House buying advice?

[dislal]

My DH and I have been house hunting for awhile now and it is a little frustrating! We have recently been approached by a friend of my MIL who is getting a divorce from her husband and she is losing her house, she has offered us to "buy the house" for what she owes on it. Has anyone ever heard of anyone ever doing this? I feel like this could go so wrong! I don't know what the value of the house is, but my uneducated guess is that the price she quoted us would be about half of the value of the house?

Anyone ever do this or have any advice, she doesn't want to involve a realtor, because she said it would be more expensive!

 

[minnie1928]

It is cheaper for her to sell it directly, since she wouldn't have to pay a realtor commission. However, I'm leery of buying property from friends/relatives simply because if the house has major issues down the road then that could translate into something very awkward. If you love the house and the price is right, then it might be worth proceeding. But, don't buy a house just to "help someone out". Make sure it's a house that you can see your family in for a long time.

 

[LuLuO]

Make sure you get the proper home inspections and I suggest an inspection of the sewer lines as well.

 

[kayrosek]

I do know of people who have done this. If you get the house appraised and inspected and you truly love it then you should be fine.

 

[AJRitz]

Be careful that you're not getting in the middle of her divorce mess. It is not unusual for a property settlement to permit one spouse to remain in the home on the condition that the spouse refinance or sell the property within a certain amount of time. The non-resident spouse is often entitled to a share of their equity after the refinance or sale. If her ex is entitled to a portion of the proceeds, and she sells to you in a way to avoid there being any proceeds, you may find your new home in the middle of their fight. If the non-resident spouse is entitled to a share of the fair market resale value of the house, after the mortgage is paid off, and you buy for less than fair market resale value, you may end up with a cloud on your title.

I'm not saying absolutely don't do it, but don't do it without legal counsel (even if lawyers are not usually used for residential real estate transactions in your jurisdiction). And don't do it without knowing all of the facts.

 

[Lehuaann]

don't buy a house just to "help someone out". Make sure it's a house that you can see your family in for a long time.

We have been offered numerous times to buy out relatives properties -under appraised value-. As much as we would've liked to help them out and as tempting as the price might've been, the situations have not been in our best interest.

For starters, we always look at buying properties/homes as an investment, therefore, location (as well as condition) is key. We'd rather have a smaller house in an ideal location, then a bigger house in an undesirable location. But that's us.

This is not to deter you from purchasing from your MIL's friend. It could very well be a good deal.

Make sure you get the proper home inspections and I suggest an inspection of the sewer lines as well.

I second this. Proper home inspections from professionals- not from friends who think they know what they're talking about . Inspections being; complete home, plumbing, electrical, and termite.

Also if you choose not to go through a realtor; get comparables, an appraisal, and a good real estate attorney to draw up a contract. Also, get title insurance.

 

[Mercedes1]

I would be very careful buying from a friend or relative because little details which can be huge in the end may be over looked, just my opinion

 

[cbg1027]

I would talk to a real estate lawyer. If they end up charging you $500 for a couple of hours of work, it's not much in the grand scheme of buying a house for half what it's worth.

I would not enter in to any agreement with the homeowner without the guidance of a real estate lawyer or realtor. Dangerous territory, especially with a divorce going on.

 

[fireflymedic]

My DH and I have been house hunting for awhile now and it is a little frustrating! We have recently been approached by a friend of my MIL who is getting a divorce from her husband and she is losing her house, she has offered us to "buy the house" for what she owes on it. Has anyone ever heard of anyone ever doing this? I feel like this could go so wrong! I don't know what the value of the house is, but my uneducated guess is that the price she quoted us would be about half of the value of the house?

Anyone ever do this or have any advice, she doesn't want to involve a realtor, because she said it would be more expensive!

I would think most houses now-a-days are sold by how much one ows on it. I mean you mite list it for what someone told you it is worth but when it comes down to the fianl sale you have to get enough to pay it off and have the com. for the realator

 

[tlbwriter]

I would think most houses now-a-days are sold by how much one ows on it. I mean you mite list it for what someone told you it is worth but when it comes down to the fianl sale you have to get enough to pay it off and have the com. for the realator

That's an odd assumption. People who bought at inflated prices before the market crashed are likely to be in that position, as are people who refinanced and pulled out their equity, but I don't think you can say that applies to "most" houses.

 

[mrsklamc]

15 year not thirty, is the only advice I have, assuming you are taking out a mortgage. The extra amount each month is SO worth it.

 

[PlutoPony]

You really really need to establish the market value of the home before you even consider something like this. For instance if the loan balance is $200k but homes like this are going for $180k, it's not in your best interests to go ahead and buy it for the $200k she owes - and in fact you probably can't get a loan for more than the appraised value. What she thinks her house is worth is not something I would take on face value imo.

If you didn't know the seller, is this a home you would be interested in buying? If so, forgetting about how much she owes on the house, how much do you and your realtor think the house is worth?

 

[THERESA522]

Before you move forward, make sure it's a house you can see yourself in for at least 5 years. If you decide that it's a house you would want, b4 you go any further, spend the money on a professional appraisal (that's usually cheaper than a home inspection). If the numbers are okay with the appraisal, you can move forward from there.

Then you can have your lawyer draw up a sales contract, protecting you a little differently in this transaction since the sellers are divorcing. Your contract can be subject to the home inspection.

 

[PlutoPony]

15 year not thirty, is the only advice I have, assuming you are taking out a mortgage. The extra amount each month is SO worth it.

I understand where you're coming from - the amount of interest saved by paying for a house over 15 years vs. 30 is astounding! However, by signing up for a 15 year loan up front, you are locking yourself into higher payments. If your income drops (someone out of a job or has their pay drastically cut, not uncommon these days) that higher 15 year mortgage payment can be a problem.

Another option is to get a 25 or 30 year loan and pay extra each month against principle so that you're essentially paying it off in the 15 years, or whatever time you want. You have to have a lot of discipline to do this but it does give you significantly more options should your income drop over the life of the loan.

 

[mrsklamc]

I understand where you're coming from - the amount of interest saved by paying for a house over 15 years vs. 30 is astounding! However, by signing up for a 15 year loan up front, you are locking yourself into higher payments. If your income drops (someone out of a job or has their pay drastically cut, not uncommon these days) that higher 15 year mortgage payment can be a problem.

Another option is to get a 25 or 30 year loan and pay extra each month against principle so that you're essentially paying it off in the 15 years, or whatever time you want. You have to have a lot of discipline to do this but it does give you significantly more options should your income drop over the life of the loan.

Your income dropping can be a problem no matter what the cost of your mortgage is. If you lose a job that difference in payment amount is not going to be what makes or breaks you.Many many people get a 30 year with a plan of paying off extra but almost no one ever does. The built in discipline of having it be a 15 year mortgage is worth it.

 

[Green Tea]

I do know of people who have done this. If you get the house appraised and inspected and you truly love it then you should be fine.

I agree. You likely know slightly more about this house than a random one anyway. Do your due diligence, as you would in any home purchase. It might be a great deal.

 

[kathie859]

I agree. You likely know slightly more about this house than a random one anyway. Do your due diligence, as you would in any home purchase. It might be a great deal.

But you do need to do your due diligence including having a real estate attorney draw a contract (one issue is dower rights if your state has them), having a complete home inspection and specifying closing and occupancy dates in the contract along with remediation options if those dates are not met. If you are getting a mortgage your lender will order an appraisal and you will get a copy of it to review. Be sure your attorney gives you an escape clause in case of low appraisal or condition issues. And, lastly, buy title insurance!!!!