I got this email the other day and I said “Possibly” as it really isn’t a yes or no question without finding out some other facts about the property first. The first is, “Have you been pre-approved for a loan by a mortgage broker?” This is a very important step because if you can’t get pre-approved, then there is no reason to even ask the other questions or even approach the owner of the property.
OK, you now have a pre-approval, the next question we need to find out is the seller even willing to sell? Some people consider this the first question, but I find the owners tend to get upset when you ask, they say yes, and a week later you come back and say, “Sorry, I don’t qualify for a loan”.
If you have been pre-approved and your landlord says, “Yes, I’ll sell it to you”, then you need to ask the tough questions or have a professional real estate agent or real estate lawyer ask the tough questions of your landlord.
- Do you own the home free and
clear? (If no, then
you need to ask question #2)
- Will the home appraise for the
amount you need
to sell it for to pay off the loan? (If no, #3)
- Since the home isn’t worth what you owe are you willing to come to the table with the remaining balance to close?
If they answer no to number 3, then you are pretty much dead in the water. The main reason is that you have to do a short sale on the property to get it to close and one of the first questions the bank will ask upon the offer coming in is, “Is this an Arm’s Length transaction” and with you living in the property, the bank doesn’t consider this to be an Arm’s Length transaction and will stop the sale in its tracks.
So, once again, if you want to buy the property you are renting, ask the tough questions and find out, it may just be possible!
Todd Clark (Principal Broker)