Seller Financing Dilemma - What would you do?

[Kit Elliott]

Hello everyone,

I recently met a seller that has a proposition that has me a little confused. First, here are the details for the property he is trying to sell:

1) The house is a 2/2 with 1400 sqft.

2) The lot is 11,800 sqft. He bought the two parcels boarding his house many years ago because he wanted the privacy. There is a creek that runs through the back of his property.

3) He wants to sell the BOTTOM HALF of his house (1bed/1bath) for $500k and is willing to carry the loan.

4) Regarding the seller financing offer, he is open to negotiate price and interest rate.

5) The deal would be done as a joint tennancy

6) Whoever buys it from him will inherit his Prop. 13 taxes (about $300/month)

7) The buyer would share water credits with him

The attractive part of this potential deal is that he has that MASSIVE backyard. Since he is offering $500k for just a 1bed/1bath you would have to build a kitchen and living room. In addition, whoever buys it could build another house back there if they wanted to.

But what am I missing here? I know I'll have to factor in the costs of building new rooms, and there's also the fact it would be a joint tenancy, but what other factors should be considered on this?

The house is listed in a very nice neighborhood where others houses in the same neighborhood are selling for approximately $1.2million for the same bed/bath but less of a total lot size. The only problem is he does not want to sell his entire house (that would be the best outcome),

If I wanted to build it to become a nice 2/1 800 sqft home then I know it could sell in the $800k-950k range for that neighborhood.

I look forward to hearing your thoughts.

- Kit

[Chris Seveney]

Quote from @Kit Elliott:

Hello everyone,

I recently met a seller that has a proposition that has me a little confused. First, here are the details for the property he is trying to sell:

1) The house is a 2/2 with 1400 sqft.

2) The lot is 11,800 sqft. He bought the two parcels boarding his house many years ago because he wanted the privacy. There is a creek that runs through the back of his property.

3) He wants to sell the BOTTOM HALF of his house (1bed/1bath) for $500k and is willing to carry the loan.

4) Regarding the seller financing offer, he is open to negotiate price and interest rate.

5) The deal would be done as a joint tennancy

6) Whoever buys it from him will inherit his Prop. 13 taxes (about $300/month)

7) The buyer would share water credits with him

The attractive part of this potential deal is that he has that MASSIVE backyard. Since he is offering $500k for just a 1bed/1bath you would have to build a kitchen and living room. In addition, whoever buys it could build another house back there if they wanted to.

But what am I missing here? I know I'll have to factor in the costs of building new rooms, and there's also the fact it would be a joint tenancy, but what other factors should be considered on this?

The house is listed in a very nice neighborhood where others houses in the same neighborhood are selling for approximately $1.2million for the same bed/bath but less of a total lot size. The only problem is he does not want to sell his entire house (that would be the best outcome),

If I wanted to build it to become a nice 2/1 800 sqft home then I know it could sell in the $800k-950k range for that neighborhood.

I look forward to hearing your thoughts.

- Kit

 Is the house on a separate lot and you are buying a house on a different lot or is it literally attached and you are buying a fractionalized share of the property. If its the latter just walk away now and save yourself a lot of headache.