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Author: YewGuise Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127474  
Subject: Re: Landlord Offered to Sell Date: 8/10/2011 7:47 PM
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...my husband's job is renewed annually.
...The company seems to be doing well at the moment, but you never know, especially these days.


I don't think you should buy. Too risky right now.

... purchased it May 2005,
...prices were dropping. The neighborhood seems to have leveled out a bit, but still below the 2005-2007 median.


So the house is now worth less than what your landlord paid. Sounds like he's gotten tired of waiting for prices to rise, and is hoping to unload it for the amount of the mortgage.

Possibilities:
1. The house is worth less than his mortgage. If you do decide to buy, do your due diligence to establish FMV, and don't offer more than that, regardless of what the seller needs to pay off his mortgage. Actually, if the seller's underwater and doesn't have cash to bring to the table, the sale can't happen anyway, because no one will approve a loan for you for higher than the appraisal.
2. Landlord made a huge down payment in 2005 (or aggressively paid down the mortgage), so house is now worth more than the mortgage. That means if you buy it for FMV, you get a fair price, and landlord can unload the house without having to bring cash to the table. He might even walk away with cash, although after paying closing costs (which he'd have to, since you can't), he might walk away empty-handed; but if he's tired of being a long-distance landlord, he might be happy with that. So, win-win.
3. #1 and #2 don't really matter, because in order to commit to a mortgage you should have either an extremely secure income source and/or significant savings to tide you over in case of job loss. You have neither.

Honestly, it sounds like your landlord has a bit of a problem, which is unfortunate, but you're not in a position to bail him out. Don't let his problem become your problem.
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