My Proposals for FSBO Deal

After mulling somemore over this FSBO deal, I decided to cut the chord now - almost.

My wife informed me that we had an engagement tonight that would take me away from talking with the seller. I wanted this to be the absolute last day I would deal with this particular deal, unless I could get some interest from the owner. So, I decided to do the one thing an REI shouldn't ... make a faceless and voiceless proposal. I decided to just write the owner with several proposals.

To recap the situation, the asking price was $96,000. Comps turned out $100k-$110k for the house. I used the median price of $105k. I would guesstimate repairs at $2k tops (if what I've been told is true). So here is what we have so far:

MAO = ARV*70% - repairs
MAO = 105000*.7 - 2,000
MAO = $72,000

So I would need the owner to sell it to me for $72k just to break even. In an earlier blog, I wrote how I found two mortgages on the property from mid-2000. Using some amortization calculations, I figured AT WORSE the outstanding balances to total $89k. If she paid the loans down more, then it would be less. Therefore the deal is already upside down by $17k.

Option #1: I explained that to make it an all cash deal and for me to close quickly, I would need to pay no more than $70k for the place (leaving me with a $2k profit - ugh). If that was not an option then ...

Option #2: Rent the place from her for long term (I didn't specify the term).

Option #3: As added incentive, I could have the option to purchase it from her anytime during the term of the lease. Essentially, I offered her a Lease/Purchase without calling it one.

I stressed that I would need information on the existing financials in place in order to work any deal with her (other than an all-cash deal).

I really don't see any deal happening myself. The financials are too thin, and there doesn't seem to be any strong motivation on the owner's part. For example, I sent the owner an email last night after trying to contact her unsuccessfully, and have yet to receive a response. Couple that with the owner's sister thinking her sister would NOT come down on price, and I'm better off just severing the chord with this one.

If something does develop, though, I'll definately mention it here.