This is a follow up on a previous topic of mine: “Nice home, nice neighborhood, unsavory neighbors – options?”. Link is here - viewtopic.php?t=422058
Since that post, and through some miracle, the owner of the home next door has approached us about buying her house. She is elderly, in poor health and realizes she can’t keep up with it and doesn’t want to continue providing a boarding house for her son and his addict/unhoused friends. She gave us a reasonable price and the home would come in as-is condition. We even had a tour of the home a couple weeks ago -- a very strange experience behind enemy lines with 8-10 transients laying around smoking weed.
The home is a time capsule. Built in 1930 with little renovations since then (the owner’s grandparents built the home for her parents). It would need to a total renovation, but the overall condition is better than expected. My parents suggested they would be interested in purchasing the home if the chance came up but have since balked. After reconsidering and looking further at our finances, we are planning to purchase the home ourselves. This will solve the immediate problem and then we will have time to consider options – resell as-is, clean it up and resell, renovate and sell, establish a rental, etc. At the price she is offering us, we are confident we will not lose money and stand to make something as well. She does not have the capacity to clean up the house and list it, so we are an appealing prospect.
We will need a mortgage to complete the purchase. This is the plan I am considering:
1)Pre-qualify for the mortgage loan.
2)Draft a somewhat informal contract for the sale, signed by both parties with a third-party.
3)Sell stock for down payment, proceed with the loan.
4)Hire an attorney to handle closing, deed transfer, etc.
I am unsure about best practices for an off-market home purchase and wondering if anyone can offer guidance. Questions:
1)Should the sales contract be handled in a more formal manner? (As I understand it, even formal contracts do not carry much weight).
2)I assume a home inspection and appraisal will be required for the loan. Is that correct?
3)What are the pitfalls of buying then reselling? I know that 1-year holding is required to avoid short-term capital gains.
4)What else should we consider?
Since that post, and through some miracle, the owner of the home next door has approached us about buying her house. She is elderly, in poor health and realizes she can’t keep up with it and doesn’t want to continue providing a boarding house for her son and his addict/unhoused friends. She gave us a reasonable price and the home would come in as-is condition. We even had a tour of the home a couple weeks ago -- a very strange experience behind enemy lines with 8-10 transients laying around smoking weed.
The home is a time capsule. Built in 1930 with little renovations since then (the owner’s grandparents built the home for her parents). It would need to a total renovation, but the overall condition is better than expected. My parents suggested they would be interested in purchasing the home if the chance came up but have since balked. After reconsidering and looking further at our finances, we are planning to purchase the home ourselves. This will solve the immediate problem and then we will have time to consider options – resell as-is, clean it up and resell, renovate and sell, establish a rental, etc. At the price she is offering us, we are confident we will not lose money and stand to make something as well. She does not have the capacity to clean up the house and list it, so we are an appealing prospect.
We will need a mortgage to complete the purchase. This is the plan I am considering:
1)Pre-qualify for the mortgage loan.
2)Draft a somewhat informal contract for the sale, signed by both parties with a third-party.
3)Sell stock for down payment, proceed with the loan.
4)Hire an attorney to handle closing, deed transfer, etc.
I am unsure about best practices for an off-market home purchase and wondering if anyone can offer guidance. Questions:
1)Should the sales contract be handled in a more formal manner? (As I understand it, even formal contracts do not carry much weight).
2)I assume a home inspection and appraisal will be required for the loan. Is that correct?
3)What are the pitfalls of buying then reselling? I know that 1-year holding is required to avoid short-term capital gains.
4)What else should we consider?
Statistics: Posted by vanuber — Sun Mar 24, 2024 9:14 am — Replies 6 — Views 280