Can Anyone Tell Me The Pitfalls Or Downside?
House is appraised value $350,000. House is listed for sale for $330.000. Owner does not have a mortgage, owns outright. Owner is looking for someone to take out a mortgage for $280,000 and become a co-owner with him. He will make the payments and cost of the mortgage until the house is sold and pay $10,000 fee for taking out the mortgage. He is willing to pay some payments up front and add new partner to listing agreement and deed. Does anyone see this as a bad deal?
Kittiwulfi is right. This seems a little weird.
It sounds like the seller needs money fast and apparently can’t qualify on his own to get a loan. Or, something else is going on. Are there any other liens against the property? Whatever is going on could mean a motivated seller.
No lender is going to do a cash-out REFI in your name, unless you’re on title. And if he can’t qualify, then title would have to be in your name only. Then it would have to be a lender that has no seasoning requirements. Which also means they may only go to 80%, or $280K (as he is wanting).
The best way I can see to put a mortgage on it is to just buy it. So, why not make him a low-ball offer? Ask him to carry a second that will be paid off when it re-sells, providing he stays in the property making payments until it does.
Is there any way to get the agent out of the picture? Or, at least get them to agree to wait and be the listing agent when it re-sells?
Regardless, I would be real hesitant to “partner” with this person. You want make sure you have TOTAL control of what goes on.
Just a couple of thoughts.
Thanks for the input. I was trying to get some other perspective on the deal and all of the replies have helped.
Yep got one here. There are tons of pros & cons. The benefits of a license to me far out weigh not having one. Some people like to have a layer of protection from liability by hiring out their agents.
If you talk to any lawyer long enough and you know the full potential of liability in anything you do in life. You will soon find yourself doing nothing.
I am licensed Broker and Realtor and an investor. I see no downside. I have never worried that I was licensed in an investment deal. I do everything in the open, aboveboard so to say and liability insurance takes care of any unintentional mistakes. Been licensed just short of 30 years. Always disclose it. That is paramount!!!!!
Thanks for the inputs fellas! Chris where are you in San Diego? I was going to relocate in Chula Vista and become a realtor but I decided to stay here in the Gulf Coast.
[ Edited by pinoydarv on Date 10/17/2005 ]
I am on the road, on my cell phone and surfing on my laptop. WiFi and cell phones put real estate investors where they need to be... on the ground and out of the building!
I chose not to get my realtor license here in Florida because you have to disclose when you buy.
I think this makes the seller believe you really want to list their home.
Secondly, by not having a license I am not held to a fiduciary relationship with the seller.
There are cases of judges making a licensed agent pay back some of the money they made reselling a home.
I have thought recently of getting my license just to get the data available of what is active, pending and recent sales.
In the end, I choose not to get a license. There are many, many very successful people in our club here in Orlando that do. It is a personal preference.
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todd hutcheson
[ Edited by NancyChadwick on Date 11/18/2005 ]
Both have a license and love it. The additional income from sales is nice too. We have no problems with disclosure and feel our benefits far outweigh the downside.
Jim
Im about to take my state exam. Im also doing investing right now, although I havent done any deals yet. When you say you are looking more into rental properties thatn flippinf. Are you talking about lease option, subject to and such?
I think it all depends on the individual and what they’re doing. I had my RE license about a 100 years ago, but let it lapse. I’ve debated whether or not to reinstate it, but haven’t so far. Instead, I focused on getting licensed to do loans in all states. – which seems to be more appropriate for me.
I dont see a problem with having a realestate license and being an investor. Every realtor i know is an investor as well as realtor. Disclose who you are to everyone and watch the deals role in. I think that investors feel more comfortable doing business with an agent that is investor as well.