I need to close but now the seller can't come up with 20% down

[David Luetkemeyer]

Okay I need some advice. Here's the history. I bought a house in a town of about 5000 people in Oklahoma. I paid $15,000 for the house. I have about $9000 in repairs and carrying cost. The house was on the market for $52,000 for four months. I finally agreed to an offer at $48,000. The entire process has taken one and a half months to close. So I am sitting at 5 1/2 months. We are supposed to close this week but now the buyer is saying that they can't come up with the 20% down. The House passed inspections and appraised and they have a loan for the 80%. We own the house free and clear. Here is what I'm thinking about doing. I am thinking about loaning them the $8600 and taking a second position on the home. I understand that a second position in the case of default rarely gets paid off. I also am aware that their primary lender may not let this happen due to the fact that they're borrowing the 20% down. As you can tell by the numbers we are already making pretty good money on this house. And I need to pull my cash out of this house to put to work on others It's the only offer in four months of being on the market so I don't want to lose it. And the buyer still talks like they really want the house. So tell me BP what are your opinions of this.

[JD Martin]

Well, to me it reeks of desperation, but sometimes you get in desperate situations. If you've had no offers in 4 months on a house priced that cheap, either you are in a war zone, the house is a disaster, or there's absolutely no sales market. In any of those cases, you are probably wise to sell. 

Sometimes you have to unload something that just isn't working out. It looks like even if they defaulted, you're walking away with 15 grand or so. If you need access to that money, there's your answer.