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Seller Gifts

Posted by SeanW on July 05, 2003 at 8:16 PM

I'm facing a sluggish buyer's market. The investors at the courthouse grumble that houses are hard to move; so bids are topping out around the 65 cent range.

Since there are "move in, zero down!" signs all over town, I figure I'll be encountering a lot of poorly qualifying buyers when I have something to sell.

So... suppose, hypothetically, I had a property like this:
Bought for 80K
Repaired for 15K (now a basis of 95)
Appraised at 120K (theoretical profit of 25)
Offered at 115K (willing to take 20 to sell fast)
Figure 5K of junk fees on the sale.
That leaves 15K of profit.

Would it be possible to leave, say... a 3K zero-interest first deed of trust on the property, as down payment assistance for the buyer?

My logic is, get 80% of my profit quickly, rather than keep waiting for a buyer to show up with a better down payment. The 3K will just sit there until someday the house sells-- but it's still secure profit. (Although it would decline in purchasing value over time, due to inflation.)

Since the house sold under it's appraised value, I don't see any problem with the appraiser removing the gift from the valuation.

Main problem would be the buyer's lender... Are there lenders that would write a 2nd, under a small non-performing first? Or is there a better way to structure a seller gift? (I'm not interested in lease/option and rent-to-own situations. I wanna buy and sell.)


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