that experienced and others might see a wrinkle I don’t.
Any suggestions??
Thanks
Dan
So, put another way. He wants nearly full price, all cash, and wants to live there until he wants to move. Wow, what a great deal…for him. Say this to yourself with conviction, “Next!”
Your intuition is correct. You’ll come across these once in awhile. If he won’t carry all of the paper or maybe take $500 if he leaves all the appliances then this isn’t a deal.
Reason? You can’t get in light. You have too much money at risk and you don’t even have possession of the property.
Keep in mind people with free and clear houses don’t only look at their house as an asset, which it isn’t, they look at it as a checking account that all they have to do is sign a loan document or sell and they get all the cash. That’s not a motivated seller. That’s a typical homeowner. We don’t buy properties from typical homeowners. You could call any house in the MLS to do that, you don’t need a FSBO.
By the way, do you know why he’s so graciously “discounting” it by about 5%? Because if he sold it through an agent he’d have to discount it more like 6-10%.
You might politely leave the door open by explaining that you have to buy with enough profit in the deal to make sense and give him the price you’d want to pay, which should be a lot less than that. Ask him if you can call him in a couple months to see how things are going. Then follow-up later. Chances are, he’ll still be sitting there possibly more motivated.
You didn’t mention, does it need work? For a house at that price you gotta figure putting in $3K just for cosmetic cleanup and landscaping.
Anyway, if for some inexplicable reason you do what he asks, at least get the full rent up front. You’ll have a miserable time evicting an ex-owner once they’ve sold the house.
Thans for the reply.
Yeah I kind of figured it’s not a great deal, but I am going to meet with him anyway just to gain experience to talking to owners. Plus it will MAKE me go get some contracts ready so when a real deal calls me up, i’ll be ready to make an offer on the spot if needed. I do plan on telling him tomorrow that I won’t be able to pay more than 320 for it, and since he needs to live in it, he would have to make the lease payment cover my mortgage payment. If he balks at that, which he will, I will just tell the un-motivated seller thanks for his time, and if he hasn’t sold it in a month, call me back…