Home Buying in Las Vegas>Question Details

Jason Jones, Renter in Las Vegas, NV

What should I know before I buy the townhouse where I am now?

Asked by Jason Jones, Las Vegas, NV Mon Apr 9, 2012

I've been given the chance to buy the townhouse I am in now. The owner is going to carry the loan, there is no money down.

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Go to a mortgage broker and see if you could qualify for the loan. You said you have no money down. Does the seller have a loan on the property? If he does, you are hoping he pays the monthly amount when you pay him. You don't want to be in this situation. Maybe he needs your money to keep paying the loan. If there are to many renters in there the property cannot be sold on the market because of the number of renters and that is what the mortgage lender sends out to ask the HOA's board about back fees owed? If there are to many monthly HOA's not being paid they will not lend to you. You know the saying to good to be true. What value are you buying the property at an appraised price or a price he came up with? Since you are not getting a loan where is the value coming from? Do you know what other properties in the area have sold for? The Vegas market is still soft and I would be worried that I could not sell in the future if you buy to high and not have proper representation. Talk to a realtor and have them give you a value or pay for an appraisal yourself before getting further into this.

Tom Inglesby, Broker
RE/MAX Equity Group
0 votes Thank Flag Link Mon Apr 9, 2012
Hello Jason,

Does the term "Caveat Emptor" sound familiar? It is Latin for "Let the Buyer Beware". It certainly applies here. I wouldn't automatically assume that the Seller is taking advantage of you, but you need to be aware that property values have gone down for the last several years, and the price you are being offered may be way above the market value.

You should also be cautious and check to make sure there are no current liens (such as mortgages) on the unit. If you are buying subject to the current loans, you are relying on the Seller to continue to pay those payments when they receive the payment from you. If not, the bank can come in and foreclose on the unit and put you out on the street. Which is why, if there is a loan or two (there could be more than one loan on the property), you want to first be sure it (or they) is/are lower than the price you are paying.

Secondly, you will want to make sure that there is an escrow set up so that as you make you payment, the independent third party is making the payment on the underlying loan(s).

Lastly, there are a number of ways to transfer title to the unit which include Contract for Deed (in which you actually do not get title until a certain agreed upon date or event), and Note and deed of trust. There are others, but these 2 are most common. Be sure and spell out how hazard insurance and taxes are to be collected and/or paid for.

To wrap this up, I would recommend that you either have a Real estate Attorney or a licensed Real Estate agent handle the paperwork for you, which would include a title search, escrow, and structuring the deal to protect you.

If you need help, don't hesitate to ask.

best of luck and thanks for reading.
0 votes Thank Flag Link Mon Apr 9, 2012
First make sure you have an experienced realtor to represent you in this transaction. They will know all the forms and documents you need to collect so you can make sure you are aware of all the terms in the deal as well as the current owners financial status with the property. Make sure you see the tax records and title report so you know if everything is current and that there are no liens on the property. I am always willing and able to help if you need anything.

Graham Irving
Province Real Estate
0 votes Thank Flag Link Mon Apr 9, 2012
Hi Jason,
There are few things that you need to consider and address:
1. Terms of financing like interest rate, late payments, early payoff , escrow account and etc.

2. Request the seller to provide you with the assiciation resale package that includes the Cc&Rs, budget, minutes,By Laws and llitigation statment.

3. Request seller to provide you with Title insurance and have escrow pull a prelimannary title search for liens.

4. Negotiate all the escrow fees, transfer fees and association transfer fees.

5. Even thogh you live at the property, I suggest to have a home inspection done by a licensed professional inspector.

6. Insure the property with a home owner's policy.

If you have any questions or need help, please contact me at 702-612-7099

Rena Levy
Web Reference: http://www.cvegashomes.com
0 votes Thank Flag Link Mon Apr 9, 2012
Hi Jason,
That is great that you currently live in the association you are wanting to possibly purchase in! Some of the questions are: Is there any litigation? What is your final amount (have it broken down)? What is the price you are buying the townhouse for and what are the terms? Sounds as you are doing your own research, but hiring a pro is always a good idea too, if not just for peace of mind! Thank you for posting! Raina Musser

0 votes Thank Flag Link Mon Apr 9, 2012
OK, so Jason you have received a LOT of good advice below.......now you see all the things you need to investigate before even thinking of signing anything.

As was pointed out by others.....making sure the owner is current on his mortgage payments, HOA fees and property taxes....and stays current.... are all vital to making this scenario work..

Lots of questions for you to ask....get the answers before moving forward.....and get legal representation!

Good luck!
0 votes Thank Flag Link Mon Apr 9, 2012
Hey Jason,

The first thing you need is your own representation in this transaction. I received a referral last week from a client of mine. This guy wants to execute his lease option and wanted someone in his corner. Problem is, he has already signed all the paperwork and he's kinda stuck. There are several terms in his contract that are unclear and up to interpretation and I've discussed these with him.

Bottom line is he should have brought in a pro before he signed the agreement. Give me a call and I'll see if I can help. If I can't, I'll let you know that too.


Robin Gray
0 votes Thank Flag Link Mon Apr 9, 2012
Donna & Debbie give good information,you might also want to see what kind of liabilities you as a part of that association will have.Say there's an unfortunate situation such as a drowning in the pool of someone outside the association,a kid gets hit by a car,your neighbors unit burns and your unit doesn't,but smells like smoke.What are you covered for.I lived in an association.You may want to seek a little consultation from,dare I say,an attorney.It may help in your decision.If the association gets hit with some sort of million $ suit.How good is the insurance.
0 votes Thank Flag Link Mon Apr 9, 2012
I would make sure you get a third party who is knowledgeable about owner carry contracts to make sure you know and understand what you are signing. I would make sure you get a full copy of the Homeowners Association resale package with budget and statement of any pending litigation. I would also check to find out their ratios on rentals to owner occupied. Make sure you know how the taxes will be paid and that you have access to any impound account statement if there will be one. You also need to make sure the owner is making the payment every month on the property. Do not just pay him and assume he is paying the mortgage. There are always the people that have been paying on a contract for years and all of a sudden the notice of default is taped to the front door.You may want to get some representation. It seems easy to have an owner carry a loan for you to purchase but there are many things to consider so you are protected. I hope this will help answer your question.
Thank You
Suzie Marquardt
Realty One Group
0 votes Thank Flag Link Mon Apr 9, 2012
Make 100% certain he is current on payments and that he is not in default. Make sure you are the one making payments to the mortgage company so you know they are being paid. I agree that it is vital you review CIC/HOA documents re:showing their financial strength and rules etc.
0 votes Thank Flag Link Mon Apr 9, 2012
Greetings Jason,

You would want to know if he is caught up on his payments, the yearly taxes, does he pay for the water and sewage now or do you, if he does what is the cost, age of the property?

You need the HOA package and read it and see if you want to pay the HOA fees and deal with the HOA and the fines that he has been having to deal with.

Before you sign the finale papers I would have a cpa look them over or if you have a banker friend ask them to look at them.

The biggest thing I have had kill deals for me is the HOA requirements.

Donna J Nuttall
Principle Realty Advisors
0 votes Thank Flag Link Mon Apr 9, 2012
If the townhome is part of an HOA commmunity, and/or a condominium type of ownership, make sure you ask to see and read the Bylaws ( homeowner's association or condo rules and regulations) so that you know what restrictions there might be................also ask for a statement of the financials, so that you know there is no shortage in the reserve.........and that the community is solvent..........ask how many, if any, units are for sale and/or in foreclosure.......ask what percentage of units are rented rather than owner occurpied (this may be limited by the association)........make sure you know exactly what is your responsibility to maintain (pay for) and what is covered by the association..........know what the monthly fees are - ask how often they have been increased in the past........ask if there are any special assessments currently being paid, or planned for the near future............

Finally, make sure you know that you will be paying a fair market price, so, do your due dilligence and find out what the recent sales have been for similar units and what the days on market are.

In my opinion - you shoudn't sign anything unless you have a real estate attorney review it first.

Just curious why the owner is willing to offer what appears to be such a buyer-friendly deal.............is it difficult to sell units there?

Best wishes!
0 votes Thank Flag Link Mon Apr 9, 2012
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