Another bites the dust

[New Guy]

After years of waiting out the market and being a loyal pigg, I am very close to finalizing a deal on my first home. A home fell into my lap due to a unique situation involving friends of the family.

– This would be my primary residence

– It looks like the deal may end up being +/- 20% below market value which would allow me to absorb a further significant drop in the market

– My wife and I have a 15-month old and our current 900 sq. ft. rental just isn’t cutting it anymore

– We can afford the payment on one salary

– While it’s not a long-term home, it would allow us to collect the $8K housing credit and get the tax write-off which would make the net monthly costs significantly less than market rate rents

– After 3-years when we will have “fully earned” the tax credit, we’ll re-evaluate the market and potentially look for a more long-term home to buy. My hope is that the all the resets, governemnt props, etc. would have run their course by then

– Our intent would be to keep this house as a rental since we would be cash flow positive

One potential curveball is the seller wants to sell the house “as-is” and without using realtors. Pending a thorough home inspection I am fine with this arrangement but was curious of any potential pit falls especially given that this would be our first home purchase.

This is not a done deal but it’s moving that way fast.

Any thoughts, suggestions?

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[jameswenn]

Can you share some details like price, area, and size of the property?

[jameswenn]

Can you share some details like price, area, and size of the property?

[jameswenn]

Can you share some details like price, area, and size of the property?

[jameswenn]

Can you share some details like price, area, and size of the property?

[jameswenn]

Can you share some details like price, area, and size of the property?

[New Guy]

Thanks for the input Analyst. I’ll definitely keep all your points in mind.

This is a bit of a “sweet heart” deal due to the family friend tie. The owner’s father passed away some months ago and left this house to his son. At this point the son just wants to unload the house – and I agree that people don’t generally leave that kind of money on the table regardless of the circumstance. The 20% figure was just a number that I estimated based upon my own research. A friend of mine pulled recent comps in the area and I know the area very well also. Based upon this info., I figure the house could sell today for $290-300k and the number being kicked around for the sale is $240k.

As for the condition, I am going to make the deal contingent on a home inspection but what I do know is the roof is newer (5-7 years old), and the seller did say that the plumbing is functional but needs to be updated since it is galvanized steel. The house is on a raised foundation and I am going to primarily rely on the inspection to find out about the electrical, HVAC and pest/termite issues.

The house has been maintained well but you never know what lies beneath.

In terms of the house specs:
Location – LA County
Sq. ft. – 1600 house, 7000 lot
Year built – 1954
3 bd / 2 ba

All this said, I am proceeding with caution but don’t think this person is concealing any deal breaking info. since there is a family tie.

[New Guy]

Thanks for the input Analyst. I’ll definitely keep all your points in mind.

This is a bit of a “sweet heart” deal due to the family friend tie. The owner’s father passed away some months ago and left this house to his son. At this point the son just wants to unload the house – and I agree that people don’t generally leave that kind of money on the table regardless of the circumstance. The 20% figure was just a number that I estimated based upon my own research. A friend of mine pulled recent comps in the area and I know the area very well also. Based upon this info., I figure the house could sell today for $290-300k and the number being kicked around for the sale is $240k.

As for the condition, I am going to make the deal contingent on a home inspection but what I do know is the roof is newer (5-7 years old), and the seller did say that the plumbing is functional but needs to be updated since it is galvanized steel. The house is on a raised foundation and I am going to primarily rely on the inspection to find out about the electrical, HVAC and pest/termite issues.

The house has been maintained well but you never know what lies beneath.

In terms of the house specs:
Location – LA County
Sq. ft. – 1600 house, 7000 lot
Year built – 1954
3 bd / 2 ba

All this said, I am proceeding with caution but don’t think this person is concealing any deal breaking info. since there is a family tie.

[New Guy]

Thanks for the input Analyst. I’ll definitely keep all your points in mind.

This is a bit of a “sweet heart” deal due to the family friend tie. The owner’s father passed away some months ago and left this house to his son. At this point the son just wants to unload the house – and I agree that people don’t generally leave that kind of money on the table regardless of the circumstance. The 20% figure was just a number that I estimated based upon my own research. A friend of mine pulled recent comps in the area and I know the area very well also. Based upon this info., I figure the house could sell today for $290-300k and the number being kicked around for the sale is $240k.

As for the condition, I am going to make the deal contingent on a home inspection but what I do know is the roof is newer (5-7 years old), and the seller did say that the plumbing is functional but needs to be updated since it is galvanized steel. The house is on a raised foundation and I am going to primarily rely on the inspection to find out about the electrical, HVAC and pest/termite issues.

The house has been maintained well but you never know what lies beneath.

In terms of the house specs:
Location – LA County
Sq. ft. – 1600 house, 7000 lot
Year built – 1954
3 bd / 2 ba

All this said, I am proceeding with caution but don’t think this person is concealing any deal breaking info. since there is a family tie.

[New Guy]

Thanks for the input Analyst. I’ll definitely keep all your points in mind.

This is a bit of a “sweet heart” deal due to the family friend tie. The owner’s father passed away some months ago and left this house to his son. At this point the son just wants to unload the house – and I agree that people don’t generally leave that kind of money on the table regardless of the circumstance. The 20% figure was just a number that I estimated based upon my own research. A friend of mine pulled recent comps in the area and I know the area very well also. Based upon this info., I figure the house could sell today for $290-300k and the number being kicked around for the sale is $240k.

As for the condition, I am going to make the deal contingent on a home inspection but what I do know is the roof is newer (5-7 years old), and the seller did say that the plumbing is functional but needs to be updated since it is galvanized steel. The house is on a raised foundation and I am going to primarily rely on the inspection to find out about the electrical, HVAC and pest/termite issues.

The house has been maintained well but you never know what lies beneath.

In terms of the house specs:
Location – LA County
Sq. ft. – 1600 house, 7000 lot
Year built – 1954
3 bd / 2 ba

All this said, I am proceeding with caution but don’t think this person is concealing any deal breaking info. since there is a family tie.

[Author]

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