Looking for advice on a potential deal

[Sarah Damico]

Hi,

First time posting here. We live in a suburb called olde town Arvada just 10 minutes outside of downtown Denver. Our neighbor approached us about buying their house, we’d like to house-hack as our first purchase and this house would allow us to as there is an 800 square foot apartment downstairs with a kitchen and bedroom renting for $1300. The upstairs is 1200 sq feet, it’s semi updated but definitely needs some work. There’s a small yard and only 1 car garage. We did some research and thought at most it should list for about 430k or so. We got their price today and it came in super high at 500k. They were trying to find the buyer to save money on fees and then went above the highest price comp. Comps ranged from 360k-490k. I want to walk away solely based on principle but even at about 450k mortgage would be $2350 or so putting us at $1050 for mortgage which is great for Denver. After a year it so we could rent the top for about 2k so 3200 a month on a 2350 mortgage. I’m a complete newb at this, was hoping some of you could weigh in? Let me know what info I missed. Thanks!

[Chris Lopez]

Hi Sarah,

About 50% of my clients are house hackers. I love this niche of investing!

The style of property is ideal for one for house hacking. I can't give you any feedback on the price since I don't know the address. It sounds like there is a big difference in your price and their price.  If you want to private message me the address, I can run some comps.

A few things to keep in mind:

• When properties are sold by the owner, it's not uncommon for the property to have price discrepancies. Sellers usually think their property is worth way more than it is. 
• Make sure you're 100% comfortable with the price. I totally get the fact that some people want to minimize the transaction costs with real estate. Since most people don't buy and sell houses all the time, it leaves room for error and often for one side to get taken advantage of. There is more to selling the property than looking at a few comps.
• If you move forward with it w/o an agent, make sure you understand the "appraisal" dates and deadline under line 87 (section 3.1) in the Contract to Buy and Sell Real Estate, as that leaves the buyer a resolution or possible out if the appraisal comes in under ask price.
• Have the sellers share the comps they used to price it.
• Have the sellers pay for an appraisal before going under contract.  Ultimately, the market and an appraiser determine the price.

Good luck!