1st time buying Real Estate, how would you go about this situation?

Question

A acquaintance I know from work lost their parent and the home they were staying has to be sold. The home still has a loan, and whatever profits they will receive will be split amongst several siblings. The sibling that has to authority over the home is open to selling it to me, but when I talk to my acquaintance, they told me the oldest brother is very mixed and iffy on how they do business. That after 2 months, they dont want to pay the mortgage any longer, and want to sell it enough where they can buy a few high tech items, and he has went on zillow and seen the house hovers around 225-230k.

Here's the numbers and my thoughts:

Its around 230k now on zillow (weeks ago it was literally 224). The appraisal said the home was 210 last year. Home is about 22 years old.

Hoa is 25/month, not sure what insurance or property taxes are, but zillow estimated property taxes 3.3k.

3 bed, 2 bath.

The neighborhood is decent, but there is a adjacent new neighborhood which you can pretty much buy a similar house that is in a newer, more quiet neighbor. I'm not sure how quick homes are selling, but its not lightning fast like 5 years ago. IMO the price is very high.

I toured the home, the sibling I know staying there clearly is smoking weed, and the carpet has not been replaced.

Kitchen needs to be repainted, but looks ok and comes with dishwasher, new fridge, good stove, and dryer (washer will come but is broken).

Master bedroom has no flooring (its concrete now), and has graffiti on the concrete.

AC unit is less than 2 years old.

What is concerning is the garage. It looks like it has a split in the middle. The sibling staying in there told me thats just the moisture from being in texas and drywall. I still think thats something to be aware of.

Also, before the ac was replaced, something on it leaked in the kitchen (the silver tray underneath the unit in the attic is rusted btw), and theres a big stain and looks like a crack in the ceiling in the kitchen. The sibling tells me again its drywall, that they can replace and repaint it.

The backyard side of home needs to be repainted.

I'm looking at average rents in the area and its about 1.8-2.2k, but this home I think I can get between 1.8-2.0k (I think 2k is reasonable).

So I'm wondering what are your thoughts on this situation, and what steps I would need to take if this sounds like a good deal, or is this something to walk away from? My gross income before taxes is over 100k, 800 credit score, no outstanding debt with plenty of reserves to cover the note and expenses. Chase keeps sending me offers saying I'm pre-approved for a 474k home, so I believe I will do well on the financing side. Just has to make sense on the rental income side.

I just dont want to buy a property for hoping it to appreciate, and overleverage myself in this situation. I'm assuming I need to get pre-approved first, contact a RE agent next, and find out what the actual appraisal, comps, and rents are? But new and have no idea the right way to go?

Or should I send a text to the person in charge and ask them can they give me an estimate of what they are asking for the property? Because I think if they are still stuck on a high price, it will be hard to make sense.

Stevan Stojakovic · Answer

First thing I’d do is simplify this. Right now you’re looking at the house emotionally and with partial information.

Step one is just asking them what price they actually want. Not Zillow. Not guesses. The real number the siblings would accept to sell.

Then run the math.

If the house is worth around 230k fixed up and it rents for about 2k, the deal is already pretty tight. At today’s rates that usually doesn’t leave much margin unless you’re buying it well below market and the rehab is light.

The bigger red flags to me are the unknowns. Possible foundation movement in the garage, ceiling damage from the old AC leak, missing flooring, plus cosmetic work. In Texas especially, foundation issues can turn a cheap deal into an expensive one quickly.

Also keep in mind deals with multiple heirs can get messy. You might negotiate with one person and another sibling suddenly blocks the sale.

So the simple order is this. Ask their price. Run real comps and rent numbers. Estimate repairs conservatively. If the numbers still work, move forward with inspection. If not, walk away and don’t force your first deal.

Curious what number they would actually sell it for if you asked them directly.

Stevan

Janice Carter · Answer

First step is to ask what price they are actually willing to sell it for as that will determine whether the deal makes sense. If the numbers work, the next steps would be to run proper comps, estimate repair costs, verify rents and get a professional inspection. If the purchase price and repairs still allow the property to cash flow, it may be worth pursuing. If not, it is best to walk away.

Caleb Brown · Answer

I think the first step is knowing what the ARV and rehab is. This will tell you if the list price is low, just right or high. If it's worth let's say 250K fixed up then 230K doesn't make any sense. If it was worth over 300K then it can be a different story. Rents seem low so not sure if it'd be a solid BRRR or a hold. Regardless you need to run numbers. That means calculating if you held as a rental or flipped it. Plug in everything then make a decision off that. If they are unrealistic on price throw out the offer then move on

Pierre Guirguis · Answer

For a first deal I’d try to zoom out and focus on a couple of big things rather than all the small details.

The main question is whether you’re actually buying it at a discount. If similar homes in good condition are selling around $225k–$230k and this one needs flooring, paint, carpet, and possibly some repair work, the price probably needs to reflect that. Otherwise you’re basically paying retail for a property that still needs work.

The other piece to be careful with is the ownership situation. When a property is inherited and multiple siblings are involved, you want to make sure the person negotiating with you actually has the authority to sell and that everyone is on the same page. Deals like that can get messy if one family member changes their mind.

From a rental standpoint, I’d run the numbers assuming the lower end of the rent range ($1,800) and include realistic expenses like taxes, insurance, maintenance, and vacancy. That will tell you pretty quickly whether the deal works or not.

Before getting too deep into it, I’d probably start by asking them what price they’re actually looking for. If the number is close to retail value, it may be hard to make the rental numbers work given the condition of the property.

Tom T. · Answer

@Brandon White

Do you really want this?

Honestly from the outset it doesn't sound like a deal that screams Yes!

Zillow is a fair Estimaing, point that considers a house to be in retail condition which this is not.

As a person who isn't buying this to live in you don't want to pay retail less expenses. You need a little equity for your time and expertise.

If all the siblings believe 230 or even 200 is what they will get, the deal won't work for you. Dealing with one seller is hard enough, Id want a pretty clear lay of the land on that front before I spend too much energy.

If you feel like they are negotiable and serious. Id want to walk a couple of contractors through and get 2 estimates on repairs. Add 10% to the higher one because there is always something that comes up.

From there, figure your numbers. In my experience at least one of the heirs will want retail and will hold everything up. Be ready to get lots of signatures. It would be great if they could elect a spokesperson with power of attorney etc..

Good luck, I think you will need it.

Bo Smith · Answer

Brandon, Caleb's right -- you need the numbers first. But I'm seeing some flags here beyond just math. The garage crack, the ceiling damage from water, the concrete flooring in the master -- these aren't cosmetic. That's foundation/structural/water intrusion. You can't eyeball whether that garage split is cosmetic settling or actual structural movement. That costs -5k to find out with an engineer, and if it's real, you're looking at 0-20k to fix it. The ceiling stain could be old, or could indicate ongoing moisture. You need a real inspection, not just a walkthrough.

The bigger issue: family deals are harder to walk from. You mentioned the oldest brother is "mixed and iffy" -- that's a negotiation that's already uncomfortable. If you run the numbers and the deal needs them at 00k to work and they want 30k, that's a bad conversation to have with family over 0k. Most family deals don't survive that. My advice is to run the real numbers (ARV after repairs, rehab budget, 6-month timeline with interest), tell them what you can pay, and be prepared to walk if it doesn't work. A deal that doesn't pencil doesn't get better after you buy it.

Can you get a proper home inspector and structural engineer on this before you commit to any negotiation with the family?

Brandon White · Answer

Thank you for all of the advice. I think its really worth 230-250 max if everything is in order.

The part im trying to figure out is:

A.) Do i contact the sibling in charge and ask how much do they want, or do i call a local re agent and ask them to give me a appraisal, comps, and state the condition of the property?

B.) How do i find the arv and rehab numbers? I did put a average estimate in chatgpt based on the sq ft issues, etc., and it suggested 5-25k like @Caleb Brown suggested above. 5k if its minor and im doing the work, 25k at a worst case with the drywall, with 10-15k being likely what to expect in repairs.

Drew Sygit · Answer

A) How much are you willing to pay an agent to do this for you?

B) You need to find a good, reliable contractors ASAP!

Here's how this should go down:

1) Ask what they want, make an offer lower than that.

2) Be sure your purchase contract has a solid inspection clause, also appraisal value clause.

3) Once all parties sign the purchase contract get an inspector and contractor scheduled.

4) Depending on what they find and the cost to cure (+20% to cover surprises), you may want to renegotiate a lower price.

5) Once any new price is negotiated, apply for your mortgage and wait for the appraised value to justify the purchase price - noteL appraiser's job is only to confirm the value meets the purchase price, NOT to max out that value.

Who's going to assist you with all of the above to avoid you making any major mstakes?

Bo Smith · Answer

Brandon, this is a deal evaluation question masquerading as a family negotiation. Step back from the relationship piece for a second and run the numbers. If the property is worth 10-230k (let's say 20k after appraisal), and the siblings want to "sell it fast" because they're impatient, that's actually your advantage. But you have to know the real after-repair value first.

The red flags you mentioned -- damaged concrete floors, graffiti, cracked ceiling from AC leak, possible foundation issues in the garage -- that's 5-25k in repairs minimum. Master bedroom concrete floor = new subfloor plus flooring. Attic AC tray rust means you already have moisture damage. That crack in the kitchen ceiling could be cosmetic or it could indicate a serious leak pattern. You need a proper inspection before you bid anything.

If the true ARV is 40k after repairs and you're paying 30k, that's a terrible deal. You're buying at 96% of ARV with 3.3k in property taxes, 25/month HOA, plus whatever insurance and ongoing carrying costs run. This works only if you can negotiate the price down to 80-190k, which probably won't happen with family involved.

Before you negotiate price, get a real contractor estimate on that damage, get a home inspector report on the garage split and ceiling, and have an appraiser give you the actual post-repair value. Then decide if the family price makes sense or if you should walk.

Are the siblings willing to let you get independent inspections and appraisals before committing, or is this a "take it or leave it" family offer?

1st time buying Real Estate, how would you go about this situation?

1st time buying Real Estate, how would you go about this situation?

Most Popular Reply

16 Replies