Need advice: Buying from a desperate owner

[Nathan Gesner]

There's a lot of background on this but I'm going to keep it as short as possible because I have a very specific question. I am a REALTOR and intimately familiar with the home, the property value, and the rental value. You can safely assume my numbers are correct.

I wired $11,000 to their bank 18 hours prior to the courthouse sale and stopped the foreclosure process. Owners want to sell me the property and then rent it back. Actual property value is $220,000. Owners owe $105,000. They are willing to sell it to me for $140,000 minus the $11,000 I already paid to stop the foreclosure. This puts $25,000 in their pocket and gives me a property with immediate equity.

To summarize, I already paid $11,000 in cash and intend to pay another $19,000 in cash. That leaves $110,000 to finance on a property valued at $220,000.

How do I structure this to ensure the bank lends on it? If I say I'm buying it for $140,000 they will want 20% down ($28,000) but I've already put $11,000 towards the purchase that the bank won't count and I've only got $19,000 more available (plus closing costs). If I say the purchase price is $105,000 they will want $21,000 down. I can afford that but then the owner isn't getting their $25,000 in cash.

Is this making sense? Does anyone have a suggestion?

[John Thedford]

I don't know but one thing for sure: DON'T lie to the bank. That is called bank fraud and the penalties are VERY high. You might need to find a private lender to take it down and then possibly refi. I am not a finance guy but there are plenty on BP that could offer suggestions. Good luck.