Need Advice! - Buying a House That's Already Paid

Hi P..
Sounds to me that the house now belongs to the friend. (You said papers are signed).
IF you were to rent the house from this fellow, you'd need to keep a few things in mind.
1) What are the going rates for RENT in that neighbourhood.
2) What is the value (if you'd market it) of the house NOW.
3) Market is declining - most likely the value of the house a year from now will be less. (All depends on WHERE this house is????)
4) If you are leasing - you will NOT pay any property taxes - that only falls into place when the title is transferred into your name. Depending on area it's a percentage of the PURCHASE price. Lets say you live in LA county and you buy the house for 500K. LA county dictates a 1.10%, so your property taxes would be roughly $5500 / year. (paid in two installments)
5) Some cities have a TRANSFER tax that you pay ONCE when the title goes into your name. This varies from 1.00%(Sacramento) to 15% (Oakland) in California. Also based on PURCHASE price.
6) Is this something that YOU want. Never mind if it is a great deal. In these days you do NOT want to get stuck in a house that you cannot sell if you later on discover that perhaps the neighbours suck, the schools are terrible etc.
If you are in the LA area - and need comparables to look at, I can get you that. I'm also a realtor in the South Bay- like some others that answered.

Good Look, and ponder this some more!

2 moms found this helpful

Just keep all paperwork and make sure you do a lease with option (staples usually has them) pay with check to keep a paper trail. We did a lease with option and it was great, we didn't have to pay a big down to purchase we refinanced it into our names. Also make sure you get a monthly amount (100. or more to go toward purchase and that goes back to you if you dont purchase.

1 mom found this helpful

Lots more info is needed to see if this is a good deal. My husband & I are both Realtors in the South Bay (he was born at Inglewood Hospital). My husband has also had his own Appraisal business for 10 years so he's very good at valuation, something a lot of us Realtors need help with. Here's his website http://www.davemonty.com/

If it is a good deal, you could do a "lease option to buy" which can be beneficial to you because you lock in a price to purchase & you have the "option" to buy at that price within a time period. You are not required to go through with the sale if values go down or you decide you don't want the house afterall. The seller however is required to sell to you at the agreed price, even if values go up.

Is it possible for you to do this directly with your parents & not the "friend" that went to the bank already? I'm not sure what the situation is with your parents. Where are they going to live? Could they hang onto the house if they had you paying them rent and then wait to sell until values went up? If they go ahead with the sale, I would at least make sure they are getting fair market value or talk to the bank about doing a loan modification so they can keep their home.

1 mom found this helpful

My other suggestion to you is to check the schools in the area to make sure they are good. It almost does no good to buy a house and then find out that the schools in the area aren't great, and you have to go private somewhere else.

1 mom found this helpful

I'm a little confused, did the friend buy the house for your in-laws, for him to live in our as an investment ... First you need to figure out what the purpose of the house is and then make a decision based on that. Buying real estate is always a good investment providing you buy at the right time and for the right price.

Hi P. -

This sounds like a wonderful opportunity to get into a house, something that has become nearly impossible for many people these days. You probably should talk to a lawyer, just to make sure all bases are covered & made clear what's expected of who, and when it's expected.

And might as well start with a good mortgage broker sooner rather than later. Things are changing fast & who knows what great loan possibilities will have been created a year from now? But you could at least set yourselves up with someone you like. I know a wonderful woman who works for a good brokerage company in the south bay area if you would like a referral. We worked with her family for 12 years until we sold our house earlier this year.

All the best to you,
C.

A few things...

First, I think you need a Realtor, someone who is going to look out only for your best interests and guide you through the process.

Second, it may be a great deal, but before you make the decision, look around. It's a big deal to buy a house or commit to lease to own a house. See what's out there, decide what you like and what you want. It doesn't cost anything to look!

If you need any help. I am a Realtor in Orange County...you can check out other houses in your area that are for sale on my website if you want. If you need any other help, let me know. I love working with first time buyers!

www.meredithdrews.com

-M

What a great opportunity! Do it!

Hi P.,
You don't say how old your daughter is but I agree with the other mother who said to look at the schools. I have friends who bought houses before they had kids and now they can't send the kids to the local schools because they aren't any good. I looked at the schools I wanted and narrowed it down to two neighborhoods and then bought a house in one of those neighborhoods so I wouldn't have to worry. Just something to think about.

Good luck!

Hi P. D,

I am a Realtor and although I only work REO properties right now, you should contact a Realtor in your local community. Your "friend" should not have contacted the bank without your parents' permission. Lease options are very difficult and can often cause lawsuits in the end because prices are usually negotiated at time of sale, not lease and for market price. It's sad to hear your parents after their hard work are losing their home. They should try a modification with their lender before they sign any papers with these "friends". I put "friends" in quotes because it appears someone could be benefitting from your family's misfortune. This would only be surmised if your parents had no knowledge of the friends contacting the lender of record. If everyone knows, then perhaps a favor is being extended here.

Good luck and you can contact me if you need further discussion.

Happy Saturday~
C. Griffin

It sounds like FIL is trying to help you out and I think a house is definitely better than where you are. Apartment. Especially if you have a family of 3. The friends are god sends since many are losing their homes right now. Money is money and giving it to your current landlord only benefits his /her lifestyle. The friends would be only the new landlords and if you had option to buy- if house is quality- why not. It is great the friends are in financial position to buy home firstly, and secondly that FIL is willing to give you this option. You sound like you are being blessed and quit fretting and take the blessing and just remember to PASS IT FORWARD to thank God and everyone else trying to help you and your family. Go for it!

Make sure to get everything in writing. Keep a paper trail of everything. I would go online and try to find out more information about this. Also call a few lawyers and ask them questions about this. If they charge I think it would be worth it to pay. Make sure the lawyer is really good and knows there stuff.
Sue

Just to clarify....your parents' friend bought the house FROM them...or paid off their mortgage? And if they paid off the mortgage...are your parents partial owners, or are they paying their friend back, or did their friend take possession?

Hi, everything will depend in how the lease agreement is write, read everything before signing in. I don't know if is a good deal because I don't know the price but now is a good time to buy a house. If you are buying without getting a loan from the bank (direct from the owner like looks like) usually they made a Trustee's Deed with the interest rate and based on that you make the payments direct to him or if you have an ok credit you can may be get a lower interest rate with a bank.
Good luck!

A good deal is buying a house below market value. Do the math, find out comparable values in the neighborhood. Talk to real estate brokers, they will give you all the information you need for free.