Home Selling in Amarillo>Question Details

Macs24, Home Seller in Amarillo, TX

Real estate agent (unsigned) wants to buy my house at 27% below solid market price, wants me to carry the note for at least 5 years at 6 % interest.

Asked by Macs24, Amarillo, TX Sun Aug 12, 2012

There is no mortgage. Home does not need major repair, as it has had lots invested for maintenance, repair and updating in last 4 years. He offers no down payment.

On paper, realtor shows that by selling to him for $86,543 (27% discount) and carrying the note for him for 5 years at 6 %, that we will make $15,000 more than if we sell outright on market. This is based primarily on the payments and interest earned (6%) in 5 years. Why would we have to do a deep discount and carry the papers for 5 years? This is not a distressed situation in any way. Why not a more reasonable offer along with carrying the papers? This doesn't seem like a good deal to me, but am I missing something?

I know we would save some capital gain tax, save the $7000 broker fee and not have to do any further repair, but is that worth it on this offer? He compares it to why banks are in business (the amount of interest he would pay), but banks also loan most of the fair market value.

Help the community by answering this question:


I can guarantee you this is not a good deal for you. Selling a home at 27% below market price (if that is true and correct) makes zero sense. Also the fact that he is not giving you any money up front also is a red flag.

I agree with Barbara that he most likely has a buyer or tenant ready to put into the home as well. I would speak with another licensed agent to get a good idea of what the home is actually worth. Typically the transaction you are talking about involves two things that yours does not.

1. Buyer pays a slight premium to purchase using owner financing... here he is getting a substantial discount.

2. Buyer makes a sizable down payment which is non-refundable if they do not end up purchasing or refinancing the home withing a specific period of time.

With both of these factors missing from your offer I would not walk but run away as I feel he is trying to take advantage of you. Get some other opinions on what the home is worth and keep doing the math to see what is the best option for you.

Best of luck to you,

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
1 vote Thank Flag Link Mon Aug 13, 2012
I so appreciate your information. This is exactly what I thought. It helps to have a professional confirm my concern.
Flag Mon Aug 13, 2012
I bet he has a buyer in is pocket.
Barbara Coker
Licensed Mortgage Loan Officer
1 vote Thank Flag Link Sun Aug 12, 2012
I do appreciate the advice of professional. Thank you.
Flag Mon Aug 13, 2012
Nothing down means nothing risked. It would be a pretty sweet deal for him and likely a not so great deal for you. What if he walks because he has no "skin" in the game....how is that beneficial to you? What if he rents the unit and it gets destroyed? Again, he has no skin in the game so he can walk and you get the damaged home back with no money received in advance to make the repairs. I don't blame the agent for trying as we'd all like to get a cherry deal like that, but those are very few and far between. My guess is he will turn around and sell the home at a little over fair market value, get a sizable down payment and carry the note at 8% or more, making money on the monthly spread and getting the down payment you didn't require.
1 vote Thank Flag Link Sun Aug 12, 2012
Thank you for giving me this advice. While I had concern for the deal, I had not thought about some of the other things you mentioned.
Flag Mon Aug 13, 2012
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