Deferred Payment Sale Of Property? Have you ever done this??

[Ryan Fatula]

Hey everyone, so I'd like to get your input on a situation I have going on with one of our rehabbed properties.

I just received an interesting phone call from someone who saw one of our yard signs at one of our recently completed rehabs. The prospective buyers are from out of state and sold a house to move down here. Their story is, they have some cash from that sale, but are getting 2 more lump sum payments from that sale, one in February for $40K and " the rest" in May. I told them I'd send them pics, and after hanging up with them and sending the pics, they immediately called back telling me they LOVE the property and we've scheduled a showing Monday.

In that second conversation they are already talking numbers, which is great, but I'm of course skeptical due to the circumstances of the sale of their other home. They told me they could put $5,000 down and would be able to complete the sale of the property in May. Keep in mind, due to a 90 day deed restriction on this property, I can't transfer title until 3/13/13 anyways, so it would be another 2 months after that before we could close the deal. They're happy with the asking price AND in this situation I am paying nothing towards a buyers agent. Basically, I don't mind waiting if they pay asking price and put $5k down.

What do you all think about this situation? How would I proceed forward? Write up a contract with the $5,000 down and make it very clear that it's NON REFUNDABLE once inspection period passes? If they ended up not closing that $5000 would definitely cover the extra 2 months holding costs, and leave me with about $3,600 to keep. I'd of course have to calculate the lost opportunity cost of those funds that are continually tied up in that deal not making me $$ elsewhere on other deals. Maybe I could get them to agree to continue to market the property for back-up offers, and possibly have a "cut-off date" for them to submit proof of funds to close.

I don't want to get caught up in an overly complicated deal, but $5000 down is sizeable amount on a $77,900 property. As a point of reference we would have about $62,850 invested in it by the time May came around, including the holding costs to get to that point.

Thanks in advance for any thoughts on this situation!!

[Wayne Brooks]

Make them put down a bigger chunk in February, and I agree no posession prior to close. And a drop dead date to close. Verify the deal on the other end.