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How do you approach a FSBO whose house has been on Zillow over 500 days about owner financing?

Currently renting 4bedroom for 2K due to Chap 13 for 100K in medical debt. Currently re-establishing credit slowly. Marital income 120K. No car note monthly expenses beyond rent 1K food utilities child care. Would like to find out about owner-financing options. Currently 2.5 years into BK.
  • September 22 2013 - US
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Answers (6)

Does the seller have a mortgage on the property?  If so, seller financing is not an option unless you have money to pay the owner so they can payoff the mortgage.  Most sellers will not provide seller financing without the buyer having some skin in the game.  You will need a large enough down payment to offer the seller in order for them to consider your offer.  They need to be protected in the event of a foreclosure.  
A lease option will be your best bet with your income and credit history.  You can offer to lease the property with the option to buy it within a pre-determined time frame and dollar amount.  The owner gets a non-refundable down payment plus higher than normal rent and possibly sells their house at a higher price than current market.  You're responsible for all repairs as though it's your house.  Some of the rent is to be applied to the down payment.    Let's use 3 years as the term.  In 3 years you will have to get a mortgage to purchase the property.  If you don't the owner keeps the downpayment monies. 
Good Luck! 

  • September 26 2013
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Hi ~ You don't know what the owners intentions are until you actually ask them. My recommendation would be to pick up the phone or one better would be to knock on their door. 

Now that you got that out of the way ---There are programs with min. down payments and you only need to be 24 months out of BK discharge or from file date - depending on the BK type - in your case as a CH 13. if you have reestablished credit. You might be shocked at what you would be able to avoid now. 

Biggest key is no lates to the BK trustee ~ 

If you would like further detail, please feel free to email me or call. I would be happy to assist! Hope to hear from you soon. Michael 
  • September 25 2013
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I understand your situation, and I certainly feel for you.  I have to be honest, however, and say that I wouldn't bother.  Someone whose home has been on Zillow 500 days is in no rush to sell, they're likely to not even return your call.

That being said, it never hurts.  Call them and introduce yourself, say you're interested in their home.  Ask if they're willing to show it to you.  Get your foot in the door.

When you're there, talk to them.  See what financing options they're willing to discuss.  In your situation, I'd mention your bankruptcy last if possible.  Discuss if they're willing to finance it for you.  Talk about your income, and that it is not only proven, but that you're in no risk of losing your job due to your excellent employment history.

If that conversation turns sour, ask about a lease or rent to own.  Some people prefer this method of getting rid of their homes, myself included. 

As a last resort, open up to them with an honest, respectful approach; you've already explained your income and employment history to them.  Explain the bankruptcy and what you've done to right it since.  Then explain what you've learned and why it won't happen again.

Don't be pushy, or angry, and go into this with realistic expectations.  There is a shot it will work.  But it's a long shot.

Best of luck!
  • September 22 2013
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We doubt that a FSBO with a home on Zillow for 500 days is in a position to do owner financing. We suggest that you check your County Auditor's/Assessor's web site for the property address, where you will find out if there is still a mortgage on the property.
  • September 22 2013
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Just ask them, likely the answer will be no since there is likely a mortgage already. Most sellers need to sell completely and not be landlords or pretend banks giving loans.

  • September 22 2013
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If the owner of the home has an underlying mortgage they cannot do owner financing.

Go and look at the home and talk to the owner.  Indicate you know they have been trying to sell for almost 2 years and would they consider owner financing.  You never know they might be interested in renting and you could possibly rent from them.

There are dangers and possibly more financial hardship for you if you handle a sale without professional assistance like a Realtor and attorney.  If the home was well priced it would have sold in 500 days.  Have to assume it is over priced.

If you agree to buy at the current price - even with a lease purchase - and later find out the house will not appraise - you lose all the money you invested and have no home in the end. 

That could be avoided by an attorney including a clause which holds you harmless if the property does not appraise.  That's all well and good but try and get  your money back from the seller later.

I could be wrong but I think the terms of your Chapter 13 include not taking on any new debt without the permission of the Trustee.  Once you complete the Chapter 13 you can qualify for a mortgage almost immediately.

My advice is stay where you are.  You have 2.5 years left.  Build your credit even if it means getting a "select" secured credit card. Taking out a secured loan with savings.  BTW Aaron rents or one of those rent to own appliance stores usually report to the credit bureau.  That could help.
  • September 22 2013
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