I have an opportunity to purchase a home that is going to be foreclosed on. The seller is asking me to purchase it, let him live in it for 1 year by paying me rent, and give me $10,000. When the year is up, I will sell it back to him at market price. He simply does not want to lose the house. Does this sound legit?
2006-09-27 12:34:36 · 12 answers · asked by Chacie 2 in Business & Finance ➔ Renting & Real Estate
It's legit. However, I am very knowledgable in this field and I highly discourage this because there is a reason why this guy is in foreclosure, it's because he doesn't pay. So why or how would he pay you? Also, in California, you will have a hard time evicting this guy.
Tread carefully and do not give the seller any money until you have a notorized signature on your legal forms. I personally would pass this deal up and go to the next one.
Another way is to buy the house from him, pay for his rental elsewhere for a year and give him an purchase option contract to purchase the property back from you at some set or future price with an option fee of $1. So when the year is up and he still can't buy the house back, you fullfilled your promise to him and he has no recourse to get the property back or sue you and say that you took advantage of his situation.
Regards
2006-09-27 14:21:29 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Remember desperate people will say what ever it takes to get out of a bind. So, this person will tell you just about anything to get you to help them out.
However, be aware that once you buy the home you are considered the landlord and they are a tenant with certain rights. So if the place is "uninhabitable" or in need of repairs, this person can legally with hold rent until you fix these issues.
Also, the process to evict some one in the case they do not want to move out or for non-payment of rent is lengthy and cumbersome.
My suggestion is to run as fast as you can!
2006-09-27 13:29:22 · answer #2 · answered by juliazumba 2 · 0⤊ 0⤋
If the house is going through foreclosure, where will he find rent plus additional $10K for you?
In addition, the housing market continues to slump. It is almost for certain that "fair market price" from a year today will be equal or lower than today. If you sign a contract with him, you would be buying at higher price and selling it to him at lower price.
Finally, should any dispute happends, there will be court, lawsuit and etc. I would avoid this arrangement.
Oh, another potential problem, if he can pay rent rather than mortgage, that means this property is overvalued. Meaning your rent can't cover mortgage payment, you would be losing money every month.
These two describe current market.
http://money.cnn.com/2006/09/25/news/economy/homesales2/index.htm?postversion=2006092513
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514
2006-09-27 20:59:41 · answer #3 · answered by Price is what you pay for value. 3 · 0⤊ 0⤋
How do you know the seller?
Chances are if you know the seller through a friend, it could possibly be legit. If the seller somehow found you randomly, it is not likely to be legit.
Anyone about to be foreclosed on is not likely to have $10k ever. I'd ignore the deal from this perspective.
2006-09-27 12:43:35 · answer #4 · answered by WJ 7 · 0⤊ 0⤋
First off make sure you have good legal advice and that your contract is well written. Is the price fair? Can you kick him out if he does not pay the rent? Will it keep its value in your area? Is the house actually his to sell - Go through a title company to find out. It might be worth hiring a Realtor to help with this deal and pay them something (Not full commission). I would be very suspicious. Because obviously it is a good deal for you and going to cost this guy something. Why is he really doing this? Divorcing a wife? IRS wants him? You must find out first.
2006-09-27 12:45:42 · answer #5 · answered by rscanner 6 · 0⤊ 0⤋
I'll answer with a question of my own...if seller has money for rent and $10,000 additional...why isn't he paying it off himself? I'd stir clear of this 'deal' if I were you. You may want to check with a realetor about the legality of it also.
2006-09-27 12:43:46 · answer #6 · answered by mommatoots616 1 · 0⤊ 0⤋
If it sounds too good to be true, it probably is. Suppose next year he can't afford to buy it back. If his house is being foreclosed on, then his credit might prohibit him from securing a mortgage...be so careful!
2006-09-27 12:54:15 · answer #7 · answered by clueless 3 · 0⤊ 0⤋
If he has the means to pay market value for the rent plus 10K why is he going to foreclosure?
2006-09-27 14:44:01 · answer #8 · answered by Karen R 3 · 0⤊ 0⤋
You would be considered what they call a straw buyer, lenders won't lend to you if they find out.
P.S. How can you be sure you will get paid, since your friend is in foreclosure. I would not do it, if I were you. You have too much exposure to you and that is not good.
2006-09-27 17:37:33 · answer #9 · answered by ? 2 · 0⤊ 0⤋
if he can't come with the money for the payments where is he going to get the rent money let alone the $10,000.
2006-09-27 12:44:45 · answer #10 · answered by natallbad 4 · 0⤊ 0⤋