What would you do if in my shoes? Writing counter offer on sell of house.

5 Replies

I am in process of selling a house, I have received a contract to purchase but with some circumstances I'm trying to wrap my head around to decide if I want to accept the offer. This is my "old" primary residence (moved out of this residence 6 months ago and have been renting it since then.)  I would keep as rental but due to some regulations on the mortgage I am not allowed to do so, (refinancing would require a 25% down payment- which I don't have at this point- since it is a investment property now- as far as I understand). I've been given permission from the mortgage company to rent it for 6 months, but can not rent it for profit. So I'm looking to sell the property at this point as soon as I can since I can't rent for more than the mortgage payment which only costs me money (except for mortgage pay-down).


The offer is good and I will make money off of it, which is a plus of course.

Price isn't necessarily the issue.

The offer includes $20K  non refundable as down-payment. They are very motivated buyers.

The offer has an extended closing date for 6 months from now, since the couple making the offer didn't quite qualify for their loan. They (the couple and their relators and mortgage officer) are saying they need at max (will close sooner if possible) 6 months for credit repair. So they are asking that I rent the house to them for up to 6 months while this is going on (they just sold their primary residence and don't have a place to live now). 

My questions:

As a FSBO the 20k down payment can or should be written out to me as seller? Or as they have it written in contract... go as earnest money in escrow? I want to be in control of this non refundable money as much as possible in case they back out. Advice...

Also the property currently has no garage, but there is space for a garage and they are requesting to build a garage, at their expense, immediately upon moving in, during the time they are renting. I want to protect myself and protect them as well, so am wondering the legal aspects of this and what I need to include in the lease agreement if I decide this is ok, or if this is a good/bad idea.

I'm sure I'm missing details so feel free to ask if needed.  Looking for advice.

I am not sure on the down payment how that would or should be handled but the garage could be a head ache for you. My guess is the city you live in will require permits and may limit the size and location of such. That being said if they do build a garage and the deal falls through you now have 20k and a garage on the property that you didn't pay for. My thinking is it will be very hard for you to lose on this deal unless they would trash the place. 

Take $10K as a nonrefundable option fee payable to you.  The other $10K they can make payable to title company as a nonrefundable em (make sure this is spelled out in plain English on contract or ask title company for some advice).  Write a separate contract in which you lease property to them that clearly spells out that any improvements they make to residence (you must review all improvements) are out of their pocket and will remain with property.  They should not immediately build a garage because that will effect their credit if they are not paying cash.  If they are paying for garage cash they should save that for more of a down payment. 

Best of Luck!

I would request another extension of you right to rent property from the bank to give you and your buyer a cushion on the time they are allowed to be in the property. I would explain the terms of the sale to the bank and assure them that you are going to make monthly payments during the time you are waiting for your buyers to qualify for a new loan

 I would then owner finance the purchase of the property under a land contract (owner financing) with sellers promissory note ( this would allow you to keep the 20k and it would be non refundable.

Make sure your calculations consider to include the value of the proceeds you would receive as rent and close the sale portion of this property.

 I would have these terms included in the sales agreement and time the actions accordingly.

You can sell the property on a land contract now and for the 20k you would allow them to take early possession now with a promissory note due (balloon) at the estimated time of credit qualification. if they don't qualify within the estimated time agreed upon you can find someone else to purchase the property and keep all monies that you receive while they have physical possession.

The terms of the promissory note would have a monthly payment that equals the monthly mortgage payment made payable to you or the bank for as long as it takes for buyer to qualify for a new loan to payoff the promissory note. I would also allow them to construct the garage.  After you create the promissory note contact me and I will seek out someone interested in paying you cash for your promissory note

Thanks for all the advice, you guys are awesome!  They accepted my counter offer which includes the $20K as non refundable. Now I'm just working on structuring the next stage which is the 6 month "waiting for credit repair" contract (it will be separate from contract to purchase). Still deciding best route to go with that. I think I will let them build their garage with the right language in my contract. Although good point @Rocky V. about it affecting their credit, I'll have to see what their plans on that are, I don't think they've thought about that.

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