Expert: Brian Ray - 5/1/2008

Question
Pretty complex and muddy issue, but any guideance you can offer would be great. My mother is a very healthy and active 80. She has a couple acres w/200-ish feet of waterline on Perch River where is joins Lake Ontario (a low bridge prevents all but small motorboats access to and from the river and her property). There is a small house on the property which really should be torn down - no one lives there currently. Anyway, she has tried to sell it for the past few years through 2 or 3 local realtors with no luck. She thinks she could get at least 60ish grand for it. My nephew wants to get it on land contract: $2,000 down and payments, and he has talked to a lawyer (who is also a close relative to his father).

She makes no bones about the fact that she could drop dead any time, and fears the payments /deal would fade away (the money is largely to go a foster child she adopted late in life - and who is still a young teenager). She's had another couple of informal offers, and is very tuned in to people trying to pull a fast one on her because she's an old lady.

Our guts are telling us its a dangerous arrangement, but neither of us is real-estate or legalese savvy. Do you have any strong thoughts or words of advice? The property is a diamond in the rough AND a burden to her.

Pat

Answer
Sorry it took so long to get back with you on this Patrick,

You mom needs the assistance of a good, local real estate attorney. Whether she sells for cash, the buyer obtains financing or seller financing (land contract) is involved she should have an attorney review and approve of the transaction before she proceeds.

Provided an attorney well represents her interests, your mom should be able to close on the sale. It should be remembered that your nephew's attorney doesn't represent your mom and as such she will need her own attorney to protect her interests.

As far as selling on land contract with $2000 down; I would think that is ill-advised. In the event your mom or whoever is representing her estate needs to proceed with foreclosure proceedings, that small down payment would hardly cover the attorney's fees.

To sell the property, contact two or three agents interested in providing (and supporting it with documented sales data) their opinion as to the value of the property. Choose the one that best documents their findings and whom your mom is most comfortable. The current real estate market is tough, but you'd be far ahead getting cash. At least get an adequate down payment $5,000 and allow for a 3 year balloon on the outstanding balance. This will require the buyer to obtain financing in that timeframe or otherwise pay off your mom - sooner than later.

Again, the best single piece of advice is for your mom to secure the services of a reputable real estate attorney who will advise her and represent her interests in the transaction.

Let me know if you have additional questions. Again, I apologize for the delay!

Brian Ray
broker@chartermi.net
www.propertyupnorth.com