I’m looking at a run down dirty filthy house that I think someone may have died in.
It’s been on the market for close to a year. I don’t think it is all that terrible and may be marginally liveable with some cleaning an fixing up. It need quite a bit of work and a major update. It is surrounded by ok nice home in a nieghborhood, only is backed up by a small industrial park. Nothing real bad or toxic though.
Stick with me here………………….
If you had inherited this property and don’t live near it ( as I believe the case may be) and you were not getting offers near your asking price, would you consider a rent with option purchaser?
What terms would you accept. I could probably buy this house but living in it for a year with some (all or most I’m thinking) of the rent paid going towards the down payment would just put the icing on the cup cake.
Remember, you are not in the trades and you were left this house states away and you have not been able to sell it in close to a year.
Let’s have it!
Eric
Replies
Well, I am in the trades and I had to do exactly what you suggest. We recently moved and no one wanted to buy our house. Its now rented to someone that wants to buy it in September. Whether he does or not doesnt matter I still get money and would be just as happy not to sell it.
For a non trade person, you'll have to sell him on this. Explain (briefly) the concept of cashflow and how this arrangement will enrich both of you.
I mean, at the very least he will get a house back thats been all fixed up that he can either go on renting or sell later. At best you rent for awhile (cashflow) then buy it and he wins again.
Give it a shot.
It never hurts to make an offer like that. The glitch in the offer comes if the house is currently listed by a realtor. Not all realtor will know how, or be willing to, work with a lease option.
When I was trying to sell my condo in MI, we were not having much luck. I talked with my realtor and asked her if she might find someone to do a lease option. After explaining it to her (she never was involved in a lease option before), she agreed because with sales so slow, she felt that every angle was worth exploring. Within three months, she had the condo "sold" on a lease option.
The option was a short term 6 month option, with one option to renew.
The optioner didn't execute the purchase during the first 6 months and she opted for the second term. During that term I found a new buyer. According to the terms of the first Lease Option, the tenant had first rights of refusal. She decided that she didn't want to buy it and according to the terms of the agreement, she moved out. I sold it to the second buyer for cash (he got a mortgage).
So, yes Eric, if the seller is not in the house, there is a very good chance that they will consider a lease option if it is presented correctly in the right spirit. At the time I was selling, I was out of state and I appreciated the income from the property while I was looking for a permanent buyer.
Bob's next test date: 12/10/07
Jim, what kind of terms do you think would fly?
This house is sitting there not doing anything. I would like to offer close to asking and 100% credit towards d/p on my rent payments.
Heck, I haven't yet seen the inside but I have a "feeling".
I've watched houses similiar to this many times. I poke around and think that this house would be a great buy for the right guy.
Then one day I'll be rolling by and sure enough someone has finally snagged it.
[email protected]
I almost forgot. We have a new spec house lease optioned right now LOL! The money is going directly to the investors so I completly forgot about it.
Bob's next test date: 12/10/07
Somthing is odd some where unless its really just that bad. There could be a differenvce in what you think its worth and the agents .
Best thing to do right now is ask the agents who have had it listed. Its best the person they are working for do the asking . Agents are obligated to them only.
I dont have the numbers and I dont have the conditions around there .
You have to learn all that before you make a move . Ive always stressed to study the area. What are rents going for and whats the percentage of occupancy. Is there any thing negative in the hood , town , etc?
From what you mentioned , no one wants to buy a run down house in run down condition except people like me and I want to steal it to be honest. Theres a cost to doing business . Not everyone wants to work in crappy run down buildings . They had rather put up crown mold in upscale houses. Thats the truth. Thats why theres better money in those old buildings . I charge it by offering a steal price.
If you go in and fix it up then youve got what the market has to show and itll sell or rent but you still have to fix it up. Either way unless you dump it on an investor.
Tim
Tim, As I mentioned to Blue, I've seen many houses like this in my area that just seem to languish.
Perhaps to small for the big guys? This house sits smack in the middle of a small development of nice homes with kids running around. No through streets so it is slow and sleepy. It does back up to an industrial park that has some small manufacturing in it but nothing noxious or chemical related as far as I know.
It went on the market close to a year ago. Looking inside you would guess that someone walked out (or was taken out) the door and never came back. Blankets on the beds and clothes in the closets.
My guess that someone died there would perhaps justify the reason why it is still sitting. Or just my imagination.
Why do you not care for rent options?
Eric[email protected]
This house is a repo . The owner has lost it.
It will sit like that for about a year . Finally it will get a sign on the door in the form of white paper taped to it . Itll have somthing like
This house belongs to the united states goverment. If you have any questions call, br549.
First they will have it winterized and cleaned up.
Later it will be sold .
Read Jims post about optioning and think about being the owner listening to it .
Hes not offering anything I can tack his butt to the wall on. So why shouldnt I just rent it so I can toss his butt if I want to? Why would I want his terms when its my house and hes not offering anything but rent and mentions he will fly if he doesnt like it there. Of course he will. He doesnt have anything invested and to me thats useless. Certainly not worth signing my name to.
Tim
"Hes not offering anything I can tack his butt to the wall on. So why shouldnt I just rent it so I can toss his butt if I want to? Why would I want his terms when its my house and hes not offering anything but rent and mentions he will fly if he doesnt like it there. Of course he will. He doesnt have anything invested and to me thats useless. Certainly not worth signing my name to."Tim brings up an excellent point but it might not be a point at all depending on the contract language. Also, the point of view that he's looking at it from is his. There are two kinds of sellers: non-motivated sellers and motivated sellers. Tim is not a motivated seller so he looks at every offer from his point of view. Motivated sellers will have a much different agenda. If you are dealing with a motivated seller, Tim's concerns will easily be overcome. If you are dealing with a non-motivated seller, Tim's concerns will NEVER be overcome. That is why I said that you need to understand the seller need's before you start making the offer. When you talk to the seller, YOU ARE INTERVIEWING THEM TO DETERMINE WHAT THEY "REALLY NEED". Sellers have different needs depending on their tax situation, immediate money needs, condition of the house, etc. Don't assume ANYTHING. Figure out their needs by interviewing or making offers. Bob's next test date: 12/10/07
"Hes not offering anything I can tack his butt to the wall on. So why shouldnt I just rent it so I can toss his butt if I want to? Why would I want his terms when its my house and hes not offering anything but rent and mentions he will fly if he doesnt like it there."Tim, you are assuming that the contract is written in a way that benefits the buyer only. Rememer, the contract, and all it's terms, are negotiable. The actual contract could be very fair: one that you would approve of.Think about my situation. I had a perfect condo in move in condition. It was in a nice newer neighborhood. They just weren't selling because of the economy. My decision was to put a tenant in there to provide some cashflow while I kept selling it. We all know that it's hard to sell a house with a tenant...right? The lease option was the perfect tool to accomplish what I needed to do. Remember, my place was in perfect condition and I didn't want a transient tenant to come in and rent it on a month by month basis. A place could get trashed quick with tenants like that. So, I found a professional lady through my realtor, who was looking to buy a place. She was going through the beginning stages of a divorce and my place was her perfect solution: she could settle in while she sorted out her financials. So, the first step in giving me cash flow was done. I wasn't going to worry about this lady because she was a white collar professional, with two nice kids and she was "invested" in my property because she had an option to buy it and was a serious buyer, not a professional renter. The next important element of the deal is writing a lease with the terms in it that BENEFIT ME! The lease term for her was 6 months but I could have locked her in for a year...just like you do. There were two important terms though: she had to agree to keep the place clean and ready for viewings and allow them with 24 hour notice and more importantly: if I got a buyer, the lease would terminate and she'd have to move immediately upon closing! Think about that last clause. How many of your tenants would agree to getting booted out in the middle of their lease? I'm guessing: not many. The difference in the lease option is that the "buyers" are excited about buying instead of leasing. They get to tell their friends that they "bought" a house. This tiny difference can be all the difference in the world in allowing the seller to add the clauses we need to get a deal done. Bob's next test date: 12/10/07
Thanks for all the advice Jim and Tim as well.
I would consider structuring the deal with a down payment (let's say $10,000) and would want full or partial credit on the rent paid over the term of one year at which time we would consumate the final purchase.
So lets say I paid 18,000. in rent with full credit less the taxes, my d/p has now increased to $22,000. We could much more easily handle the mortgage with that kind of d/p. We could do that in cash right now but that would leave us with a pretty empty coffee can!
Do you see any holes in an offer like this?
The only thing I wil or can safely assume about this house is that the owners are don't wanter's. To stretch, I might assume that they are from out of town considering the condition of the property.
Thanks for all the help.
Eric[email protected]
I wouldn't be offering 10k to start the negotiations! I'd be offering my sweat equity."Mr Jones, the house needs a lot of repairs. I'll start paying you rent and then I will start putting a lot of time, effort and money into improving the house. My goal is to live in it for the next 30 years, so I'm going to make it as nice as I can. If all goes well, I'll be able to get a new mortgage on it in two years. In the meantime, you'll be receiving more money each month from my rent payment than you would if you put the money in the bank and your house will be getting improved. If I don't execute the option to buy, you'll end up with a much nicer house". I'd offer the standard security deposit and the first and last month's rent. Actually, I'd only offer the first month rent LOL especially if I was paying full price on the asking price. That's a powerful offer. Bob's next test date: 12/10/07
Jim,
I think that I am talking about something a little different than you are thinking.
If the place looked good to me, why not just make the offer I suggested?
I would be really leary of fixing up someone elses house. I would want the security of knowing that I am not going to get thrown out.
Here's 10k. I WILL consumate a purchase from you in one year under these terms.
[email protected]
I don't understand why you think that I suggested that you should offer him something that would allow you to get thrown out.Your offer would be exactly the same as you first suggested but keep the 10k in YOUR pocket...not his. Bob's next test date: 12/10/07
I don't understand why you think that I suggested that you should offer him something that would allow you to get thrown out.
In a previous post about your condo, you stated that if you found a buyer while your tenant was occupying the residence she was out. No?
Maybe I misunderstood.
I just want a solid commitment and want to give on too.
You would recommend holding off on the 10k d/p offer if I were to make an initial offer then?[email protected]
Okay...I got it now.I was responding to Tim's concerns that he didn't want to put a tenant in there that could walk anytime. So, I explained that he's in charge of the terms and could structure his lease just like a normal lease but put in a clause that gave him the right to move them out if a sale came through. That would be considered a lease option that favors the seller. You would structure your offer to benefit you, the buyer. You wouldn't add that clause or agree to it. Instead, you load up the offer with buyer friendly terms. A lease option can be a very powerful tool for either the buyer or the seller. It will become an increasingly important tool because of the difficulty in obtaining new mortgages with the worst still to come in the mortgage fallout. It also can be a very important investor tool. You can "buy" a house with buyer friendly terms and "sell" the house with seller friendly terms. You can get in the middle on a deal like this and make some cashflow and get a chunk of option money too. Or, you can structure the option terms to give you a year or two or more to make a decision. A common term might say "after the one year option period expires, the optioner can renew for a second option period by paying an additional option fee of "x" amount of dollars. The option period can be extended as often as you desire. Typically, an investor would attempt to get as long of an option period as he could...maybe starting by asking for 5 years. In a rising market, the amount of the monthly payment would not have to go toward the principle like you are asking. Instead, the rising market would provide equity and if you could get a five year option period, it's not unthinkable that there would be 40% equity without making any improvements even if you paid full price! Bob's next test date: 12/10/07
i'm not saying that buying on a option is not a good idea,but one thing i think could put a hook in it is,lets say you do the deal,you put your 10k into it and spend a lot of time and money fixing it.if the guy owes money on it and stops making payments your had,or if he was to be sued,even if the suit was just filed,it would tie the property up and you would not be able to buy.
if i liked the house and wanted it i would make a low ball,and i mean low ball cash offer,no inspections,as is and own it. intrest rates can't be any lower than they are now next year,then i would start fixing MY house as i could.
heres my example: asking 230 no real estate fees=15 k so were at 215. i would offer 160k with the seller putting 20k into a escrow account for repairs or a 20k merchadise card from lowes. then get a loan for 140 with the 20k you have to put down.
you come in with a option your not going to get as good of deal over all except you have the option to walk next year and lose 10k.ouch
wrap up the deal now,thats my 2 cents larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
offer 100,000 cash and to pay the closing costs. that way the sellers start to see their bottom line grow by a smooth 100k, even."Coming to recognize you are wrong is like coming to recognize you are sick. You feel bad long before you admit you have any of the symptoms and certianly long efore you are willing to take your medicine." -Charlton Heston.
i'm not sure but i think thats what they call lowballing! lol asking 230,offer at 100k. good luck i don't think you would find many takers,but you never know. the best i ever did they was asking 90k,i said i'd give 37,500 they came back at 42. i snatched it up.was a corporation [amaco oil] owner. so i wasn't going to insult anybody.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I've seen property go for half of what is asked a lot of times when cash is mentioned.Making a 100k offer net to the seller is attractive to a lot of people.Most people still think a cool 100k net to them is attractive, anyway. Especially when they really don't have any use for the place and just want the money and maybe they don't have any of their own tied up in it. Like heirs."Coming to recognize you are wrong is like coming to recognize you are sick. You feel bad long before you admit you have any of the symptoms and certianly long efore you are willing to take your medicine." -Charlton Heston.
You are correct .
If I had a cash buyer he would get very good attention because I can sell it cheaper to him and quick for me with out sharing it with an agent .
Tim
I've always found that it helps sellers see the light when you put things in terms of what they 'net', especially if it's a nice round number.
"Coming to recognize you are wrong is like coming to recognize you are sick. You feel bad long before you admit you have any of the symptoms and certianly long efore you are willing to take your medicine." -Charlton Heston.
Have you check the deed records? Tax records? etc.That will show you if there is a mortgage or other liens on it. show you who the last recorded owner is and where tax bills are sent.In many areas they are available online. Not perfect listing, you need to have a title search done for that, but will give you a quick idea of what is going on.Also does not hurt to has the immediate neighbors.It might have been a foreclosure like Tim said. Note that in some place the banks are delaying filling of deeds so that they don't get the notices to cut grass, etc.But you can will still see a mortgage listed.Or if it was an inheritance you will possibly see an out of state owner/address.Note, that a new deed might not have been filed for an inheritance. If it was a joint tenancy in my area the only thing that will happen is WHEN SOLD that a affidavit of death of the of the other party will be filed with the sale deed. So nothing will show until that time..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Thanks Bill.
I have been trying somewhat to circumvent the RE Agent but have not gone to look up the records yet. I've gone as far as contacting the agent that had the listing previously thinking I could mine him for some info.
When I was walking around the place yesterday I was looking for the neighbors but saw none.
Thanks for all the tips, I have a bit of work to do. Just trying to get some ideas.
Eric[email protected]
Around here there are several ways of searching. But by far the best is the legal description. Eazy if you have the developement name, lot and block. Be aware that often there are alternate spelling of the development and or different phases and you need to find the right one.The online realestate pricing location (Zoom???) give the legal description.But I have found it by going to the tax records where you can search by street address.The software is by some 3rd party company and found a count in NC or SC that used the same software. But there you could only search by name and that made it harder to find everything that dealt with that lot..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Thanks Bill, I'm pretty familiar with that process.
Here I can go to Town Hall and look up the L/B/Sec # on a map then go to the records division all on my own.
Thanks again.[email protected]
I wouldn't call that agent. I'd bet that the listing has expired. If you call the agent, the agent will call the owner and get the property renewed because "I have a buyer that wants to look at your property".Get to the owner direct. The agents leave their signs on vacant properties, especially on out of state owners because they like free advertising. Think about how much more business you would get for your remodeling business if you could leave 100 signs up all over town on vacant properties. Bob's next test date: 12/10/07
I wouldn't call that agent. I'd bet that the listing has expired. If you call the agent, the agent will call the owner and get the property renewed because "I have a buyer that wants to look at your property".Too late on that. I wasn't thinking as clearly as you. I just figured he might be able to give me the skinny and at worst he might become my buyers agent.[email protected]
Little story for you along these lines. Neighboring house . Owners moved to Alaska 7 years ago. Listed it with a Realtor.
No offers for 1 year. House sits empty.
Realtor makes a lease option to buy based on asking price, owners accept the offer, Realtor moves in pays rent for 4 years. Spring 07 the Realtor purchased the place. "Value" and Purchase Price was set by the original lease option agreement back in 02 ($138,000)so
the day he bought it that set his tax base at that amount. Appraised "Street value" the day he actually bought it, $220,000-$230,000. Nice.
They can't get your Goat if you don't tell them where it is hidden.
I can only hope!
Thanks[email protected]
I was responding to what Jim said too.
Too much being mentioned when nothing concrete is known.
So in general:
Im a horse of a strong odor in deals like this becasue I want total control.
But everyone should figgure their own angle. Theres probably a lot of owners that would go for a lot less than I would. Jim has a lot of angles and thats great . They wont work on me and we both have already discussed it . They still work some of the time .
You got my attention with the 10 grand down. That would do it for me . Id sell it and carry the paper for a year . The payments Id have to keep as mine though as I have costs to keep the house myself. People I have talked to have wanted payments to apply but the first years of a note applies nothing anyway.
You could get by with less with me too as Jim said . Id take a years lease , first and last months rent and deposit and we wouild be good to go on that . Then on a separate action we could right an option to buy with in a years period where you hold the absolute right to buy in the time period for a set price . That would cost a minimum of three thousand that would apply to the purchase price thats non refundable if you choose not to . I have to be paid for the inconvience of not being able to sell it espeically to a higher priced buyer. In other words I dont sign options for nothing . Theres no reason to . I can rent and lease so it has to be more than that .
I wouldnt suggest putting any labor or money in a place unless you own the paper .
Id get a construction loan on the whole thing. That way you wouldnt be short . If the owner is holding first mortgage a banker wont look at you . Their scared of who begged from peter to pay paul and did dick get paid . Thats why I dont like options my self because I dont have my camp behind me . When I move my banker is right behind me . I wouldnt have it any other way. Its good business. Normally when people do options they dont have sufficient paper . Title search just for one . When the owner owns it you have to be careful he still owns it when the deal is done or that it doesnt matter . Who is responseble if it burns to the ground ? Who will be insuring it ? The law requires the owner on reccord . That requires legal council. In a closing every thing is tied in a nice bow . The most important thing is I own it fair , square and legal .
I was at a closing one day and the owners werent there. I was to bring cash which I did . They wanted me to leave the cash with them and sign for the house with out me getting a deed. I laughed in their face and walked out . If youre gonna bluff me all in on a poker bet I want to see all your money in the center of the table before I call or fold or its not a bet or a deal to me.
Tim
"I was at a closing one day and the owners werent there. I was to bring cash which I did . They wanted me to leave the cash with them and sign for the house with out me getting a deed."You wouldn't close in escrow?!!! That's funny. Do you think the escrow company is going to steal the money or the deed? Bob's next test date: 12/10/07
i wouldn't sweat a escrow co. holding my money for a couple hours till seller got there.
but here in wichita we had one go under one day,i can't remember the amount but it was in the millions that the owner left town with.if this happens and it's your money your sol,theres no fdic insurance here.
for that reason i will only do 1031's with the largest co. in town and i never sleep that well till the money is distrubted.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Yes I trusted the closing company. "they thought I didnt either"
I was at closing on Friday afternoon as "scheduled". They didnt show and no one told me which pizzed me off but I gathered the situation. I asked and they were supposed to come by sometime Monday as they were out of town.
This is what hit me ; I was supposed to call my insurance agent as soon as I walked out of closing but no later than 5 oclock close. The law says and Ive checked before on a cash at the court house steps sale that only the owner of record can insure a house. If I give them my cash box its gone and Im now under the gun if the house burns to the ground and he doesnt have insurance becasue after all its a burnout and he owns it clear title . If he hasnt cancelled it his should pay but I signed the papers and handed over the money. The house is sitting wide open from the fire and the fire department entering bashing in doors. Even the garage door. 5 windows out too.
I made a cash offer to close in 12 days because this dude was in a hurry to leave town. He didnt show and didnt have the gonads to call and tell me .
Bottom line is I carried my money back home . Did not sign anything so the security of the house was on him. The contract said the house had to be in the same condition at closing and I reserved the right of a walk through 1 hour before closing time which is standard. How could I do that ?
I did not in the least feel like being responsible for that house over the weekend .
Im the one that had the money and as long as I have it and everyone wanted it it made me think of the Clint Eastwood movie ; Theres two kinds of people . One kind has a gun and the other kind digs . Heres a shovel. Start digging.
Tim
You wouldn't hold title till he signed and delivered the deed. The closing wouldn't occur and you'd get your money back. I haven't sat across from the sellers or buyers in the last 7 closings. The last two were across the country closings. Your probably right for being so paranoid. You've probably held onto money better than I but I think my stomache is calmer LOL. I guess I just don't worry enough:) Bob's next test date: 12/10/07
I never was a fan of "getting my money back" . I just didnt see any advantage in handing over a bunch of cash money and getting nothing in return.
Why didnt they sign the papers before they left town ? I would have done it then .
It didnt make any difference .
Then for some reason the agent called and said I could just go down and sign the papers to the sale when I sold it and pick up the funds Monday if it was hard for me to get down there Friday. Why dont I just mail her check next month and she dont have to go down there on Friday?
I couldnt figgure out any reason I needed to sign the papers with out 90,000 sitting across the table waiting on me to do it . But I was realy baffled she brought it up with out me saying anything . I guess it was all about her.
I know that people arent at closing together all the time but Im not one of them. I think its an important time to make an appointment . I catch things .
Tim
your last sentence brings up something that i've never heard mention here,catching the closing errors.
i don't have much worthwhile advice to give but here is one,no matter first time buyer,seller or your buying your 100th property.
call the closing agent 24 hrs before closing,tell them to fax you a copy of the closing statement.then that night after dinner sit down and go over it .
70% of the time there is a miatake on it,and i have never had it in my favor. once was 8k,another was 2400,last month i had one for only 350.00,but that bought me supper and a big tank of gas..............larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Me too.
I couldnt count the times . Its just not the closing statement.
I sold half of a three acre tract to split it up for two building lots. So I told the closing agent to just say the North half of said tract and use the full legal. That way I wouldnt have to pay for a survey . Other wise I would because he didnt have the numbers to do it . He said that was a good idea and it would work. I got to closing I kept reading this legal and it looked like the full three acres to me so I said it . The closing lady working for the agent that was handling this closing said ;"This isnt what were are doing? " I came real close to deeding off the whole thing !
I normally always find somthing while everyone is waiting on me . Ive never had one in my favor either . I heard of one that was in the tellers favor and he told it . But not me.
Tim
Oh yea,
I dont like lease options and Jim does . Ive got my reasons and he has his .
Tim
i got to ask,someone died in it? natural or voilent? this can affect the value alot and should be disclosed to you.
make a offer of rent to buy,but the more option money you throw in the better the deal looks to the seller.larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
Just a guess about the death. Someones stuff is still inside scattered and strewn about. Doesn't look like anyone came in to sell off Aunt Mary's stuff after she left. It's odd to see a house left that way let alone one that someone is trying to sell.[email protected]
for sake of argument ... and because I have no idea ...
what's better from your end on this ... vs just low balling a bid to buy?
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Haven't really thught about it in depth Jeff, but I am thinking that the option would preserve more of my cash which would be needed for repairs.
If I could get them to accept 100% credit towards purchase I just got a free loan on more down payment money.
At 225 asking, we could barely afford (IF) this place with what we have saved while leaving a good cushion in the bank still. Part of the reason for this is that the taxes alone are over $500/month in the houses current condition. Welcome to NY.
Eric[email protected]
The biggest advantage a lease option offers to the buyer is the delayed decision. A delayed decision to put your name on the mortgage is a welcome thing if you don't really understand the neighborhood. It gives you time to live there and find out the real reason why it wasn't selling. Then, if you decide not to buy it, you're not stuck trying to sell it for a year.They are a nice tool in markets that are moving up or down. If the market is appreciating, you can make a full price offer and wait for your option years to improve your equity. That equity, along with some sweaty equity will become your down payment, along with any rent credits that your negotiate. If the house drops in value, as many have across the nation, the optioner simply refused to buy the house and probably re-negotiates his deal.You mentioned 500 month taxes. That is probably based on a lower value which would change when you buy it. The lease option works to the buyers advantage here too because the deed doesn't change hands so the taxes are still locked in at the lower price until an actual sale goes through.There is a lot more information needed to make any suggestions regarding the terms you might offer. There are lots of ways to learn this information. The best way to figure out a deal like this is to talk to the sellers direct. Ask lots of questions without telling them anything. The key to making a great offer is to understand what they need their money for. Most buyers assume that the sellers need all their cash right now and that's a bad assumption. Here's an offer I might make in the first conversation if you can do it with a straight face and a sincere tone. "Mr Jones, I'm a hardworking guy but I'm afraid that the current mortgage industry has messed things up for everybody. What if I offered you your full price of $229,000; I would pay you $2000 per month for the next 153 months. That would get your your full price that you are asking for. Is that something your are interested in, or probably not?"His answer will tell you a lot about what they really want/need out of this house at this point in time. Information is the key to structuring a good offer but you don't want to start tossing around "complicated" creative financing offers until you understand the seller and their needs/wants a bit more. Bob's next test date: 12/10/07
I talked to a guy here in town who has some rentals. He may have quite a few I don't know.
I drove by a house with a "rent to own" sign in the yard and so I called him and he showed me the house.
Anyway he said "I'll rent it to you or you can rent to own - either way I don't care"
I asked how much he wanted for a down payment and he said "nothing"
He was doing whatever he could to get someone in there to make the monthly payment.
here are three key issues to rent to own:
1. Down Payment
2. Monthly Payment and how much applies to the purchase
3. Purchase Price
If you are BUYING then you want these to slant to your side (low or no money down, as much as possible per month applies to purchase, and then finally a low purchase price)
If you are SELLING then you want the opposite of each of the above
Good luck!
scrape up what money you can and just amke them a lowball, cash offer.
"Coming to recognize you are wrong is like coming to recognize you are sick. You feel bad long before you admit you have any of the symptoms and certianly long efore you are willing to take your medicine." -Charlton Heston.
I've been thinking a bit about your situation and I have come to this conclusion. You would be crazy to offer that 10k as option money on a house that has sat for a year.
If you offer that 10k as payment in full, I'll be proud of you.
Lease options are an investor tool that should make you money, not risk your money. They are useful to make full price offers on nice houses in rising markets. They are useful to get into a house with a very low down payment. 10K is not a low downpayment. Lease options are a great way to get lower than market rent on a property. Lease options are a good way to get control of a property without spending a lot of money on closing costs.
Typically, a lease option does not work with the vast majority of realtors and agents. They also don't work when the sellers aren't motivated. They also won't work if you are buying from an investor who will try to structure the deal to take your leverage and profit out of it.
Last but not least....the lease option should be the third choice on and owner finance deal. The first choice is take the deed subject to the loan. The second choice is buy the property via a contract for deed, hopefully with a very low down payment and below market monthly or deferred payments. Lastly, if all those owner financing methods fail, then offer the lease option. There is a positive way to make the offer and a negative way. Done right, you show the seller why it makes more sense to lease option the property rather than doing a straight lease. It solves his problem rather than giving him another.
Of course, the other suggestion by Larry is right on: a low cash offer. The cash offer would be 60% of the fixed up current market value, less fixup costs. After thats rejected, other three options should be explored.
Remember, none of these ideas will work if the sellers aren't motivated. They may be wealth individuals living on the coast of Florida and don't really need the money.
Bob's next test date: 12/10/07