We have a buyer for our FSBO?

[thatguy]

We have a buyer for our old house. A dad says he's buying it for his daughter. His english language is limited. They've sent us a contract and have a loan approval letter. The daughters name is on the contract and the loan paper. Dad says he's the one paying. We don't have addresses for either of them. The daughter has not even seen the house, nor have we had any contact from her. Negotiation is going through our lawyer and their lawyer. They've asked for closing costs in an amount that is equal to their 3% down payment.
I think these people are filppers or investers. If flippers are willing to pay the price it's probably worth more.

I'm being stubborn about paying the closing cost. They put it in the contract, we took it out, they put it back in. We just said we're not paying it.

We have to do a lot of work to get our old stuff out of the house, clean and get it ready for the sale. We've just been to lazy to get it done. Once we've done the work, it will be ready to list with a realtor. If this offer falls through, I'm okay with it.

 

[NgineER]

Flippers would not go through the process of bank financing in my experience, they would come with a cash offer. The dad paying for his daughter while she is on all the documents is a little suspect, but that could be the language barrier. In general the bank wants the person buying the property to have the full down payment amount in their account for at least two months prior to the contract signing, so that there is no one else competing to get paid if the buyer runs low on income. It is a lot easier to stiff the bank than mom and dad or aunt Hilda giving them a loan to afford the house...

 

[ERD50]

... They've asked for closing costs in an amount that is equal to their 3% down payment.

I think these people are filppers or investers. If flippers are willing to pay the price it's probably worth more.

I'm being stubborn about paying the closing cost. They put it in the contract, we took it out, they put it back in. We just said we're not paying it.

We have to do a lot of work to get our old stuff out of the house, clean and get it ready for the sale. We've just been to lazy to get it done. Once we've done the work, it will be ready to list with a realtor. If this offer falls through, I'm okay with it.

So effectively they want it for 3% less than your asking price now, right? Sounds like they just don't want to come up with much cash (no realtor fee for them to pay, 3% from you nets out their 3% down).

If the lawyer is good with it, I wouldn't worry too much about their finances, once you close you close, you aren't the one holding the loan for them.

And I would not underestimate the amount of time/money you will need to get it ready for sale. We got lucky with an 'as is' buyer, so I just stopped doing the dozens of touch-ups and updates that I planned (some minor, some not quite minor). A realtor might suggest quite a few things to bring the looks up to date (our recc a lot of new light fixtures, some painting, etc, some of which I did before this 'as is' offer).

I've been plenty busy getting our new place situated as I want it. Nothing major, but it's a long, long list of little things to make it "ours". I'm glad that's not on top of doing a lot of things to the old place.

-ERD50

 

[thatguy]

Well I'm thinking, Who gets a loan with 3% down and not any appraisal I'm aware of.
The 3% down is not an amount that almost anyone would have in the bank.
By asking for 3% closing cost, I feel like I'm part of a no money down purchase strategy. .

 

[ERD50]

Well I'm thinking, Who gets a loan with 3% down and not any appraisal I'm aware of. ....

No appraisal? I'm pretty sure any mortgage company will want an appraisal, esp at 3% down.

I'd check with your lawyer on that.

...
By asking for 3% closing cost, I feel like I'm part of a no money down purchase strategy. .

You are. But why do you care if the 3% below your ask is OK?

Unless you are confident you can get enough more with a realtor to compensate you for your time, $, effort to put it on the market. But if you are confident of that, doesn't that answer your question?

-ERD50

 

[RetiredHappy]

If the purchase is legitimate, it is cheaper and less hassle for you to go through with it. Unless you go with an agency like RedFin where they only charge something like 1% for the seller's agent and 2.5% for the buyer's agent, you will end up paying about 5% commission to the realtors.

The real estate market has tapered off and even softening a bit, I would not think too long on this offer in hand.

 

[thatguy]

I may have a bit of attitude about investors. I've listened to some of their BS on the phone and now refuse to talk to them. Give me an offer or don't waste my time telling me how many ways what you do is good for me.
This is not a distress sale.
So if this buyer is an investor I feel like I'm being tricked.

 

[pb4uski]

What does your lawyer think?

If the price is what you would otherwise want and you would pay 6% commission with a realtor, then conceding 3% with 0% commission for an FSBO sounds good to me... in other words... 97% is better than 94%.

If they do a home inspection and make demand for repairs and you don't like it then tell them to pound sand.

 

[jpeter1093]

In this real estate market, I would briskly walk away from them

 

[Aerides]

In this real estate market, I would briskly walk away from them

Yup. The point of FSBO is to get away with a sale for which an RE agent would offer no incremental help. (at least it is to me). Anything other than simple and clean and you're taking on hassles and effort that would stress me out. If I actually wanted to do all the work that would be one thing, but I know I don't.

Besides, in the current market you can almost certainly negotiate well down from the standard 6% with a listing agent.

 

[INTJ10]

We just did a FSBO. We had two buyers. The first buyer bailed at the last minute and forfeited the escrow. The second buyer was kind of a pain but we closed. My learning from this is to have a large deposit in escrow and a contract that has minimal ways for the buyer to back out and lose the escrow.

 

[ERD50]

We just did a FSBO. We had two buyers. The first buyer bailed at the last minute and forfeited the escrow. The second buyer was kind of a pain but we closed. My learning from this is to have a large deposit in escrow and a contract that has minimal ways for the buyer to back out and lose the escrow.

Maybe I'm missing something, but those are covered by the contract, whether you are FSBO or through a realtor. You just need a good contract from a reasonably good lawyer - in either case.

-ERD50

 

[rk911]

smells scammy to me.

 

[Another Reader]

There is a time and place for FSBO, This is not that time. OP is not a sophisticated seller - no one is, selling one house. The entire deal is problematic. This buyer is clearly playing games. He may be a middle man for one of those investor buyers OP dislikes.

Paying a real estate agent a commission to advise you how to get the best price given your desire to minimize time and money on upgrades would be a good investment. Run from this deal.

 

[INTJ10]

Maybe I'm missing something, but those are covered by the contract, whether you are FSBO or through a realtor. You just need a good contract from a reasonably good lawyer - in either case.



-ERD50

Don’t disagree but in our state lawyers are not typically involved in the deal just title companies. Neither party used a lawyer. We just modified a boiler plate “as is” contract.

 

[thatguy]

We just were never motivated enough to get it ready to list with a realtor. I stuck a FSBO sign in the window just in case.

I figure if these people are investors the won't loose it for 3%.

When dad viewed the house he said he was a contractor. I was showing him some of the things the needed done. It became apparent that he was having trouble understanding some of what I was telling him. In spite of the language problem, I didn't see him as an unsophisticated person. He was quick to call his lawyer on the spot to start preparing a contract.
So, maybe they are flippers, they had already researched the place to death and knew they wanted it, and when he finally got a look inside and saw it was not full of black mold, it was a easy decision.
If it comes out that it's really a good dad buying a house for his daughter, I'll be more
flexible. But a good dad buying a house for a daughter who happens to be a professional flipper, ain't the same thing.
I just don't believe the story. His name is not on any documents. She has not seen the house, unless they just did a drive by. I found some online reference to some house flippers with a similar name to the daughter.
There's spaces on the contract for address of seller and buyer. Buyers address lines are not filled in. So I have a buyers name for which a google search finds 10s of thousands of hits.
We were there today doing some work, maybe 4 hours. I'm too retired to work more.

 

[ERD50]

... So, maybe they are flippers, ...

We were there today doing some work, maybe 4 hours. I'm too retired to work more.

Why do you care if they are flippers?

When we were first approached by the buyer, he was very anxious to see the house before we were ready with fix-ups, or had done much of any prep and little clearing out, and was described as an "as is" buyer. I was thinking he was a flipper as well, but I didn't care. If we could agree on a price and terms, I was good. What he does after that is his business.

Turns out he seemed to be mostly interested in obtaining a house in the same school district as his kids (his ex had custody), he was engaged to a woman with a couple school aged kids, and there just weren't many homes available at the time in that specific area (and many were in the newer area that were 2x to 3x our price), so he was motivated.

I was working from early morning to late night every day to get the place ready (though we had 30 years of pack rat stuff and hobby stuff to clear out), and to get packed to move, and that went on for 2 months. And I was able to skip a ton of time-consuming fix-ups since the buyer took it as-is. So if 4 hours is your limit, and you have anywhere near the work I had to do, don't underestimate the value to an 'as-is' buyer.

-ERD50

 

[Another Reader]

We just were never motivated enough to get it ready to list with a realtor. I stuck a FSBO sign in the window just in case.

I figure if these people are investors the won't loose it for 3%.

When dad viewed the house he said he was a contractor. I was showing him some of the things the needed done. It became apparent that he was having trouble understanding some of what I was telling him. In spite of the language problem, I didn't see him as an unsophisticated person. He was quick to call his lawyer on the spot to start preparing a contract.
So, maybe they are flippers, they had already researched the place to death and knew they wanted it, and when he finally got a look inside and saw it was not full of black mold, it was a easy decision.
If it comes out that it's really a good dad buying a house for his daughter, I'll be more
flexible. But a good dad buying a house for a daughter who happens to be a professional flipper, ain't the same thing.
I just don't believe the story. His name is not on any documents. She has not seen the house, unless they just did a drive by. I found some online reference to some house flippers with a similar name to the daughter.
There's spaces on the contract for address of seller and buyer. Buyers address lines are not filled in. So I have a buyers name for which a google search finds 10s of thousands of hits.
We were there today doing some work, maybe 4 hours. I'm too retired to work more.

You are just the kind of seller flippers and swindlers are looking for. There are flashing danger signs everywhere. This guy will likely get you under contract and shop the deal around. Find a knowledgeable real estate agent and negotiate the commission down. Tell the agent you want to sell as is but expose it to market. A good agent will have people to help you clean out the house and get it sold so you can move on.

 

[pb4uski]

Why do you care if they are flippers?

When we were first approached by the buyer, he was very anxious to see the house before we were ready with fix-ups, or had done much of any prep and little clearing out, and was described as an "as is" buyer. I was thinking he was a flipper as well, but I didn't care. If we could agree on a price and terms, I was good. What he does after that is his business.

Turns out he seemed to be mostly interested in obtaining a house in the same school district as his kids (his ex had custody), he was engaged to a woman with a couple school aged kids, and there just weren't many homes available at the time in that specific area (and many were in the newer area that were 2x to 3x our price), so he was motivated.

I was working from early morning to late night every day to get the place ready (though we had 30 years of pack rat stuff and hobby stuff to clear out), and to get packed to move, and that went on for 2 months. And I was able to skip a ton of time-consuming fix-ups since the buyer took it as-is. So if 4 hours is your limit, and you have anywhere near the work I had to do, don't underestimate the value to an 'as-is' buyer.

-ERD50

+1 OP doesn't owe the house anything... it's a house. If this party is willing and able to buy it and the OP can avoid the realtor commission then what's the problem? The OP's lawyer should be able to handle any questions and issues.

I've done 4 FSBO transactions... two purchases and two sales.

Our main home sale 10 years ago is similar to what ERD50 describes.... we were getting our home ready to list and DW threw it out on craislist for sh!ts and giggles and a young couple responded. He was a fireman and needed to be within a certain distance of the fire station and her grandparents were wealthy and were financing the purchase. After we cleared a couple minor issues with the home inspection they asked if they could close a week early! We weren't ready clearing 25 years of stuff out but said yes, as long as we could store some stuff in the garage for a few days and they were fine with that.

 

[38Chevy454]

The part where the "father" is behind the scenes and his daughter's name is the only one on the contracts, and the non-english speaking is where my BS detector goes off. Especially since the daughter has not even seen the house at all. If anything goes further with this, make sure you have an iron clad contract, one that can't be sold to a different buyer, or has way to get out of the earnest money. Speaking of earnest money, make it enough that the buyer is serious and not able to get out of the contract without forfeiting that earnest money. You can remove any language giving reasons for the earnest money returned. Not your problem, make the buyer agree on your terms; not his (hers). The hidden aspect of the daughter as buyer just wreaks of future problems to me. With the housing market what it is, why put up with the BS?

I fully agree so what if the buyer is ultimately a flipper. You as seller get your money and you are out of the house which is your goal. The problem is getting a real buyer that comes through and does not become a big PITA.

 

[thatguy]

We might be committed to what we signed, but what we signed did not include the closing credit from us. They sent it back with the closing credit added back in. We have not signed that.
Yeah, if I get my price, who cares. But I'm not negotiating with a hidden flipper.

 

[rk911]

You are just the kind of seller flippers and swindlers are looking for. There are flashing danger signs everywhere. This guy will likely get you under contract and shop the deal around. Find a knowledgeable real estate agent and negotiate the commission down. Tell the agent you want to sell as is but expose it to market. A good agent will have people to help you clean out the house and get it sold so you can move on.

+1. we just sold my late BIL's 2br/2bath townhouse in San Jose, CA. it was a wreck. norhing had been done to it in 41-yrs. a time capsule of sort...2" brown shag carpet, roll up window shades that hadn't been up in forever, one john out of commission (he had the parts just never got to doing the repair), the other john had a tiny but growing tank leak. and he was a horder. took us 6+ weeks to clear and clean it. we live in Illinois and have no desire to be landlords and have even less desire to move to NorCal.

in the process of transferimg two of his bank accounts to my wife I mentioned that we would shortly have a townhouse for sale. he started asking questions about the property and said he and his wife were looking to buy. we invited them over the next day. the place was still in the process of being cleared but it was clear they liked the place. we hired a realtor the next day and had an as-is, full-asking-price offer. because of the horrible condition the asking was a lot less than appraised value but that plus the usual seller expenses will give us a nice loss against taxes. it closed 30-days later.

the moral? lots and lots of paperwork written by attys who majored in obfuscation. our agent handled all the details and made the process EZ...well worth the commission. unless you're a RE pro hire a pro to represent you.

 

[travelover]

........the moral? lots and lots of paperwork written by attys who majored in obfuscation. our agent handled all the details and made the process EZ...well worth the commission. unless you're a RE pro hire a pro to represent you.

I wonder how much a real estate attorney would have charged for the same service. And they are real attorneys.

 

[RunningBum]

because of the horrible condition the asking was a lot less than appraised value but that plus the usual seller expenses will give us a nice loss against taxes.

Can you take a loss on a house that was not a rental? I know you can't for your personal residence. I don't know about one you inherit. The cost basis is updated when you inherit. Usually that's for the better, but if he paid more than it is worth now, you don't get to claim that loss. Maybe you can write off the loss on the seller expenses, but that's really it.

 

[rk911]

Can you take a loss on a house that was not a rental? I know you can't for your personal residence. I don't know about one you inherit. The cost basis is updated when you inherit. Usually that's for the better, but if he paid more than it is worth now, you don't get to claim that loss. Maybe you can write off the loss on the seller expenses, but that's really it.

our CPA seems to think so. and lots and lots of related paperwork involved in selling real estate in CA besides the sales contract. we were happy to have the asistance of our RE pro.