Home Buying in Phoenix>Question Details

Phillipe, Home Buyer in Phoenix, AZ

WHat are some ways to structure a seller finance or lease purchase?

Asked by Phillipe, Phoenix, AZ Fri Nov 23, 2012

We are interested in a unique property that is currently not listed but the seller has indicated she may be interested in selling now as opposed to waiting for the market improve in two to three years. She is getting tired of maintaining the property after 25 years. It has a guest house and a separate apartment that are both rented (1400 per month income). We want to offer her her asking price but believe it will not appraise for that in today's market. We would normally never pay over appraised value but this is truly unique. We plan to make this our long term home. We feel it will appraise at 140-150K but she wants 175K to sell today. She owes 100K. We want to do a first loan and have the seller carry the second or do a lease purchase wit the final price to be determined in the next few years. We want to make an offer but not sure how to structure it. We plan to use a real estate attorney and want both parties to feel protected. Any ideas?

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5
Hi Phillipe,

You will need to pay off the seller's first loan because no conventional lender will agree to be in second position. If you can qualify for a loan of $100K or more, then just have the seller carry the remaining portion of the purchase price (what every you negotiate). You will want to make sure the seller carryback is recorded with the recorders office but if you use a title company or an attorney, then you should be protected.

I can refer an excellent attorney that handles a lot of seller carryback transactions. Just give me a call and I would be more than happy to provide you with his name and contact information. Good luck!

Sean Heideman, Broker / Owner
Position Realty
Office: 480-213-5251
Web Reference: http://positionrealty.com
0 votes Thank Flag Link Tue Nov 27, 2012
Doug--We can qualify for up to 180k. Roy-- how would we find out if her loan is assumeable? That sounds like a great option
0 votes Thank Flag Link Fri Nov 23, 2012
The seller can find out if their loan is assumable. I am a real estate broker in Colorado and not Arizona. However with acceptance of certain conditions to buyer and seller, performing loans with a due on sale clauses are being assumed by buyers in our state. Any such agreement should involve qualified professional such as an attorney and broker.
Flag Sat Nov 24, 2012
You should certainly use an attorney or real estate agent to represent you.
0 votes Thank Flag Link Fri Nov 23, 2012
Phillipe

Are you able to qualify for a loan of $100,000 or a little more?
0 votes Thank Flag Link Fri Nov 23, 2012
Your ability to generate a 1st loan will be a problem for any lender with the value (appraisal) and a carry back or lease option. Perhaps a better direction is to assume her $100K loan through a structured payment account to her lender and then have her take back a 2nd to ballon in 5 years with some cash at closing for the balance. Your attorney can structure the assumption account of the non assumable loan along with the 2nd. In this type of deal the seller gets her purchae price any you get the property! The bank will not remove the seller from the loan but will not call call the loan in provided payments are being made. Your obligation to the loan(s) are by agreement to the seller. Much better than a lease option!!!
0 votes Thank Flag Link Fri Nov 23, 2012
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