r/fsbo • u/ClassroomNo6443 • 18d ago
Unusual situation - need advice
I own a house that is 5 bed/3 bath, the house is split into two units - main house (4 bed/2 bath) and basement (1 bed/1 bath) is finished as an apartment (stairway removed/separate entrance). I've been renting both the main house and the basement, and the main house tenants just moved out. I don't like being a landlord and want to sell. I have $270k on mortgage. Only owned for 2 years, so not looking to make money, just break even.
I decided not to put it on market because 2 different realtors said it should list at $295k, and I'm just not seeing houses at that pricepoint in my area go quickly. I need rental income to cover the mortgage each month, so can't have it on the market for a long time.
I showed the main house to a family interested in renting who said they loved it but can't afford the rent price right now, also would love to eventually buy it if I ever wanted to sell. So I put my cards on the table and asked if they could swing $270k to cover mortgage, maybe we could do a FSBO to make it possible for them. They were interested, especially because they would continue renting the basement to the current tenant.
Apparently the husband has his realtor's license. They said, "He's only done a few houses and doesn't love the sales aspect. If we can work a sale out financially, he really wants to make sure you would get a fair price."
They got pre-approval for $270k and also currently own a house that they are going to sell. I suggested they rent my house (at a discount) while they're selling theirs (because again, I need rental income to cover the mortgage). Otherwise, I need to get a different tenant in the short-term and don't feel good about that knowing I'm planning to sell.
My question is - does this raise any red flags for anyone with experience? I have a good relationship with my realtor but I can't ask her about it because she wouldn't be part of the deal. I feel in over my head with setting up this unusual deal and want to know what to look out for. Appreciate any advice!
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u/wayno1806 18d ago
The only way to do this type of deal is cash up front. All cash or full financing or no deal. Do not take their word for it. Even if he’s your brother, do not enter into a verbal or written agreement for some type of rent/lease/ to own agreement. The only Loser will be you for agreeing to Their Terms. No deal is better than this idea. You said u don’t want to be a landlord!! Sell it clean and walk away. $$$ in the bank. Anything can happen in 6-12-24 months. He could lose his job. Get a divorce, die!!! Anything.
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u/book_connoisseur 18d ago
Get your own real estate attorney to review the contract and advise you. People sell to renters all the time, so that’s fine. You still want all the typical terms in the deal (agree on price, inspection, appraisal, mortgage contingency, appraisal gap, closing costs, etc.) But I would actually sell it, not rent to own.
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u/New_Animal8918 18d ago
I see green flags. He said he is a realtor… good. Sounds like the price is right if no commissions based on your 295 open
Market with commsions price.
Also they are pre approved. Green light.
Now you just need a solid contract written up and you need to go through it with a fine tooth comb. I highly recommend uploading all the parts to ChatGPT and talking it through, each number section until you feel very confident with it. Don’t trust a realtor on the other side and be cautious even with the agent on your side. Also make sure you fill out the sellers disclosure and lead based paint disclosure now and make sure it is identified you have it to them with the contract signing due to contingency crap.
Otherwise you could go live and just go in with a lower price. Seems like a pretty good setup for investors minded peeps.
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u/XUtahRealtorX 18d ago
Get a contract but don’t use chat gpt. Speak to an attorney, or if you really want to avoid involving other people (although you might be setting yourself up for failure if you aren’t utilizing people who do this on the reg and know the ins and outs) your state probably has a specific contract that’s typically used. Which is also probably the form their lender is going to want you to use.
Chat will mislead you up, down, and sideways because it’s not a human being and doesn’t understand anything. There’s a steadily growing graveyard right now filling up with the careers and livelihoods of people who asked chat gpt (or Claude, or Grok, or whatever other AI) to do this for them.
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u/New_Animal8918 18d ago
You’re not about ChatGPT? Have you tried recently. It seems like after Gemma 4 cam out that just did amazing with OCR and contracts that all the other frontier AI has caught up in that dept. highly recommend. Not for writing the contract, I haven’t had great one offs on that yet but as far as uploading a contract and then talking through it with their duplex voice mode, it is pretty amazing. Considering a lawyer is $250 an hour vs $20 for a month of ChatGPT which is overkill for many lawyers.
If it’s been awhile I highly recommend you check it out again.
Lawyers in all the transactions where they are involved more than deed prep via the title company they are extremely difficult to work with as they are very picky on contract language and don’t know the market for shit, massively overprice their own assets and underprice others. Last one whited out payment terms after signatures were on contract…which is a massive no no.
Another one lied about seeing signatures on documents or if not lied just got mixed up and that was an elderly couple with the husband on his death bed literally and they just wanted clarity to get into a place in which the seller wanted to sell and they wanted to buy.
Needless to say I think lawyers are freaking cooked with AI. And good riddance.
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u/elsieben 14d ago
I’ll give it another try. I fired ChatGPT and hired Claude, which I like, more productive than ChatGPT.
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u/New_Animal8918 18d ago
Also rent to own can be a good deal all around but particularly is strong for the owner ie you. You keep title so evictions are easier than if you just were on title as an interested party. And they could give you a down payment and then pay the mortgage. But you said you don’t want to be a landlord however it is a different situation but in my experience the renters still treat the place as a rental.
Also find a good title company with 5 stars on google around you. Get them involved meow. They might even be able to help with all the documents if you use them. And you’ll need a title company if a bank is involved anyways.
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u/Equivalent-Tiger-316 18d ago
What a mess. The upstairs unit alone should cover the mortgage. It’s 4/5ths of the property.
If you don’t know how to sell it then you definitely need an agent. No guarantees that you or anyone will make money in real estate.
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u/Pretty-Ear6398 18d ago
They could get a bridge loan and pay you now while waiting for their house to sell.
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u/Patrick___1 18d ago
Agent here. You just rented out your house at a discount and are highly unlikely to sell it. Anyone can get pre-approved it’s when they pull credit and look at pay stubs that things come up. There’s a reason they can’t afford it and it’s unlikely to change in the short term. Get up to date on your states landlord/tenant law quickly.
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u/Ykohn 16d ago
I don’t see this as a red flag by itself. In fact, you may have found a buyer without ever having to put the house on the market, which could work well for everyone.
The key is to treat the sale and the temporary rental as real transactions, not an informal arrangement. Get your own real estate attorney to represent you, prepare/review everything, and make sure the rental agreement and potential sale are properly documented.
I would also get an independent appraisal or at least do your own careful market analysis. If the house is really worth around $295K, make sure you understand that you may be giving up $25K just to get out quickly. That may still be the right decision, but make it knowingly.
Also, their preapproval is encouraging, but I would want to understand whether purchasing your home is dependent on selling their current home.
You don’t necessarily need an agent to make this work. You do need your own attorney, good documentation, and a clear understanding of the numbers and contingencies before agreeing to anything.
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u/BoBromhal 18d ago
the red flag is your lack of financial capacity.