Wanting to buy our rental home, need advice (Lexington: for sale, eviction)

[blisterpeanuts]

Originally Posted by Dm84

Yeah, not so much. Money and convenience to the seller will win out. If the teardown developer offers cash and you need a mortgage than the developer will probably win unless the landlord really really likes you for some reason.

Why is that? They get a check from the bank, either way, do they not? It might just take an extra couple of weeks for the mortgage paperwork.

[Dm84]

Originally Posted by blisterpeanuts

Why is that? They get a check from the bank, either way, do they not? It might just take an extra couple of weeks for the mortgage paperwork.

Yes. There is also the [unlikely] risk that you can be denied a mortgage, a risk that is elevated in a teardown situation. The teardown developer paying cash has no risk, they sign the purchase and sale agreement and can close immediately shortly after with no strings attached. Much cleaner transaction for the seller.

[MikePRU]

Originally Posted by WoodyWW

When I owned a tear-down in Lexington, I'd get letters & even knocks on the door from builders & individuals wanting to buy it. Some seemed like crazed a-holes, but I held out for the right offer from a legitimate builder with a track record in that town.

I know a few of the builders in Lexington. Can you tell me who you sold your house to? Feel free to PM me if you don't want to put it out on the open forum. I'm just curious if it's someone I've worked with before.

Originally Posted by blisterpeanuts

Since we've been living in the house, we already pretty much know the problems. In fact I would just say -- we'll buy the property as is. If the sewer main breaks a week later, or we discover mold, or whatever, then that's on us. Neutralizes the tear-down guy's advantage. Then (I hope) it comes down to, should they sell it to the tear-down guy, or to a nice family who's willing to pay about as much?

Unless you've got enough cash in the bank that you need to invent ways to spend it, I would strongly suggest you have the home inspected before you commit to purchasing it. Unless you have a background in building houses, then there could easily be a serious problem with the house that you don't know about even if you've lived there for 4 years. Once you own it, you're responsible for it. Be smart.

Originally Posted by ryanms3030

Every home is basically sold "as is". Inspection is required as part of the sale. You can negotiate things that need to be fixed before you buy but once you and seller agree about what will be fixed or haggling price if they aren't fixing etc then you bought it as is.

Inspection is absolutely NOT required. This is a completely inaccurate statement. This being said, it's an excellent idea to write in an inspection contingency clause in the contract if you don't have unlimited funds in the bank to fix anything that may be wrong with the house. This clause will allow you to cancel the contract or renegotiate the sale price/terms of sale as Ryan had said.

Originally Posted by ryanms3030

You really have no advantage over anyone other interested buyer just because you have rented the place. If the seller wants top dollar then they are going to accept the highest offer.

That's not entirely true. The OP is convenient. They're in the house already and they're a known quantity to the seller. Plus, they asked to buy the house. It's a small advantage but really the size of it depends on how motivated the seller is by money.

Originally Posted by blisterpeanuts

Why is that? They get a check from the bank, either way, do they not? It might just take an extra couple of weeks for the mortgage paperwork.

Because there's no guarantee that you'll be approved for a mortgage. The house might not appraise out. You might do something dumb like go out and buy a BMW 7 series and wreck your debt to income ratio. Whereas a builder typically is paying cash. So, there is a much greater likelihood that their contract will go all the way to closing without any renegotiation.

[MikePRU]

Originally Posted by Dm84

Yes. There is also the [unlikely] risk that you can be denied a mortgage, a risk that is elevated in a teardown situation. The teardown developer paying cash has no risk, they sign the purchase and sale agreement and can close immediately shortly after with no strings attached. Much cleaner transaction for the seller.

Why is it unlikely? It happens all the time. I once had a deal fall apart because the buyer was laid off 3 days before the mortgage contingency was set to end. My client couldn't even make a claim on the deposit. They were back at square one and had to move out of state by a certain date. I feel bad that the buyer lost his job, but the seller was definitely damaged in this situation as well.

[Dm84]

Originally Posted by MikePRU

Why is it unlikely? It happens all the time. I once had a deal fall apart because the buyer was laid off 3 days before the mortgage contingency was set to end. My client couldn't even make a claim on the deposit. They were back at square one and had to move out of state by a certain date. I feel bad that the buyer lost his job, but the seller was definitely damaged in this situation as well.

How often does something like that happen in your experience?

[MikePRU]

Originally Posted by Dm84

How often does something like that happen in your experience?

The specific example I cited where the buyer was laid off? Not too often, but appraisals can come in low and people sometimes do stupid things like buy a house full of furniture on credit that blows up their mortgage approval. Last year, I almost had a closing blow up because the lender's underwriter approved the appraisal report, but the PMI company rejected it. Another agent in my office several years ago had a deal fall apart two weeks before the closing before the buyer got a great job offer to relocate to Japan. There are unavoidable "bumps in the road" in many transactions. Nothing is a given in this industry.

[Dm84]

Originally Posted by MikePRU

The specific example I cited where the buyer was laid off? Not too often, but appraisals can come in low and people sometimes do stupid things like buy a house full of furniture on credit that blows up their mortgage approval. Last year, I almost had a closing blow up because the lender's underwriter approved the appraisal report, but the PMI company rejected it. Another agent in my office several years ago had a deal fall apart two weeks before the closing before the buyer got a great job offer to relocate to Japan. There are unavoidable "bumps in the road" in many transactions. Nothing is a given in this industry.

I meant more along the lines of for every 100 closings how many aren't successful in the end?

[ryanms3030]

Originally Posted by MikePRU

That's not entirely true. The OP is convenient. They're in the house already and they're a known quantity to the seller. Plus, they asked to buy the house. It's a small advantage but really the size of it depends on how motivated the seller is by money.

I see that as more of a convenience to OP not to the owner of the house. If I was selling my place I would't care if the person lived there already or not. And whether or not they are able to pay rent on time doesn't mean they can secure a mortgage. And personally with such a large transaction, I wouldn't want to know the buyers personally. What happens when a major repair comes up 6 months down the road and buyer has sour grapes? I wouldn't want them contacting me personally for any reason. Sounds like OP is fine with as is but that is easy to say now but may not be the same if they have to drop $10k on a major repair.

[ryanms3030]

Originally Posted by MikePRU

Why is it unlikely? It happens all the time. I once had a deal fall apart because the buyer was laid off 3 days before the mortgage contingency was set to end. My client couldn't even make a claim on the deposit. They were back at square one and had to move out of state by a certain date. I feel bad that the buyer lost his job, but the seller was definitely damaged in this situation as well.

People also do stupid things like go on a spending spree for new furniture or try to finance a new car before their mortgage is finalized that can get them denied

[MikePRU]

Originally Posted by Dm84

I meant more along the lines of for every 100 closings how many aren't successful in the end?

Maybe 5 to 10%