I might have found a motivated seller...now what?

Question

Today I got a return call from someone who had posted their house (by owner) on craigslist. It is a 3/2 1400 sq ft ranch with a 2 car garage on a large (.19 acre) lot. According to the ad it has recently had new paint inside and out, new carpets, flooring,roof, windows, toilet and lights. It has forced air gas heat. They are asking $220k, but I saw it posted on cl for $191k last month.

When I spoke with the sellers son, he said that they had a buyer but the financing fell through. He also said that the father is in financial trouble and needs to downsize. They would like to be out next month, or mid October at the latest.  Without seeing the house yet, I am estimating that it is underpriced by $10k-40k just based on my searches over the past few months. The father has owned the home since 1991, but I do not know if he has a mortgage or not.

I would like to get into this for as little of my own cash as possible, though I do have funds if needed. What options should I be exploring and what questions should I be asking? I am meeting with them to see the house tomorrow after work and this will be my first foray into meeting with sellers.

Brandon M. · Answer

Jody,

To follow on to what Hattie said, here in FL I have been told they only allow a "roof-over" once before you have to peel up the shingles and lay new ones, so those rules might vary per state.

I think my next step would be to re-visit the property with a licensed contractor who could help you accurately value the rehabs need and give you input on anything that appear to be possible unpermitted add-ons. That way you can present to the sellers the honest numbers of what the house is worth. Like Hattie said, the numbers are the numbers and if he wants/needs more than it is worth, you just have to wish him the best and move on.

As long as you can convey the numbers to them in an honest/sympathetic manner, hopefully they would appreciate your honesty. If it is something that you can't make work you could always suggest a short sale or anything else you think they could do. It makes it tougher when you let your emotions get tied in here (in this case your sympathy towards the ill father and the true desire to help someone), but if you can't help you can't help.

Honesty is the best policy.

Jody Powell · Answer

Thanks for the roofing information @Hattie Dizmond . The more you know... I am gathering information so I can present a compelling case for my offer. (Even though I am still not sure what my offer will be.)

I was considering offering them some cash and a "subject to" deal. Any input on how best to present that would be  appreciated. I still need to ask them the pertinent questions of how much they owe and what they need (besides to be out of there by mid October at the latest).

Jody Powell · Answer

After seeing the property today, I am unsure how to proceed. They seem desperate to get out, but I feel like I do not know enough to help them out.

The "new roof" is actually just new shingles over old. The son said it should last another 6 years. I know nothing about roofs, but think that is stretching it. He also mentioned some electrical issues in the garage--I am fairly certain that it had been transformed into a grow room and they just took everything out. There also seems to have been some un-permitted work done--a garage renovation into an extra room and then a new garage built around back. This new garage needed a driveway, so most of the yard is now blacktop.

After doing some research it seems as if they are asking about what other properties in good repair would sell for. How does one tactfully tell a dying old man that his property is not worth near as much as he is asking?

Any suggestions from BP would be appreciated.

Rachel H. · Answer

Sounds like they are getting more motivated to sell. When viewing the home, it's best to approach it as if you would live in it - check everything. If they have records of any work done to the home, that would be even better.

When it comes to negotiating, the more motivated the seller the more flexible they are and open to working with you. As far as options go, it's best to present them with a few options to choose from.

Best of luck!