FOR THE LOVE OF DOGS

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Ok... I'm in need of some advice because I am real estate challenged.

We've had our house on the market since February. We NEED to sell it because it's swallowing us whole. We bought it, not realizing that the financial problems it would cause would lead us closer to bankruptcy than either of us is comfortable with.

Anyhow, Friday night we got our first and only offer on the house. We had planned to take it off the market at the end of this month if we didn't get anything on it and relist it in the spring with a new realtor.

If we could sell it now, we'd be in much better shape than we would be in the spring, but we need a little help deciding if this is the right thing.

First of all, it's a 3 family house (which we've learned we are terrible landlords!!!) and it's listed at 264,900 (less than many of them out there at the moment but we need to sell it, so we dropped the price).

The guy who made the offer is an investor, and is willing to let us stay on and rent the 1st floor unit back for up to a year, which is what we'd like to do to get our finances under control.

Apparently he's bought many houses before this one, and has his methods all worked out.

This is what he wants to do:

We have it listed for 264.9... he wants to get it appraised and he thinks it will appraise at around 300K. He wants to offer 300K, and we'd sell it for 300K (as long as it appraises obviously), but then write him a check for the difference to him for repairs to the house. This way he only takes out one loan at a lower rate, rather than taking out a home improvement loan at about 3% higher than the mortgage rate.

My inlaws have worked in real estate all their lives - My father in law is an investor who has bought/rented/sold properties for the last 40 years - he has heard of this being done many times, and has done it himself a few times, with no problems.

My parents think it's going to get us into trouble because they think it sounds like it's borderline legal. My parents have not been involved in real estate, though my dad took a real estate course some years back when he thought he might want to be a realtor.

So..... I'm very confused - We need to sell this house, but not if it's going to land us in jail.

My inlaws say that there is no risk associated with us selling in this manner, but my parents think there might be.

Is anyone else slightly knowledgeable about real estate? We'd love some input from an outside source...

Thanks tons...

Emms and Tray

Emms, I have two questions...........how long will he give you a lease for and will you and Tray be relieved of all mortgage obligations? Will your mortgage be satisfied?

I would not enter into any kind of agreement where you still owe money on the property or are liable on a loan he assumes.

Be careful. Something sounds fishy to me.

Our lease would be one year, and yes we would be relieved of all mortgage obligations.

It will be a completed sale.

We won't be liable for anything, other than paying rent, obviously, for the time that we would stay there.

We have been looking for a buyer who is interested in the property as an investment property because we need to be able to rent for at least 6 months in order to get our finances under control. So right now this seems to be the ideal buyer - he does not have an interest in being an owner occupied landlord. He is simply an investor who buys properties, fixes them up and rents them out.

We would have no legal ties to the money that they have as their mortgage, and it would be a home sale for all intents and purposes just as any other.

We are just worried because we have never done this before.

I'm more hesitant to go on my parents assumptions simply because they do not know real estate as well as Tray's parents do, but at the same time... they are my parents, and therefore their hesitancy makes me wonder too.

Until I talked to them, we really had no big qualms about the transaction, but now that they have put their opinion in... I'm very worried.

How much do you have to pay him back out of the sales price for repairs, Emms? I guess that is the key. If you get in excess of the price you were asking, even after you have paid him the repair costs and you are certain that there is no loan assumption, where you would continue to be liable, then maybe its ok.

If you have sound legal advice, you should be ok. Just make sure you have your own counsel and don't "share" with the purchaser.

We would be paying him the excess of the sale - i.e. our asking price is 264.9K. We will GET 264.9K, and he will get the difference between that and 300K. So we'll get exactly what we are asking for out of it.

We will most likely use the closing attorney that we used to purchase the house 2 years ago, and I guess we'll see who he uses - I do not know if he'll have someone or just sit in with ours??

Anyhow, I have a request into one of the RE lawyers here, to see if they have any suggestions, and I'm calling our accountant today because he's in the investment business, and hopefully will have some input as well.

I'll keep ya'all posted of what happens.

Emms

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