Can't Close The Deal
i'm a novice/new investor with several sub-prime loan approals for 85%LTV. I put up 10K and asked the seller to hold a 50K second for 6 months(selling price is 20K over apprasied value). seller is nervous, wants more money down. however I think he is already getting an incredible deal. how do I convince him of this. should I just walk away?
I think you need to elaborate with the seller what you are planning on doing (give him some detail on why you want this property, assuming you are even getting a great deal show him how you both win). Use FORM -Family, Occupation, Recreation, Message - to build report and then tell him if still questiong tell him that you are sorry this won't work and drop a card for future business. The ocean is big and there are a lot's of fish to catch and fry - this one dosen't sound like it's anyting special - make sure the seller know this.
i find it impossible to elaborate on my plans with the seller because I can't communicate directly. i did request a face-to-face meeting with the seller though.
The owner probably shares my curiousity - how are you going to pay back the 50k in 6 monthes if you can only qualify for a 85% LTV , only have 10k to put down, and the house is 20k over appraisal.
actually its' a totally rehabbed 4 unit. according to the mortgage broker after 6 to 12 months I can refinance the owner occupied property for 100% LTV. here are some specifics: the asking price is 431K, apprased value is 410K. 85% mortgage will be for 350K with 10K down and seller 2nd for 50K.
You might want to do the 50K for 12 months and explain that to the seller the way you did here. Good luck
Quote:
On 2004-02-19 13:37, snakeye wrote:
actually its' a totally rehabbed 4 unit. according to the mortgage broker after 6 to 12 months I can refinance the owner occupied property for 100% LTV. here are some specifics: the asking price is 431K, apprased value is 410K. 85% mortgage will be for 350K with 10K down and seller 2nd for 50K.
Here are my concerns even if you have great credit. If you only have $10k who is going to lend 100% on an investment property without reserves.
Lori
[addsig]
got that covered using my 401K
You are going cash out your 401k or borrow against your 401k.
I have great credit, veriable income, great assests, etc and the best investor refi that I can find - that still has low closing costs and no points - is 75% LTV. And this was on a Single Family Home. 4 units are most often considered like commercial property and not residental in the eyes of most lenders. Be very careful what some lender/broker is tell you now. Verify his information and get it in writing. Too often they tell you one thing and then when it is time to close they start apologizing or blaming some one else.
Brenda
bgrossnickle,
Ahmen to that. I have yet to find a good banker/broker to work with in the Atlanta area. I've got a great local banker to work with in the rural areas but the real action is in the city. The city brokers/bankers all seem incapable of doing anything without making mistakes (in their favor, of course). They only tell you what they want you to hear. Good faith estimates fly off their computer at the speed of light and are worth less than the paper they are printed on. Most of them could care less if what they tell you turns out to be incorrect and ends up costing you time and money.
<end vent>
That said, if anyone knows of a good, straight-shooting, honest mortgage broker/banker that doesn't have typing dyslexia in the Atlanta area, please PM me.
JohnCl
Greetings snakeye,
I’m a little confused here. If you’re getting a 350k loan (85% LTV), putting 10k down and asking the seller to carry 50K – that adds up to a 410k selling price. The same as the appraisal. So, where does the 20k over appraisal come from?
Also, how are you structuring this? Because with an 85% LTV (15% down) are you sure the lender will allow the seller to carry that much?
Remember, in doing loans lenders always run their ltv off of the lesser of the sale price or the appraisal price. So in this case 85% of 410 is 348,500. Also let's say the seller is willing to do this and hold back the second for 50K, how are you going to pay him back. Sure I heard 100% cashout refi (if under a year of ownership)but will the appraised value be high enough by then. This is also assuming you can get a 100% refi when you only qualify for 85% now. Also what about the closing cost and maybe a prepayment penalty on the loan you are trying to get now. I mean good luck, but it sound like your taking too many chances on this. One snag and everything goes down the tubes.
the seller has ageed to a 50K second. which will be paid based on market based interest and payments monthly for 1 year then a balloon payment so I have an understanding that i will get refinancing after a year and I already have a lender lined up. also, i ageed to pay the seller the appraised value which is 410.....thanks to everyone for your suggestions.
Good Job snakeyes on getting the deal done
Lori
Snakeye:
One suggestion. Why don't you explain to the seller that if you didn't buy his property, he would have to sell it with a realtor and pay 6%. I would try to get at least 6% off the appraised value or meet
somewhere in between.
Best Riches,
Jeffrey Adam[ Edited by JeffreyAdam on Date 02/20/2004 ]
This reminds me of my worst deal in some ways.
It is not a steal,, like you I was eager to make the first deal happen and jumped into something less than ideal. I bought at retail and the market went south rapidly after I had put a lot of $$ into rehab and I lost 50K when it was all said and done.
My best deal I waited on until the numbers worked out, invested 15K in cash money and netted over 100K. Most deals don't do that well (for me).
If you do wht Jeffrey suggests and get at least 6% or a portion of it then your coming in under appraisal etc. and you have some scant equity.
Hopefully property is appreciating in your area fast enough that you will make $$ on a one year hold