Home Selling in 60613>Question Details

Mike, Home Buyer in Indianapolis, IN

Does anyone have experience with a new home builder agreeing to purchase your existing home, specifically in a different state?

Asked by Mike, Indianapolis, IN Fri Apr 29, 2011

We are under a purchase agreement with a home builder in Indiana, contingent on us selling by June, but we would like to structure a deal where they buy the home if not sold by closing for a discounted amount.

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6
Mike,
price and terms is the game. the terms in this market are 70% of the value to accept risk. I want you to reduce your price 10% (90% of Value) and sell it and send me 10% for my advice, keep 10%, and negotiate an additional 10% from the builder.. you think I am kidding.. unforunately I am not. The interests rates are grat, the inventory is GREATER.. trust me- I have 100's of sales under my belt- you are giving away all your power. Slow down- do what I said..I would even take 5% if need be..Good Luck
Web Reference: http://www.joeschiller.net
0 votes Thank Flag Link Sun May 1, 2011
Greetings,

depending on your financial position (assuming you are not late on mortgagage tax, etc..) you could structure the purchase of your property with this builder as a lease purchase. advantages for you are the tax benefits you get from remaining on title on your existing property (see your accountant), money in your pocket up front, monthly rent coming in on the property, and the ability to move out into your new construction.

advantages to the builder is that they are obtaining the "right to buy" - not the obligation, by paying a non-refundable option consideration down payment. this is far less risky to the builder. i don't see why a builder would want to take a risk buying your existing home without having enough "spread" in the deal nor a "C" buyer in place to disposition the property. even if they are buying all cash, the numbers will not justify it.

all in all, i can set up a lease purchase deal like that as a principal in the transaction or as a consultant.

as far as your initial question about a new home builder agreeing to purchase your existing home - i don't know the nuances of how that works. i recommend speaking with a qualified real estate attorney or possibly and asset protection attorney - or both. i use both.

i am currently in talks with a home builder who built a custom home in a very nice suburb of Chicago. he is asking $650,000. he funded this project with all cash - no bank debt. he is in good position financially but he wants to get on to the next project - as long as he is not sitting on a vacant home.

he is interested in a possible lease purchase b/c he will have some non-refundable money in his pocket upfront and a tenant/buyer with "skin in the game" to buy the home in 12 months. we also apply buyer rent credit to the purchase price. otherwise, he is going to be sitting on the market for 300+ days, like all the other properties, if he attempts a straight sale at this $650K price. depending on how he pays me will determine if i am a principal in the transaction or a consultant.

These transactions require very specific contracts. Even most real estate attorneys will not be able to provide them to you. The language is straightforward and simple for any lease purchase specialist. Our goal is to provide clients more options. Real estate has officially changed forever, in 21st century real estate, if all one knows is sell; and all one knows is rent - don't expect to too much.

Regards,
Harry (investor/agent)
HK Creative Investments, Inc
(312) 339-6758
Web Reference: http://www.3stepvictory.com
0 votes Thank Flag Link Fri Apr 29, 2011
Hi Mike, I have 8 years of experience working with builders. They would not pay right price and they are not interested own properties in different state. Just land.
Best regards. Tatiana Perry tatiana@conlonrealestate.com
0 votes Thank Flag Link Fri Apr 29, 2011
I use to be with a company that offered "If we can't sell it we will buy it" as a sales gimmick. I say gimmick because once you hear the terms we rarely found anyone willing to do it. First of all it has to be in the right market and that is one where the values are going up or one where homes are flying off the shelf and today is neither so the terms would have to be even worse today.

Back them the terms were that at least 2 CMA's or appraisals would be needed and an average of the two are used. A third could be used if the number on the first 2 were too far off from each other. Then the home had to be listed at a certain commission rate for 90 days after which the company would buy it in 30 days at 80% of the average of the two values obtained for it.

I would imagine the terms for the builder buying your home would be about as unappealing, if not worse in this market.
0 votes Thank Flag Link Fri Apr 29, 2011
I used to work with many builders and have seen some do this, unsucessfully. They do it as a marketing tool to get people in the door, but it is not usually a good deal. If the builder were to buy the home, they are eating up all their little profit on the new home. They don't want to do that. They would have to buy the home and then try to sell it and fix it up. This is a headache for them. They are not going to give you market value for the home because they will have to sell it and may take a few months. And they will not give you the best price on your new home, because they have to deal with the old home.

My advice - put your house on the market with a Realtor for a reasonable price that it will sell at and treat the two homes separately.
0 votes Thank Flag Link Fri Apr 29, 2011
Call you your attorney and get them on it.
0 votes Thank Flag Link Fri Apr 29, 2011
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