Can I afford to buy my grandmothers house?

[waffleironhead]

Originally posted by: Juddog

Originally posted by: swbsam
By the way - it's a bad deal EVEN IF YOU GET APPROVED.

They want to sell it to you because they're hoping you'd pay the full market value, while selling it on the market will always require negotiation.
It's a buyers market, so they're really trying to screw you here...

^^ This - it's a scumbag move to try and get a family member to pay full market value for a house so they can sell it right away and make a huge profit, especially in a depressed real estate market.

Uhh, market value is exactly that, the price that it would sell for given current market conditions. IF they were trying to sell it for what it was worth 2 or 3 years ago, then the op should walk away. What do you expect them to sell it for, the original purchase price?

 

[swbsam]

Originally posted by: waffleironhead

Originally posted by: Juddog

Originally posted by: richardycc
If it is already paid for, why are you 'buying' it again? Who did she leave the house to in her will?

Her sons / daughters, who want to charge O.P. money to buy it so they can make a profit off of their mom's death; in other words a greedy ass family.

I dont see it as greed. The house was left to the family as part of the estate. The only way that everyone gets an equal portion is for it to be sold and the resultant money split up. The only way for this to be fair to all involved is for it to be sold for as much as they would get on the open market. Was the op even in the will? If grandma wanted the house to go directly to the grandson she would have willed it that way.

It is greed. In today's market, "market value" is never what you'll get for a house. The house I bought has a market value $100,000 more than what we paid for it - bargains are to be had in this buyers market. You know this, everyone knows this. Trying to pass this on to a family member at "market value" is greed because they know that they will only get offers $20-50k less than the asking price. I don't care where this house is - coops in Park Ave are selling for 20-30% less than market value!

They're also trying to sell it inside the family to avoid waiting 3-6 months for a deal to possibly fall through. The brand new building next door to me has had the contract fall through twice because people just aren't getting approved for loans. Keeping it in the family means they don't have to wait/find a buyer, and don't have to worry about the deal falling through.

Lastly, they're saving agent fees and I'm sure a bunch of other fees as well.

What would be fair? $220,000 "market value?" They should sell it to you for $150,000 if they were trying to help you out.

But I wouldn't take it for $150,000.. You can't afford it right now - I'm sure your finances will improve, and $20,000 isn't really that much debt. Bring down you debt, save your money, and get yourself a nice condo or coop in a few years.

 

[Kyteland]

Originally posted by: kalrith
Agreed. OP, even if you can afford the mortgage and taxes, that will put you at about 100% debt-to-income ratio. Most banks won't touch someone with greater than 40% debt-to-income ratio, and most want closer to 30% IIRC.

Prudent lending practices call for a 28/36 DTI ratio. That's 28% for servicing mortgage related debt and 36% to service all combined debt. OP, I'm willing to bet that you're paying more than 8% of your income to service that $20k in debt, but you didn't say what your payments were. If it's low interest school debt maybe it isn't a problem. If it's high interest credit card debt or a car loan then there is no way you should be thinking of purchasing a home until it is payed down.

Another rule of thumb is that "affordable housing" is 2.5-3 times your anual income. You should be looking for a loan in the $80k-$96k range, not $220k.

If you don't mind me asking, what's your sentimental attachment to this house? It sounds like your grandmother only lived there a short time, so unless there's a serious attachment to the place I wouldn't even consider it. Don't let your family pressure you into a house you can't afford.

 

[Juddog]

Originally posted by: waffleironhead

Originally posted by: Juddog

Originally posted by: swbsam
By the way - it's a bad deal EVEN IF YOU GET APPROVED.

They want to sell it to you because they're hoping you'd pay the full market value, while selling it on the market will always require negotiation.
It's a buyers market, so they're really trying to screw you here...

^^ This - it's a scumbag move to try and get a family member to pay full market value for a house so they can sell it right away and make a huge profit, especially in a depressed real estate market.

Uhh, market value is exactly that, the price that it would sell for given current market conditions. IF they were trying to sell it for what it was worth 2 or 3 years ago, then the op should walk away. What do you expect them to sell it for, the original purchase price?

All that I am saying is that they could cut their family member a little break on the asking price, especially in a depressed economy where times are hard. Instead they try to squeeze every last nickle and dime out of the property and offer to a family member first to save on real estate agent costs, etc..

Let me give a real world example. My grandma on one side of the family is in bad health and wants to move to Florida, so she offers to sell her house for 95k to any family members that want it to keep it in the family. This is for a 7 bedroom house on an acre of property. A cousin buys it, family still gathers there each year to meet up and have a reunion. Grandma passes on a few years later, everybody is happy with the arrangement.

Second scenario. Grandma on other side of the family dies, property is split to children, who bicker and argue over every last item. They offer to sell the house for "market value" at 145k, for a 3 bedroom house with a few acres of land. I offer to buy for $115k based upon my income was the highest I could afford at the time. Family says no way they can "lose" that much money on the sale and won't sell to me. House sits on market for 3 months, nobody wants it, finally they sell for $110k and real estate agent takes a big hefty cut. Now everybody distrusts each other and the siblings grow distant. Had that side of the family taken my offer from the get go and not been so greedy about it, there would have been a win / win, but instead they wanted to act all hard and not negotiate.

 

[SandEagle]

first off, your family sucks
second, wtf. get an appraisal, i dont trust your family.
third, if you have to ask, you cant afford it.
fourth. i know people who make over 90K and still cant affort a 220K home
fifth. sorry for saying your family sucks
sixth. dont do it

 

[Juddog]

Originally posted by: SandEagle
first off, your family sucks
second, wtf. get an appraisal, i dont trust your family.
third, if you have to ask, you cant afford it.
fourth. i know people who make over 90K and still cant affort a 220K home
fifth. sorry for saying your family sucks
sixth. dont do it

That was pretty blunt, but also pretty true.

 

[clamum]

Sounds like a terrible fucking idea to me.

 

[Muadib]

Originally posted by: SandEagle
first off, your family sucks
second, wtf. get an appraisal, i dont trust your family.
third, if you have to ask, you cant afford it.
fourth. i know people who make over 90K and still cant affort a 220K home
fifth. sorry for saying your family sucks
sixth. dont do it

I agree with 1,2. You need to do 2 before you move forward.

 

[sutahz]

If you are buying at market value, and you do want a house, then go house hunting, see if there is another $220K house you like better.

 

[BoberFett]

Originally posted by: BigToque
The house has been valued at $230-250,000. Most houses are selling for over asking price in this area right now. I'm sure my family could walk away on the open market for $280-300. $220 was selling to me at the low value minus what it would cost them in commission selling to someone else.

The house has a 2nd lot that I was planning on selling dropping the cost of the mortgage even further.

I figured I could stay in the house while in university and then resell the house.

I make enough to pay the actual mortgage and taxes, so worst case scenario I can just re-sell the house if I need to.

By definition, market price is what people are paying. Nobody pays over market unless it's an exceptional property with some unique feature.

If houses like the one you're talking about sell for $280K, then that's market price.

Edit: And to the OP, back in the mid 90s I bought a house for half what you want to pay, and at the time I made twice what you make now. I wouldn't have been comfortable beyond that. I can't even imagine the financial agony you would have if you bought this house. Nobody will loan you this money. Not trying to be mean, but that's the facts.

 

[BigToque]

Originally posted by: swbsam

Originally posted by: waffleironhead

Originally posted by: Juddog

Originally posted by: richardycc
If it is already paid for, why are you 'buying' it again? Who did she leave the house to in her will?

Her sons / daughters, who want to charge O.P. money to buy it so they can make a profit off of their mom's death; in other words a greedy ass family.

I dont see it as greed. The house was left to the family as part of the estate. The only way that everyone gets an equal portion is for it to be sold and the resultant money split up. The only way for this to be fair to all involved is for it to be sold for as much as they would get on the open market. Was the op even in the will? If grandma wanted the house to go directly to the grandson she would have willed it that way.

It is greed. In today's market, "market value" is never what you'll get for a house. The house I bought has a market value $100,000 more than what we paid for it - bargains are to be had in this buyers market. You know this, everyone knows this. Trying to pass this on to a family member at "market value" is greed because they know that they will only get offers $20-50k less than the asking price. I don't care where this house is - coops in Park Ave are selling for 20-30% less than market value!

They're also trying to sell it inside the family to avoid waiting 3-6 months for a deal to possibly fall through. The brand new building next door to me has had the contract fall through twice because people just aren't getting approved for loans. Keeping it in the family means they don't have to wait/find a buyer, and don't have to worry about the deal falling through.

Lastly, they're saving agent fees and I'm sure a bunch of other fees as well.

What would be fair? $220,000 "market value?" They should sell it to you for $150,000 if they were trying to help you out.

But I wouldn't take it for $150,000.. You can't afford it right now - I'm sure your finances will improve, and $20,000 isn't really that much debt. Bring down you debt, save your money, and get yourself a nice condo or coop in a few years.

First off, I'm the one that approached my family about buying the property, not the other way around.

Second, my father, aunt and uncle are all extremely wealthy individuals. The money they would receive really doesn't matter that much. They just want to tie up all the loose ends surrounding my grandmothers death.

Both my father and uncle have flat out said "Do some research and see if you can afford it". They don't want to screw me over, they want to see me finally start growing up.

My uncle is the one who said dealing within the family can cause issues and trouble down the line, so the best way to avoid trouble is to that IF I could get a mortgage, is to make sure it's done at arms length. Just approach the sale as if I'm a stranger and buy it at market value.

Anyway, after all the reading I've done and feedback from here, it's obvious I can't afford the house (which is what I thought from the start, but having never looked at what a house would cost before, I figured it was as good a time as any to start researching).

 

[Orsorum]

Originally posted by: Juddog

Originally posted by: SandEagle
first off, your family sucks
second, wtf. get an appraisal, i dont trust your family.
third, if you have to ask, you cant afford it.
fourth. i know people who make over 90K and still cant affort a 220K home
fifth. sorry for saying your family sucks
sixth. dont do it

That was pretty blunt, but also pretty true.

Agreed.

Hell, I make mid-70s and I can't afford (am not willing to pay for) a $220k house.

 

[dahunan]

Sort of a Happy Gilmore

 

[waffleironhead]

Originally posted by: BigToque


First off, I'm the one that approached my family about buying the property, not the other way around.

Second, my father, aunt and uncle are all extremely wealthy individuals. The money they would receive really doesn't matter that much. They just want to tie up all the loose ends surrounding my grandmothers death.

Both my father and uncle have flat out said "Do some research and see if you can afford it". They don't want to screw me over, they want to see me finally start growing up.

My uncle is the one who said dealing within the family can cause issues and trouble down the line, so the best way to avoid trouble is to that IF I could get a mortgage, is to make sure it's done at arms length. Just approach the sale as if I'm a stranger and buy it at market value.

Anyway, after all the reading I've done and feedback from here, it's obvious I can't afford the house (which is what I thought from the start, but having never looked at what a house would cost before, I figured it was as good a time as any to start researching).

See if they are interested in doing a land contract for you. Seriously, it may be an option.

 

[Kelvrick]

Definitely can't afford it. I got a 260k mortgage on a 100k combined gross (about 5k after taxes monthly) and I'm feeling the hit. Combined debt is about 10k in student loans and another year of $400 monthly car payments.

 

[biggestmuff]

Originally posted by: LTC8K6
Your family doesn't like you.

 

[Muadib]

Originally posted by: BigToque

Originally posted by: swbsam

Originally posted by: waffleironhead

Originally posted by: Juddog

Originally posted by: richardycc
If it is already paid for, why are you 'buying' it again? Who did she leave the house to in her will?

Her sons / daughters, who want to charge O.P. money to buy it so they can make a profit off of their mom's death; in other words a greedy ass family.

I dont see it as greed. The house was left to the family as part of the estate. The only way that everyone gets an equal portion is for it to be sold and the resultant money split up. The only way for this to be fair to all involved is for it to be sold for as much as they would get on the open market. Was the op even in the will? If grandma wanted the house to go directly to the grandson she would have willed it that way.

It is greed. In today's market, "market value" is never what you'll get for a house. The house I bought has a market value $100,000 more than what we paid for it - bargains are to be had in this buyers market. You know this, everyone knows this. Trying to pass this on to a family member at "market value" is greed because they know that they will only get offers $20-50k less than the asking price. I don't care where this house is - coops in Park Ave are selling for 20-30% less than market value!

They're also trying to sell it inside the family to avoid waiting 3-6 months for a deal to possibly fall through. The brand new building next door to me has had the contract fall through twice because people just aren't getting approved for loans. Keeping it in the family means they don't have to wait/find a buyer, and don't have to worry about the deal falling through.

Lastly, they're saving agent fees and I'm sure a bunch of other fees as well.

What would be fair? $220,000 "market value?" They should sell it to you for $150,000 if they were trying to help you out.

But I wouldn't take it for $150,000.. You can't afford it right now - I'm sure your finances will improve, and $20,000 isn't really that much debt. Bring down you debt, save your money, and get yourself a nice condo or coop in a few years.

First off, I'm the one that approached my family about buying the property, not the other way around.

Second, my father, aunt and uncle are all extremely wealthy individuals. The money they would receive really doesn't matter that much. They just want to tie up all the loose ends surrounding my grandmothers death.

Both my father and uncle have flat out said "Do some research and see if you can afford it". They don't want to screw me over, they want to see me finally start growing up.

My uncle is the one who said dealing within the family can cause issues and trouble down the line, so the best way to avoid trouble is to that IF I could get a mortgage, is to make sure it's done at arms length. Just approach the sale as if I'm a stranger and buy it at market value.

Anyway, after all the reading I've done and feedback from here, it's obvious I can't afford the house (which is what I thought from the start, but having never looked at what a house would cost before, I figured it was as good a time as any to start researching).

They may be wealthy, but you clearly are not. If they weren't greedy, they would either give it to you, or sell it to you at a price you can afford. I'm sorry, but there is no way in hell they don't already know that you can't afford it. They may not want to screw you over, but they don't want to help you either.

 

[RaistlinZ]

Originally posted by: BigToque

Originally posted by: swbsam

Originally posted by: waffleironhead

Originally posted by: Juddog

Originally posted by: richardycc
If it is already paid for, why are you 'buying' it again? Who did she leave the house to in her will?

Her sons / daughters, who want to charge O.P. money to buy it so they can make a profit off of their mom's death; in other words a greedy ass family.

I dont see it as greed. The house was left to the family as part of the estate. The only way that everyone gets an equal portion is for it to be sold and the resultant money split up. The only way for this to be fair to all involved is for it to be sold for as much as they would get on the open market. Was the op even in the will? If grandma wanted the house to go directly to the grandson she would have willed it that way.

It is greed. In today's market, "market value" is never what you'll get for a house. The house I bought has a market value $100,000 more than what we paid for it - bargains are to be had in this buyers market. You know this, everyone knows this. Trying to pass this on to a family member at "market value" is greed because they know that they will only get offers $20-50k less than the asking price. I don't care where this house is - coops in Park Ave are selling for 20-30% less than market value!

They're also trying to sell it inside the family to avoid waiting 3-6 months for a deal to possibly fall through. The brand new building next door to me has had the contract fall through twice because people just aren't getting approved for loans. Keeping it in the family means they don't have to wait/find a buyer, and don't have to worry about the deal falling through.

Lastly, they're saving agent fees and I'm sure a bunch of other fees as well.

What would be fair? $220,000 "market value?" They should sell it to you for $150,000 if they were trying to help you out.

But I wouldn't take it for $150,000.. You can't afford it right now - I'm sure your finances will improve, and $20,000 isn't really that much debt. Bring down you debt, save your money, and get yourself a nice condo or coop in a few years.

First off, I'm the one that approached my family about buying the property, not the other way around.

Second, my father, aunt and uncle are all extremely wealthy individuals. The money they would receive really doesn't matter that much. They just want to tie up all the loose ends surrounding my grandmothers death.

Both my father and uncle have flat out said "Do some research and see if you can afford it". They don't want to screw me over, they want to see me finally start growing up.

My uncle is the one who said dealing within the family can cause issues and trouble down the line, so the best way to avoid trouble is to that IF I could get a mortgage, is to make sure it's done at arms length. Just approach the sale as if I'm a stranger and buy it at market value.

Anyway, after all the reading I've done and feedback from here, it's obvious I can't afford the house (which is what I thought from the start, but having never looked at what a house would cost before, I figured it was as good a time as any to start researching).

Part of growing up is learning to stay away from god-awd awful business deals. At least it sounds like you're going to make the right choice.

 

[StageLeft]

Nobody in the world will give you a loan for that. You are way in over your head. way way way

a step in the right direction in taking on some responsibility

learn responsibility THEN buy a house, not the other way around. In this market anyway, though you don't have to worry; a bank would never give you this loan. I don't think you can realistically afford a house even half the cost of this one with that debt and income.

this isn't 2004; you don't roll debt into houses now in most cases. You need money down. as it stands now you couldn't actually qualify for most mainstream mortgages on anything because you're so negative in equity.

 

[Via]

If the market value really is around $280,000 then do whatever you can to buy it for $220,000.

The turn around and sell it for $280,000. Pay off your debt and use the rest of your profit to put down money on a house you can afford.

That'll show your family you've grown up.

 

[Deadtrees]

Now I understand the root of subprime crisis.

 

[Al Neri]

Originally posted by: Deadtrees
Now I understand the root of subprime crisis.

And I'd consider the OP much more responsible than the rest of the United States, considering he is weighing his decision.

Think about the 75% of people that were far less responsible than the OP.

...and people favor "bailouts" and partial mortgage moratoriums

 

[nick1985]

Bailouts FTL

 

[Jadow]

Have them list it for 6 months and see what the market value is. How generous of them...

I'd say HELL NO, plus you totally can't afford it.

 

[LTC8K6]

Can the executor of an estate sell estate property for much below it's market value?

Just curious.