We have a friend who moved about 2 years ago and is still trying to sell their original house. They have now cut the price to the point where any more price cuts and they will have to bring money to the table at closing. They have had offers, but they are $30K below what is being asked at $230K. They owe about $210K and it will take about $225K to close after paying realtors and closing costs. Without realtors, the house won't get shown, since they no longer live in the area. They pay out about $2,100 in total costs each month on the first house. Any suggestions?
2007-12-15 14:35:16 · 5 answers · asked by Wait a Minute 4 in Business & Finance ➔ Renting & Real Estate
I can suggest 2 options. One is to advertise a Rent to Own deal, also known as a Lease Option. The tenant/buyer coming in usually pays a higher than market rent, and part of it goes to the purchase price. This shows a bank that they can afford the house. An option fee (nonrefundable) is usually also received from the tenant/buyer. The t/b is usually also responsible for all maintenance on the house. At the end of a set term that is negotiated (have seen anywhere from 1 to 3 years, with 2 I believe being the most common), the tenant exercises the option and house is purchased for the price that was agreed upon originally. The tenant buyer basically gets a mortgage at that point to complete the purchase. If they decide not to go through and purchase the house, your friend can lease option it again, and/or sell if the market has changed. (In the meantime, the t/b has been paying down the principle, so there is more equity in the house.)
The second option is to see if a Real Estate Investor will take the property "Subject to" the existing financing. There would not be any closing costs to be paid. Real Estate Investors do "Subject to" deals every day. Your friend can reach out to a local Real Estate Investment Association, or feel free to email me through this forum and let me know what city and state your friend's house is in (or post the info here), and I can refer them to a local group of investors. By the way, most real estate investors will not take a house "Subject to" if it is listed with a realtor, so your friend would either have to get out of his contract (which shouldn't be too hard considering apparently the realtor really hasn't done a good job to get the house sold) or wait until their current committment expired.
A real estate investor can also handle the Rent to Own scenario above, if your friends don't feel knowledgeable enough to take care of everything involved.
Good Luck!
2007-12-15 15:03:54 · answer #1 · answered by Hopeful Home Solutions 3 · 0⤊ 0⤋
If they can't rent it out and they are forced to bring money to the table, it is possible the mortgage company will short the mortgage and have your friends sign a note for the deficiency, possibly placing a mortgage on another one of their properties. My friend purchased a home from people that were upside-down and this is what their lender did.
2007-12-15 23:33:42 · answer #2 · answered by checklistenup 1 · 0⤊ 0⤋
try --in addition to what my peers suggested,
these two tacks;
a; sell Part of the house--1/2 or 1/4, or any other part. that gets you paid up to date and
thus, the investor shares in future equity
gains.
b; put a small biz in the house to cover the
payments!
2007-12-16 00:12:56 · answer #3 · answered by kemperk 7 · 0⤊ 0⤋
This is happening everywhere, if the rents can not support the home they should let it go back to the bank. Short term ding on their credit but hell life is to short to sweat the small stuff.
I have detailed information available at homehelpers911.com.
Good luck to them!
RJH
2007-12-15 22:48:13 · answer #4 · answered by Empire Realty - Upland CA 2 · 0⤊ 0⤋
Rent it out. Cut there out of pocket costs at this time . when things turn back around if a few years they can then sell it.
2007-12-15 22:45:19 · answer #5 · answered by Big Deal Maker 7 · 0⤊ 0⤋