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Mortgagemom · Joined: 14 Jan 2007 Posts: 5

I'm looking at a place listed online. This is an owner financing deal with a precentage down. They are asking 80k, but the county tax assesment is $68,900 and the direct sales estimate is $85,200.Real estate isn't selling well, so I guess thats in my favor. What should I offer them? Also, they are charging the "prime" interest rate. How is the prime rate figured?

SherilynneB8055 · Joined: 07 Apr 2005 Posts: 4

if you really want the property- dont offer less than 10% below asking price . that is a decent offer in todays market. for the second part Ratings methodologyWhat's included? The fed funds rate is the primary tool that the Federal Open Market Committee uses to influence interest rates and the economy. Changes in the fed funds rate have far-reaching effects by influencing the borrowing cost of banks in the overnight lending market, and subsequently the returns offered on bank deposit products such as certificates of deposit, savings accounts, and money market accounts. Changes in the fed funds rate and the discount rate also dictate changes in the Wall Street Journal Prime Rate, which is of interest to borrowers. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Many small business loans are also indexed to the Prime rate. The 11th District Cost of Funds is often used as an index for adjustable-rate mortgages.

rooney · Joined: 08 Apr 2004 Posts: 3

Make them a lowball offer to start the process.Offer them 50% of what the market value is, and open the door to negotiatethen if you want to up your price, come back with less down or owner finance, no interest no payment for 1 year..Make them 3 offers , cash, partial cash/owner finance, then bank money.. but never pay what they want.. http://www.MrRealEstateWizard.com

RyanB · Joined: 06 Apr 2007 Posts: 5

Well when you are dealing with "seller financing" you take it or leave it. Doesn't matter if the market isn't great. There is a reason you are considering "seller financing" and we all know why that is. So if you have no other means of obtaining financing, I suggest you offer what they are asking. Be smart, not wise.

MarkD · Joined: 14 Apr 2005 Posts: 7

I would offer $50k and begin the negotiations

WWEFanatic · Joined: 07 Jan 2004 Posts: 3

County tax assessments have little to do with real market value, so throw that out of the equation.The first problem I see with this that if the seller is charging prime rate, you are going to see fluctations in your payment as the prime rate changes.Right now, the prime rate is low, but it won't stay there.Don't enter into this agreement, it is essentially a crude adjustable rate mortgage. The only way you can do this is if the rate is fixed. I have NEVER heard of a seller basing seller financing on prime rate. This seller is trying to take advantage of your situation.Don't do it, don't do it, don't do it.

kiersysmom · Joined: 12 Jul 2007 Posts: 8

Hi,notes: I'm a private real estate investor. Depending on your market this could be the time to buy. Personally the program I have is to offer full price to the FSBO. However, you don't have to do that. However, if they are willing to offer owner financing it means1) they have been unsuccessful in selling the house2) they are not in need of getting any equity out of the house.3) they have not been in a rush to sell the house but now they may be in a need to cover their mortgage payment (if any)this means they can be talked down in price - should you wish to do that. Also, how much further will prices fall in your area? Generally prices will fall for another 18-24 months. Should you need to sell in that time you could find yourself owing more than the house is worth. Don't forget about closing costs. it can cost you up to 10% of the selling price to sell a house.Price aside if you are going to live in the house then you have to consider the following- the age of the house (the older it is the more repairs you might have to do).- when was the roof last replaced?- what state is any a/c or heating system in?- is there any foundation damage (I'm in Texas so foundations are almost always an issue).- same goes for bugs. I don't mind ants, but termites ... get a professional to check for those.- how do the appliances in the kitchen look? New, average, old?- Do you like the floor plan? are the ceilings low or high? - the neighborhood - improving, declining, close to amenities, your place of work etc- is the seller offering a home warranty?- the county tax needs to be low so you are charged less. if you are in Califirnia remmeber the taxes are reassessed each time a property sells. Here in Texas taxes are reassessed each year. Check for your state.- etc etcThe main thing I would do is look at as many houses as you have time for. it is a very important decision for you. What features do you want in a house? What floorplan do you like? one story or two? One thing is are you being represented by a buyers agent? If not, and you are a first time home buyer, you might want to get one. They are free to you, but the FSBO might not pay realtors fees so ... you might have to. That may save you thousands in the long run. However, there are good realtors and bad realtors. I'm happy that I know enough about houses not to need one. Remember that unless they sign an exclusive buyers agreement with you they work for the seller. Thus the higher the price the higher their commission.Also remember that you can ask the seller how much the balance of their mortgage is (if any). Are they asking for any down payment? What is their prime rate? How long are they amortizing the loan over? Do you have a set time to buy? 1 year, 2 years, 10years? Get the figures in writing. - what is prime rate to you or I may not be their prime rate. If they are offering a good rate - say 6% and you have average credit, or are new on your job, self employed that might be a good deal. How do you know? Well, have you applied for a mortgage yet? A FSBO will talk to you if you have proof of funds - that is either a pre-approval from your preferred mortgage company or the balance of cash in your bank account.Now interest rate is one thing but how much are they financing you for? What are the terms of any financing and/or lease? Here in Texas lease/option is almost outlawed which is why FSBO's and buyers like my program. So check with a real estate attorney to make sure any contract is in your favor - or what pitfalls of the contract there might be.Okay, I have a time out called by my better half! Good luckGS