I need your collective wisdom.
I have inherited part of a house.
The house was appraised at 335K.
We offered the house to neighbor’s kid for $250K, because we would like to see them wind up with the house,we wouldn’t have to pay real estate costs, etc.
Turns out they can’t qualify for loan they wanted, so they can’t afford to buy the house for $250K and have enough to do needed repairs. This process with them has been going on since late May or early June, but we didn’t do a contract or anything.
The house is fairly close to a two lane road, but a relatively busy 2 lane road, which may make it harder to sell.
It’s a solid brick house, but small 3 bedroom, 1 bath, full basement.
It has over an acre of land, a 2 car garage, and is in a great school district, between DC and Baltimore.
One couple looked at it and thought it was reasonably priced at $280K.
A realtor and repair guy thought it would likely be torn down by the eventual purchaser.
Another realtor thought it had good bones, but couldn’t predict what it would really sell for.
We have already made one costly mistake. We let moisture get into the basement/didn’t run ac or humidifier, so repair will cost us thousands (8k is first estimate).
The kids now want to know if we will sell it to them for $200k.
Fortunately, neither I nor the other person involved really need the money, but I am not wealthy and have three kids in college, retirement to save for, etc.
I’m trying to decide if we should just sell it to them, and be done, or sign up with a realtor, and hold out for more money.
I know nobody else can make this decision, but your thoughts are welcome.
fix it up [ the mold in the basement] and put it on the market with a credible experienced realtor who knows the area.
Dont get taken by the kids next door.
you can use the $$.
No. Absolutely not. Unless you absolutely adore them, enough that you would outright give them 100K plus. You have no idea if they are going to turn around and sell that house, immediately. You also don’t know if they are being truthful about not qualifying for a loan. Do you really have that much money to give away?
I am going to bet that if you sold the house to the neighbor for $200,000 he would turn right around and put it on the market for $300,000 – which is still beneath the appraisal. How would you feel then?
Best I would offer him is that you would take another $10,000 off the original asking price but he would have to do the mold remediation himself.
Based on your description, it doesn’t sound like the house is mortgageable until you do repairs. Is that correct? I anticipate the kids next door asking for you to be the mortgage holders, or some sort of lease purchase arrangement. Bad idea, jmho.
@alh, the repairs have nothing to do with the mortgage. They didn’t qualify for the loan amount they wanted. I think they were trying to get a loan for the mortgage, and another for repairs. We are selling the house as is, except for the mold, which has only appeared in the last couple of weeks.
Do you own the house free and clear? If you do maybe you can do an owner financing deal for five years with a balloon due at the end. The purchaser gets a real mortgage after five years and pays you or gives the keys back to you.
Houses are generally worth less than what people “say it’s worth.” But the OP needs to just sell the house for what he can get. If he wants to do the neighbor’s kids a favor he can offer to take back a 10 percent second.
In the event the OP does decide to sell the house at a discount, he needs to give himself the first option to purchase the home for a price not much more than the sales price for a period of years. That will keep the lucky kids from flipping the house after a year and going to Vegas (Habitat for Humanity had to start doing this because people were refinancing their 0 percent mortgages for 14 percent ones in order to get cash out of the equity.
If these people are among your dearest friends by all means cut the kid a deal if you wish. But absent a very close friendship I’d let business be business.
Agree with making it a business transaction. It you could sell it for $100,000 more, you should do that and let your own children benefit when they buy their first home.
I agree with fix it and sell at proper price. I’m going to have to do the same thing too.
It’s de lapidaries but I will fix it as best as possible and get the best price.
“As is” doesn’t always cut it with the mortgage company these days. In most states you must disclose what you know, and an appraiser or home inspection may bring things to light that will cause a bank to refuse to lend if they are not fixed.
As-is laws vary by state, as do some of the safety rules. A broker can explain local requirements. What sort of mold? From what I’ve read, most “mold” is not the dangerous black mold. Sometimes, it’s just algae. That makes me wonder if there is some other structural or cosmetic damage.
At any rate, OP said it was appraised at 335. Isn’t that the professional opinion, based on location, condition (minus the new “mold” issue,) layout, and comps? I agree to use a broker, even if you drop it a bit for a quicker sale.