How could this deal turn out to be a scam?

Question

Unsolicited phone call offering to buy a condo I own 500 miles away in Texas panhandle.  Price is probably above market,  17k down finance 75k @ 3.8% 35 yr amortization.  3 year balloon.  Also offered cash at 30k less.  Tenant occupied through Nov. 2023.  Buyer is a newly formed LLC out of Houston, so even farther away.  Is this just someone betting big on inflation?  I know cold calling is how a lot of investors buy but how could this go bad?  using a TREC 1-4 contract so hard to scam there.   I am leery because it is such a small deal…just 1 small 1 bedroom unit…and not a great a deal unless maybe you are local and have a use for it…walk to community college.  Condo bylaws prevent airbnb usage, so not that. Thanks for any insight…just feels too good to be true.

Marian Smith · Answer

Thanks.  It was an unsolicited offer but I would like to sell. Oh well!  I appreciate the condo board’s efforts as a unit in a predominantly o/o complex is worth more to other o/o buyers, but it has to limit my buyers.  Have a nice new year.  Maybe interest rates will go down.

Bill B. · Answer

That sucks. Especially if it was already a rental. You weren’t trying to convert an owner occupant to rental.

Try listing it locally or selling to tenant?  Some rentals just aren’t worth the hassle to hold on to. (Of course every time I think that. The property works flawlessly for a year or two with zero repairs/calls/turnover.)

Greg H. · Answer

First off, I am trying to figure out where the condo would be?  Can't be too many condo communities in Amarillo or Lubbock but that would be my guess

Personally, if they are willing to put down 17K and you are willing to finance that would be good enough for me.  Foreclosing on a property in Texas is about as easy as it gets

Conner Olsen · Answer

@Marian Smith Ask them what their goals are with the property. (It sounds like you might have done that already) If you have a realtor in that market maybe ask them what the comps are for your unit to make sure it's not higher than you expect.

Larry Turowski · Answer

@Marian Smith Owner finance, right? 3.8% is a pretty sweet interest rate these days. Assuming they save $10k in interest over three years and get $10k in cash flow and $10k in appreciation, it’s kind of similar to the cash offer, but definitely more aggressive. Do they have a way out of the balloon payment? Or are they performing some sort of arbitrage and they are not the end buyer.

I’d ask them questions directly. Ask to prove this isn’t a scam. Let us know what they say.

Marian Smith · Answer

Thought I’d update.  Deal fell apart as the condo board wanted to talk to the investor before allowing the sale.  Not sure how that went other than I never heard back.  Condo board really wants owner occupants.  Not sure how they could block a sale but I imagine they told him the central heating unit for the whole complex would soon need replacement so a special assessment would be upcoming.  True, but they have been saying it for years so who knows when.  I think a majority of owners voted to mandate sales and rentals go through the board first..at some point.  So I guess thats legal.

Ronald Rohde · Answer

Could be legit, up to you on whether you want that low of interest rate for owner finance. They can tie up the property with a lis, but if you're not planning on selling, doesn't really bother you.

Marian Smith · Answer

Thanks @Greg H.  Amarillo, actually.  1960’s build, nice area, but a family trade thing I never particularly wanted.  But I was thinking the same thing…and very pleased to know someone with your breadth of experience concurred.  And thanks to all for responding.  May actually be a win-win…the best kind of deal.

Chancy Via · Answer

I’m local to the Amarillo area and would be glad to provide local market knowledge if that would be helpful.  I’m pretty sure I’m familiar with the condo complex you are referencing.

How could this deal turn out to be a scam?

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