Owner Financing Single Family Home
I have been in contact with an owner of a very nice SFR who is willing to sell me his home subject to. Here are the details:
Owner asking $820k.
Owner states comps are close to $1 mil.
current mortgage around $500k, payments approx. $3k per month (PITI)
i had three reputable title co's do comps on the area and they all came up with numbers from $800k-$850k, not the $1 mil, like the owner suggested. To complicate things, the owner is a real estate agent and claims to be an investor and insists he know the market.
The place is in great shape and doesn't need any work and I think i can carry the mortgage for a month or two if i can't sell it quickly.
Here's my question: Is this something that is worth putting more time into? Does anyone have any advice on how I can structure this contract so that I can pull out in a decent amount of time if i can't find a buyer at a price where i can make a few bucks.
Any help is great.
thanks.
Sorry, this is my first time on the site and I accidentally posted this to the rehab column.
I didn't want to spam the board with another post in another column.
Can one of the moderators please move this to the appropriate place.
Thanks.
My first question is what the owner wants to do with the approx $320k difference between his asking price and mortgage balance. Do you have this cash? If yes I think it can be better spend elsewhere. If not, is the seller willing to finance? And at what terms?
Next when talking to the seller, you can bring the comps and show them to him. All of those comps included a realtor comission so the true market value of the property is actually 6-7% less. Try to convince him of that.
I'm not sure how far you will get. It doesn't sound like this owner is modivated.
He bought the house 3 years ago for his daughter who now has to move to san diego for work. No one is in the home and he is still paying on the existing mortgage. Property value has gone up significantly in the surrounding area in the last three years.
he knows i am an investor and he is willing to take a note for the rest of the equity for no longer than six months. He knows I will try to sell this in that time period.
I don't have the cash, but i have two lenders who will lend on the property under the terms i have stipulated. I don't want to get into a situation though where i am holding this for too long.