Is It Taking Advantage Of An Old Lady...
My friend called me up and asked me to borrow 20k to purchase a large corner lot with an old run down house. The homes in the area for the same specs once fixed up will sell at 215k. Lots alone of this size sell for above 70k. He said she was good for the 20k because six months ago her now deceased husband was asking 15k. The question here is - does it go to what a price is set to what a seller and a buyer are willing to agree diregarding what values are going for? The lady still has her senses but I am afraid come Monday after she signs purchase agreemant, months later he rehabs and sells home at 215k, the local community (population of 3,000) finds out and starts to call it abuse or taking advantage of a poor widow. The ignorant and the uncreative in the real estate business are the loosers right? She should do her homework given the California 5 day recession period and as long as he discloses on contract that she is aware he is buying this property waaaay below value. Right?
Whevever I'm doing any deal with any elderly person, I have his/her signature and the deal witnessed by a 3d party who can later testify that the old person knew what was happening, was in full possession of his/her mental faculties, etc.
So take some friend with you when the agreement is signed, and have him/her take notes so all the conversation can later on be resurrected, in court, if need be, and your lawyer can prove the old person DID know and understand the deal...and you did NOT take advantage of anybody.
If you think it's "taking advantage" of someone, it most likely is. If it's a justified price then go for it. I think that in this world you are often treated as you treat others.
Could you offer her a little more money to make the deal fair and still make a good profit?
Well..her son was called up and he said that they both felt they were doing the right thing as far as "getting rid" of the property. Iwe had her initial in the sentence "you are aware this property is being purchased under value". She is aware and so the deal has been settled.
Thanks for the imput gang!
If you are going to make a killer profit on this deal - I would put in the contract that this lady is to get a percentage of the profit down the road after it's all fixed up in addition to the 20K or whatever up front. Why not?!? A couple thousand dollars off of your 150K profit won't kill you and it will make you look like a saint in her eyes AND the 3,000 people in her community!!
Good Luck!
[addsig]
BRAINSTORM --
Here is a quote from your initial post:
"She should do her homework given the California 5 day recession period and as long as he discloses on contract that she is aware he is buying this property waaaay below value. Right?"
I am not aware of a "California 5 day recession period". Where did you learn about this?
There is a 3-day recession when homeowners refinance. And a 3-day recession when a door-to-door salesperson has a person sign a contract to buy a product or service. But no recession period for real estate contracts ... contracts go into effect the day the parties sign the contract unless otherwise stated in the contract.
Cheryl Lopez
I would suggest having an attorney give you a quick opinion about case law in your state regarding the percentages of fair market value that have resulted in court-ordered recission and those that have not. Then you can make a sound judgment as to how much you want to give her, and how much risk of recission you will take on.