So, I heard about a home from my realtor mom that was just reduced $50,000. The seller has had it on the market for 1 month and panicked. Probably another person thinking we are still in yesterday’s market.
Anyway, the price is $300k (median home price for Vegas and low/decent for area).
I was thinking of coming in at 290k, they pay all closing costs. I can get in for at most 10%, could be 100% deal though. If I need 10%, I will bump offer up and do a seller note, dismissed at close. Either way, I will get in for zippo down.
So, I buy the home for 290k. I then relist it for $360,000 ($10k under value or more by time this all happens). I advertise that I will carry the buyers full down and pay closing for a quick sale.
If the seller needs 20%, that means I have a note out there for 70k at say 9% interest.
In essence, I just got a free 70k note OR cash when all done.
Thoughts?
Oh, the home would rent for about $1600 and LO for more, so there is other options should the market go really flat. I figure that with a 70-80k score on the sale, there is room to play.
Also, if I decided to list it with a realtor, it will cost me about 4%, so $15,000.
Why such a drastic decrease in such a “hot market”? If it really is worth 360K, why hasn’t sold at 350K? Basically you are playing the “greater fool” game. You are hoping a bigger fool is going to come in and bail you out.
The Vegas market is not that hot for one. Most people think it is because they are looking at 6 month and 12 month data. Over the past few months, appreciation levels have normalized as we are over-supplied.
What is scary is the 60,000+ condos planned to hit the market.
The reduction is because the seller thinks this is last year’s marketplace where homes sold in hours. It is normal for a home to sit a couple months now.
Also, I believe the seller (from what I heard today) is very motivated to move because they have a new home they are paying on now and just moved into. The home is now vacant.
There are a ton of potential buyers here who got priced out of the market. I know of many who can only get approved for 90% ltv. Coming up with that 10% down will require 30k+. These buyers would jump to take a property for nothing down.
i think it sounds good, and i disagree with the “greater fool” label on this deal. you will be offering something that the seller is too impatient or not creative enough to offer. so you aren’t the greater fool, and you don’t need a greater fool to buy the property from you, just someone who needs a owner carried note to get financed.
Yea, plenty of people here who can’t fork over the down payment.
I think the Seller will have a tough time selling to anyone who knows about the previous price. Dropping 50k on a $350k home is a red flag to most buyers. Something must be wrong right?
Right now our market is soft. Within 2 weeks, he will probably go down another 10k or so. There are typically two types of sellers right now.
Seller One: Holds fast to the price and prices the home at estimated value. That seller’s house is not moving.
Seller Two: Willing to make concessions and prices the home under value. That seller’s house is being looked at and will move shortly.
There are exceptions, but this is what I am seeing right now. Supply is way over demand. Given the new homes coming out and the condos on the way, should get worse (more supply) before it gets better.
With 60K condos in the works (probably half will get completed), I would be warry of buying anything in hopes of giant appreciation. If people have to drastically reduce the price to get buyers, than you are working in a downward market. I also don’t understand, as a buyer’s point of view, why would I buy this house, if I can rent it for $1400 a month? Expecially when I see sellers reducing their homes, 60K condos being built, and interest rates staying the same. I would wait. Remember, Value is what the buyer is willing to pay.
Dropping 50K can mean the seller is motivated, the home was overpriced in the first place, their might be something wrong with the home/neighborhood. If I was a buyer in that area and saw a home drop like that, I would want to see it. 50 grand is 50 grand!
HOLD IT! Do you guys have a “Predatory Lending” law in your state? Ohio has it and you can’t “bump up” a price to justify your downpayment. This is why… If the advertised price on MLS is $300,000 and you need 10% down - you cannot raise the price up 10% and have it kicked back "on paper and in theory) and then dismiss it as moot. That’s what they call predatory lending. The lenders are looking for credit worthy people to purchase homes and use THEIR OWN MONEY to show good faith in that 1) they have the ability to save and 2) they have a monetary vested interested in the property. Using the “kickback” method doesn’t show this and leaves the lender thinking that if you default - you really didnt’ loose anything. I would watch out doing deals like this in case the Lending Institutions do an audit, they may reinforce those so call “second mortgages” or “kickbacks” as moot and take someone to court. And if you are a seller thinking about this and you actually extend a 10% carryback - keep in mind you are second in line if the buyer defaults - you will never get paid and again, if the lenders find out, they may MAKE you reinforce your 2nd mortgage to actually show that the buyer put the money down.
Well location counts. These places are not being built in Summerlin, the most desired community to live in or ME, the new development people are flocking to. So homes in these areas are somewhat secured.
Still, I am wondering what will happen. The good thing is all these condos going up in the towers are not cheap. We have 600k lofts going up and condos from 300-10 million. I think what will happen is the homes will continue to appreciate to a point that is higher than present and then start to flatten out. This city is in the middle of a huge transformation.
As to the 50k down. I bet potential buyers are thinking all sorts of stuff. The home is fine and the owner is getting desperate. I would say the home was overpriced in our current market. There is so much supply that saving 20k off a $370k home is not a big deal right now. His home could move easily at $330. I wonder if his “realtor” told him to drop it big time lol
I think you misunderstand what I was saying. I am not sure if we have this law in Nevada but this state heavily favors the big company, owner, etc. For example, there is no notice required to raise someone’s rent in this state.
As to the MLS, you can just adjust the price in the MLS. Any realtor will do this.
What I was thinking of doing is selling the home for say $350k. I would carry the buyers down need. So, if they needed 10% down, I would carry a note secured by the property for $35,000. It is a simple OWC sale. There is enough spread to make this a possible play.