Cash to move out?

Question

I've got a property lead here in Broken Arrow, Oklahoma, and they're wanting $1000 to move out and the rest at closing. Has anyone ever done that before? I'm torn on what to say because it really sounds sketchy to me, but at the same time it's a smoking deal and I don't want to lose that just because the sellers are cheap. Obviously, I'd pass that $1000 on to a potential buyer with earnest money, but until I get it under contract I don't really want to commit $1000 of my own money.

Kyle Critchnau · Answer

Cain Wrightall I've been able to find in public records is the assessor's info, if you could PM me and tell me where to find the other info that would be greatly appreciated. I went back and told the seller that either I could do the $1,000 now and knock the price down some more (to maximize my chances of finding a buyer) or do the full price later. Still haven't heard back, I think I might have lost this deal but I'll definitely let you know if I get it under contract.

Kyle Critchnau · Answer

@Curtis YoderThey'll be getting money out of it regardless, there's a decent amount of equity in the house. So it's not an upside down issue, it's just a probate house they're wanting to sell. So offering $1,000 at closing isn't really an option, because they'll be getting the full amount at closing.

Curtis Yoder · Answer

@Kyle CritchnauOk, yes I see your dilemma. Can you simply make the $1,000 available at closing and provide a set number of days for them to vacate?

Kyle Critchnau · Answer

@Mindy JensenThat's exactly the issue, I'm concerned they'll take the money and run, or take it and then break contract or something. Paying a moving or storage company directly is something I hadn't thought of. I'll see if that works.

@Curtis YoderI'm not worried about them not actually moving; the people living there are the son of the owner (who is also the executor of the owner's estate) and his wife and their child or there being title issues, like I said to Mindy, I'm just worried about being out $1000 if they breach contract or I can't find a buyer.

Curtis Yoder · Answer

@Kyle CritchnauAs a buyer I would assume that I will have to evict after closing. The only way I would feel comfortable assuming that the current resident would move is if there was something in writing directly with them. With that said, you can evict someone fairly quickly in OK so I would not be that worried.

As for the title issue, contact a local closing agent and have them do the title work up front. Much of it can be done with no fees if you have a relationship with your agent. I always check the title when making offers.

Mindy Jensen · Answer

@Kyle CritchnauWhat is the issue? Are you concerned they will take the money and run? Any way to delay giving it to them, or avoid giving it directly? Could you offer to pay the moving company directly?

Cain Wright · Answer

Kyle,

Concerning the process, I would do your due diligence on the contract side. If you follow the appropriate steps (i.e. clear title contingent), you should be able to shore up some of those concerns, although inherently there will still be some level of risk associated. Also, Oklahoma is very transparent in terms of public record. Research the property online through Tulsa County's site using the legal description, there you can find any liens or adverse attachments that may prohibit clear title.

I'm an investor in the Tulsa metro area, more specifically Broken Arrow. I also work with several investors as a commercial lender. If you do get the property under contract, I may have some interest. Thanks.

Kyle Critchnau · Answer

I think first I'll see if I can avoid it altogether, and then if it's a deal breaker not to get some cash up front, I'll make it contingent on clear title.

Jason McDougall · Answer

@Kyle Critchnau

I think you'd be smart to add a contingency for clear title, but I haven't done that in the past. Since I've given the money to the seller as an option fee, I'd be out the money if the deal fell through. Thankfully, that hasn't happened yet. Let me know how everything goes.

Kyle Critchnau · Answer

@Jason McDougall Do you make it contingent on anything, or provide any way to recoup the costs if the deal falls through for whatever reason? Or do you just give it to them when they sign the contract? I thought about making the advance contingent on clear title, that way it gives me time to find a buyer (I've got a couple in mind, but haven't got anything concrete) and if there are any issues with the title, I haven't thrown away $1000.