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| Too old to run, too mean to quit! |
A neighbor woman is selling her house. It is nearly 40 years old. Was not built to current code requirements, old fixtures, etc etc. She is asking $560K for the place. Has 2 bathrooms that badly need renovation. She has a potential buyer, but the buyer wants her to pay for the updates/renovation. Estimated cost for that work is $40K. Seller has offered the buyer the following "deal". Finance the sale for the full $560K, and seller will pay the buyer $40K to pay for the renovations. I suggested that she should just reduce the price by $40K, but that would not give the buyer the cash to pay for the renovations. Seems a little "questionable" to me, but then I find such manipulations a little shady. Thoughts? Elk There has never been an occasion where a people gave up their weapons in the interest of peace that didn't end in their massacre. (Louis L'Amour) "To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical. " -Thomas Jefferson "America is great because she is good. If America ceases to be good, America will cease to be great." Alexis de Tocqueville FBHO!!! The Idaho Elk Hunter | ||
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A Grateful American |
Typical in older home sale/purchases. It is up to the lender to approve, but the value of the loan, if secured by the property, then it is "just numbers". The bank sells a higher mortgage (better return), buyer gets the renovation money, and seller gets paid the full amount they wanted. The seller woud otherwise lose 40k of their asking, and the buyer would have to come up with the cash or take a second mortgage to finance the reno. The bank "loses" the income from the interest. But she should not pay for the renovations herself. "the meaning of life, is to give life meaning" ✡ Ani Yehudi אני יהודי Le'olam lo shuv לעולם לא שוב! | |||
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Yep and the kicker is what the house appraises for when the potential lenders send this to their underwriters. If it appraises for that much then it would work. | |||
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I don't think that's a manipulation. But it is strange to me that the seller would offer such a deal if her home really was worth her asking price. If it was, it wouldn't be just this one buyer looking at the place. If it really is worth 40k less than asking, my question is will it actually appraise for the asking price. If it doesn't, the bank isn't going to loan the buyer that much money I don't think. | |||
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| Needs a check up from the neck up  |
The problem is the parties really never disclose to the bank the loan back on the repairs. The best option would be For the buyer to do a loan that allows renovation draws. __________________________ The entire reason for the Second Amendment is not for hunting, it’s not for target shooting … it’s there so that you and I can protect our homes and our children and and our families and our lives. And it’s also there as fundamental check on government tyranny. Sen Ted Cruz | |||
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Member |
Is this suggesting that the seller is carrying the note back? For 100 percent of the sale price? I don't imagine any bank is going to allow that much leverage. If my interpretation of the above is correct, I would not do a deal like that. Sounds like a cash poor buyer and could end up in a foreclosure. Place your clothes and weapons where you can find them in the dark. “If in winning a race, you lose the respect of your fellow competitors, then you have won nothing” - Paul Elvstrom "The Great Dane" 1928 - 2016 | |||
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| I believe in the principle of Due Process  |
Head's I win, tails you lose! The buyer has no skin in this game. Maybe the way to do this is to do the fix ups, bring to code, then figure out what it is worth and sell to a real buyer. Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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Member |
Until the bank gives the buyer the loan he's requesting just to have the seller take the money and run. Sounds like a lot of skin to me. Lenders allow seller concessions (IIRC up to 6% of the sale price) so the buyer can cover closing costs, minor repairs, etc. When the funds are wired in at closing, the closing attorney will pay everyone what is due to them right there at the closing table. Any "side arrangements" typically won't be handled by the closing attorney because they don't want any part of the liability that comes along with what was supposed to happen. I know of a situation where something similar happened and after the higher loan amount was wired and funds distributed the seller instructed their attorney (not the closing attorney) to cancel the wire to the buyer for renovations. Sure the buyer took them to court with a signed agreement and all but no one wants to deal with that for months, perhaps years while the home is in a state of disrepair. __________________________________________________________________ Beware the man who has one gun because he probably knows how to use it. | |||
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| I believe in the principle of Due Process |
What bank? Where does it say bank? It says:
That suggests seller financing, seller carry back. I don't see that the buyer is paying one cent in this deal. Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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| Just because you can, doesn't mean you should |
Sell it to the buyer in the present condition and with a price to reflect that condition. Financed by a third party, not the seller. Appraisal for the lender will reflect the present condition. ___________________________ Avoid buying ChiCom/CCP products whenever possible. | |||
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