I Have A House I'm Almost Ready To Sell, Need Opinions(m)
We are finally about to close on this house(Friday) that I'm getting with almost 55k in equity in it. The homeowner isn't in foreclosure or anything but she is having serious financial trouble, thats why she listed the property for 50k below appraised value. What took so long(over a month) with closing is that my broker had a hard time getting us approved for 100% on 225k. The listing agent is my real estate agents friend and he(my agent) needs this deal so he ( the listing agent) called my mortgage broker and offered to raised the purchase price and have the seller take out 10% second which is to be forgiven at close. So, we got approved for 90%. Now my question is this, If the purchase price has been increased but my loan will still be for the original agreed upon amount of 225k what will be actually recorded? Will the new purchase price of 250K be recorded? Or 225k which is what my offer really is? Also I plan on putting this property right back on the market as of this Saturday with a flat fee MLS listing. Will I have a problem with a buyer's lender with a 278k sell price?
What do you guys think and how would you handle re-sell.
I definitely need you guys on this one seeing how so much money is involved.
Thanks you guys
quinn
Depending on how stringent the lender is, they may have a problem with $278k sell price. However, if the buyer goes to a mortgage broker, hopefully they can find the right lender for the situation, especially of the deed specificies the previous price of $250k instead of $225k - 10% difference is a lot easier to justify. I think you might have an issue finding a buyer who will pay $278k for a property that just sold for $250(that's what MLS is going to list as sold price, right?) in a matter of a month, but I don't know the specifics of our real estate market. Generally, if you clean up the property and make it sparkle, it will make a different impression as opposed if someone lives there.
Be careful with the way you're doing 10% seller financing thing - if the transaction is done the way you described(i.e. seller actually executes a second mortgage and then executes a release in consideration of nothing, that 10% is a taxable gain to you. You better account for it when you sell the property(or in the tax year that you incurrthe release, which is 2004) if you want to be clean in the eyes of the IRS in case of an audit.
What you are doing is likely loan fraud. What you can do is to sign a separate agreement with the seller locking them into selling you that mortgage for $1000 or such. Now you basically owe yourself money which is fine.
If the seller decides not to foregive the loan you are screwed. You can't go to court without admitting that the whole thing was to defraud the lender. Even this little side agreement with buying the note at a discount could possibly be considered loan fraud. I would certainly consult an attorney.
The higher price will be recorded because that is what you paid for the property!
Be careful. TCI jail is a little different than real jail.
Quote: Will I have a problem with a buyer's lender with a 278k sell price?
Not if the house appraises to 278k and the lender does not have seasoning requirements. Most lender will likely review the appraisal very closely. So do not think that you will get a premium retail price. You will most likely get the average retail price.
I make it clear to my listing agent that I have only owned the house for a month and to only accept contracts from buyers who are using lenders that have no seasoning requirements. My market is good and I have had no problems.
Brenda
Ok, I just got worried and called my mortgage broker and asked her about all this. She said not to worry about it because the listing agent seemed a little too eager and she had to do some research on it so she scraped it. She got us a 95/5 loan. This sounds better to me cause this way I'm using my own money, actually, someone else's money, I got an investor lending me the cc which doesn't have to be re-paid until I sell the house. I just want this to be done so I can finally make some money. Not only done but done quickly and legally no doubt.
How would you guys sell this?
quinn