Is the Market Really this Bad ?

[David_Old_Jersey]

Originally Posted by Notpopeye

Here is the dilemma...........

...............I have zero debt, my house is paid for, my car is paid for and I want to buy a boat to live on. I tried to sell my house and had a buyer but just as someone above wrote, the buyer's financing created problems that resulted in no sale.

Just thinking aloud - but what about offering a house buyer assistance with the financing, so that rather than dropping the price down to what the bank would be happy with - instead offer a percentage (25%?!) as second mortgage (behind the bank).

Bank now has lent "only" 75% except on 100% of the price (plus whatever the buyer can out down - less the bank saying the property is only worth 90% of the actual sale price).....the Bank is still better off with far more security (obviously the exact percentages / numbers will depend on the actual circumstances).

The downside to you is (probably) having to offer a 2nd Mortgage that is more than you would have to reduce the sale price down to (to acheive a sale)....so less cash in your pocket on day 1. But the upside is some income (depending on 2nd Mortgage Terms - could offer 2 years interest free!) and over the medium term a higher amount of cash in your pocket from not having had to reduce the sale price so much.

The 2nd Mortgage does not have to be for 20 / 25 years - can have pretty much any terms that works for you (and Buyer and of course - the Bank!). I would suggest something like 2 years interest only - thereafter some capital repayments. With repayment in full after 5 years (at that point they should be able to re-finance with a bank). Might have to give something away (overall) from the current selling price (and take some risk), but sounds likely will have to do that anyway on price to acheive a sale.

The obvious risk being that the buyer won't keep up with the repayments to you (keep an eye on them from Credit Checks and staying in contact, so if he loses his job you know early!) - but (I assume) you would still be able to force a foreclosure (and that ability used to re-schedule repayments if new Owner looks like simply needs some time). Bank is of course first in the Queue on a foreclosure and you might not recover all the debt owed to you - but a decent chance that you will recover a fair chunk (so not all the 2nd Mortgage is at risk), unless the property market crashes even further - in which case are in pole position to re-buy the property at the new "melted down" price (using part of the 75%(?) sale price already in the Bank)....even if that means the Bank needs to take a haircut .

As I said, just thinking aloud .