Making an offer on an older model with land

[southernmo]

Hello. I am currently apartment living but have recently received a small inheritance. I live in one state and my family another and I would like to use this money to purchase a mobile home closer to them. My best prospect so far is a 1973-ish 2br with an all season porch added, on two lovely acres with its own well/septic. It is a mile and a half from town. Very conveniently located. It is clean and well kept. Everything is in good working order. An older woman has lived there for ten years and cannot take care of the land any longer. It has been listed since April of 2011 for $20,000. The realtor stated that she is pretty firm on the price.
I have cash and would like to offer her $18,000 and I will pay the closing fees which are minimal. Does that sound reasonable? It has sat so long I assume because banks aren't giving out loans for these types of home purchases, and the potential buyer (aside from myself?) with that much cash on hand is not necessarily looking to purchase a 40 year old mobile home. I do not want to offend her, but I will need to purchase appliances and some furniture as well.
This would be an extremely affordable way of life for me. Taxes are $100 a year and the only other bill would be electric.
I am interested in any opinions. Thank you

[rmurray]

You are right banks and lenders CANNOT make loans on pre HUD homes.Most likely the ONLY way she could hold out for all the $, she would have to take a down payment and personally finance the balance. She might well find someone with a few thousand down and willing to carry the balance with her. to be able to get most of her cash is probably impossible. It should not offend her to get a generous offer like you propose. Be sure to protect yourself and be sure you involve a home inspector and attorney. The inspector will cost a few hundred but will report to you any things that will need to be done. An attorney will cost a little now but should be able to be sure she actually owns the property and home and has proper documentation to be able to transfer to you. Both of these should cost you less than $ 1,000. A small piece of mind investment to be sure your $ 20K is well spent and not at risk. Just because it is listed with a real estate firm does not protect you. Good Luck

[southernmo]

Thank you for your thoughtful reply. How would I go about looking for a home inspector? Perhaps the real estate agent will know of someone. As I mentioned, I currently live in another state, making this purchase logistically a little nerve wracking. I am unable to drive down there due to work without putting in notice of time off. (two weeks usually is needed) Would the inspector also take care of checking out the well and septic? Those are my biggest concern.
This is a very rural area and these are country folks to the extreme so I want to present a good offer that will not offend anyone. She is on a waiting list for housing of some sort so she is not in a hurry to move, although I am ready any time.
One last question, with this type of purchase, what would make you not want to purchase the home? Aluminum wiring, how much of an issue is that? I am educating myself as I go, so I do appreciate your input.

[rmurray]

I doubt I would buy a home sight unseen.You are on the right track with asking the real estate pro for guidance and recommendation on home inspector. When you arrange the service make sure they include all features important to you.
Be assured that any legitimate offer in writing with a small deposit attached should not offend anyone. Remember the agent by contract works for the seller. They collect commission for convincing you to buy.
You asked about things that would kill a deal for me, I would not consider any pre HUD code home. All my prospects would be 1976 or newer. You asked if aluminum wire would be a deal killer. It is not something I am comfortable with but the home has been there without fire for over 40 years. Bug infestation or mold would bother me more. Stop back often. Good Luck

[southernmo]

I should have been clear, I have seen the home in person and liked it very much although listed as a 3br (a big draw) turned out to be only a 2br. I had to drive three hours to find that out. When I asked her the year she did say she had the title but was unsure of the exact year. The home was immaculately clean, and all the work that she had done was done professionally. The systems were newer as well. Overall, it suits my needs but would also need to be a consideration for long term housing for me, as I doubt I would ever be able to sell. I very much like the idea of owning property with a home outright. And in the county where it sits, there are no restrictions. I have to weigh the pros and cons of this one, thank you for your help.

[David Oxhandler]

The year of the home is signification but condition and location are the 2 most important factors to consider. As Mr Murray said you need to get a professional home inspection, so you know if there will be any other major expenses befor you can enjoy living in the home.

I would not be afraid to make a lower offer. A cash buyer is a rare thing. Sales of vintage homes are not easy, because there are so many newer homes for sale in almost every market in the country at this time. If they have been trying to sell for a while the possibility of a fast closing for all cash may just get you a better price.

Don't be afraid to make a low-ball offer. Once you say a price you can never go down, only up. This is not a personal matter....You are making a business arraignment for them to sell and you to buy. I low-ball offers regularly and no one has ever tried to hit me or acted insulted. The worse thing that can happen is that they will say no and if you still want the home you will have to make a higher offer. Very few homes that sell for cash are bought at the sellers asking price. Start low and if rejected ask for a counter offer.

[southernmo]

Thank you for your response. So in your opinion do you think that I could go in at less than $18,000? Obviously I would like to pay as little as possible. Where would you suggest I begin? $17,000 perhaps or maybe lower?

[David Oxhandler]

I personally would start as low as I dare. It cant hurt to start low as long as you indicate your feet are not set in concrete. I am in the process of selling an apartment where my parents lived for many year in Manhattan. We are asking more than I know the market will bare. The agent has asked me to drop the price. I have told her to hold the line but to tell prospects I am motivated and want to sell and to ask prospective buyers to terrify me with any offer.

Start low and ask for a counter offer. They will almost certainly come down a bit for a cash buyer. If they don't you will know that your choices are to meet the original price or move on. If they come back with a counter offer you will be able to gauge your second offer accordingly. I always "cut the baby in half" My second offer is most always half way between my first low offer (which is most times to the point of a silly offer) and the sellers first counter.

If you want to play this game you must be prepared to loose the home if another buyer appears that is willing to pay the full asking price. As an investor I know that there is always another "deal" around the corner. As a home buyer you need to decide just how much you want that home and offer accordingly.

As long as yu are willing to move forward with out that home the game is fun and well advised. If you or other family members have a heart set on living there meet the buyers demand....

When I purchased the home I have been in for 26 years, on first visit my wife totally gave away her desires. She audibly gasped when we entered the home. The following day when I phoned the seller with a low offer he told me he knew I was going to buy the home and my game was dead. I have never looked back. We purchased the home at full asking price... the one and only time I gave a buyer his asking number. I have never regretted this because we have been so happy in this home.

Now you know everything.... behave accordingly.

good luck ... come back and let us know how you make out.

[southernmo]

I like that, "terrify me with an offer." Good one! I am still in the process of looking. I have found another mobile on ten acres with river access. My dream home. I actualy rented the spot over the summer for my son's birthday. Unfortunately I only have 30 to 35% of what they are asking. I was considering asking them what they would be willing to do with 30% down in cash. It is a mobile home after all, and I doubt financing for anyone would be easy to come by. The overall value is in the land, and I don't even need the ten acres. I am just trying to get up the courage to call them. Do you have any advice to offer in a situation such as this? I so much appreciate both of you taking the time to help me.

[David Oxhandler]

Owner financing has become a huge part of the resale of all homes across the country. Since the banks crashed the economy with risky mortgage investing they have tightened mortgage lending with a vengeance. Buyers and sellers in every market are seeking workable alternatives.

You have nothing to loose and a lot to gain by asking the seller if they will be willing to offer you financing. With 30% down they should have enough of your money to feel secure. Be ready to make them more comfortable. Demonstrate upfront that you can and will make the payments. Bring your credit report and proof of income, and a landlord statement that you have paid rent faithfully.

When a home seller and buyer come to terms on seller financing everyone wins.

Benefits for the Seller

With home sales slow seller financing will make the home appealing and availabler to more buyers.
Bank financing typically takes up to 6 month today. Seller financing can stimulate a fast sale
The seller gets a benifical tax postion. The selling price of the home will not be taxed fully, only the amount paid yearly.
The seller is more likely to get the asking price or closer to the asking price, when willing to take on the role of lender.
The seller will receive a higher return on his money then what is available in almost any other investment.
The seller will have a steady monthly income for however many years the loan will run.

Benefits for the Buyer

Easy qualifying. If your credit is not perfect owner financing may be the ONLY way to go.
Your loan can be set up to fit your needs.
Down-payment and interest rates may be negotiable.
Lower closing costs, no points no broker or origination fees.
You don't have to fight through the ever more difficult, qualifying routine of an institutional lender.
Closing will be quicker than waiting for a conventional lender's documenting process.


Be sure the finance agreement includes your ability to pre-pay the loan. This is critical if you want to pay off quicker or if the mortgage market improves during the loan term to the point where refinancing with a bank would benefit you.

Let us know how it goes...