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Updated about 10 years ago on . Most recent reply
Help! Received offer on my residence asking that I carry a 2nd.
Need advice.
I received an offer on my primary residence. The buyer is asking that I carry 10% ($69k) for 5 years at 5%. The offer is a "lowball" offer and we both know that a more realistic sales price is $750k. (He and his wife viewed the house in November, have looked at dozens of other houses, and now they are back to us.)
The house is listed at $800k and I really don't expect to sell it until Spring, Winter being a horrible time to try to sell a house... Come April-May-June, assuming that things heat up again here as they always do in the spring and early summer, I figured we will get $760k to $775k.
Its a little over 5,000 sq feet on .60 acre in Riverside, CA. (see link at the bottom).
The buyer is high income and solid. However, he has a $350k house in Kansas City (where his last job was) that is killing him on his debt/income ratios. It is rented out, but his tax returns don't yet show the rental income so it is a significant challenge for him. The house is for sale and has been for sale for several months. He is an accidental landlord and wants out of it.
Here is my question:
Would I be crazy to counter at $775k and owner carry $148k for 12 months at .01% ???
His payment on the second would be $411. His current offer includes a seller (me) carry of $69,000 at 5% for 5 years (amortized over 30, balloon at end of 5 years) which is $370 per month.
Included with his offer was the loan approval letter which indicates that he is obtaining a 40 year loan at 4.00%, interest only, and it is a 7/1ARM. It is obvious that he plans to refi out of this interest only loan as soon as he sells the rental house in Kansas City.
So, what do you guys think? Am I out of my mind to offer a $148k, 12 month loan at 1/10 of 1% in order to get another 25k for the house? (assuming that he is actually willing to pay $750k for the house). There is no way that he is able to buy my house unless I carry at least 10% on a second.
TIME IS OF THE ESSENCE. PLEASE GIVE YOUR OPINIONS, FORTHWITH !!!
DL