Yes, you read the title right. I just saw this story and I thought it was very unusual and unique. This couple in Pittsburgh have been trying to sell their home for a year, and the market is not that great in that area, so they had to come up with something that no one else was offering...
They are asking $399,900 for the house and since they have no heirs to leave anything to, the people who agree to buy the house can have the entire purchase price refunded back to them upon their death.
WAIT, it gets better!!! If the new owners agree to take care of the couple in their old age, they could also get the vacation home in Arizona AND an estate worth over $2.5M!!! Is that a deal or what?!
The problem is, how old are these people? The article doesn't say. What if they live another 20+ years. Will the people who buy the house now still own it when they die?
Hello, I also saw the story on my Local News. It said the couple was in thier 50s
Very interesting concept...
It reminds me of a condo i bought in 1983. Although the market value was around $60K, I got it for $17K because it came with a "rent controlled" tenant with a lifetime reduced rent lease. She was about 60 yo. I had a son who was 10 at the time. I figured I'd give it to him when he reached his 30s or 40s, if the tenant lived that long.
One morning about a year later her brother calls me and tells me she passed away. You never know!
Just to clarify, this is not my listing. I live in Dallas and the house is in Pittsburgh. I have no idea the address of the property or the sellers' names and I don't have access to the MLS up there to try to look it up... so Sorry, but I will not be able to post an update unless the news hits the Dallas area. If anyone in Pittsburgh is familiar with this story, please post what you know. Thanks!
Pittsburgh is my market area. The market is not actually down that much. The market is stable. These people have been trying to sell their house for over a year WITHOUT a Realtor, their house is over-priced, and they refuse to take anyone's advice. Since the media got the story, our marketplace is just ABUZZ with the story.
There are a lot of "catches" in their deal, and it isn't as great as it sounds.
Maybe some professional marketing would do them some good!
Now that's a new concept! I just read a pet lover left our local Humane Society her home and all of it's contents in her will. The contents will be sold in an estate sale with 100% proceeds to the Humane Society. There was no mention of selling the home - I'll have to check on that lead.
http://kdka.com/local/pine.township.house.2.430512.html
Local Realtor speaks on the subject.
FYI, the highest home sale price in this neighborhood for comps is $361,000.
I'm up for it! I've always wanted to live somewhere else anyways :-)
No seriously, there are too many open ends here... how many years, what if the house was destroyed in some natural/unnatural disaster, if they didn't have health insurance and needed extended care... it could cost you the "inheritance".... creative though, I'll give em that
And, if you cook breakfast each and every morning, in your nighty (or in your boxers, guys) then you additionally inherit the golf club membership at the exclusive club across the street from the house...
hmmm... so where is this house? Perhaps it pays to hire some nanny type to take care of them for low wages...
Of course, I agree with K. Fisher that there is likely some very robust "catches" but it is an interesting tale...
Now, personally, I would forgo the inheritances, and say, offer up 1/3 the asking price, if they just let me keep the dog, and did what they want with the rest of the estate... ;-)
Thanks for the link for the video. The agent was absolutely correct. How does the buyer know the money will be there? Did you see how messy the house was when they were standing in the breakfast nook and it showed the room to the left. Maybe they need a stager too!!
And his excuse that he doesn't want the inconvenience of Realtors and buyers walking through the house is BULL when it offsets actually selling the house verse trying to sell it word of mouth for over a year!
I'd love to know just what the catches are to this deal. And has anyone mentioned how old they are? That's a pretty important detail to this deal.
I will admit that this is a very unique way to get your house sold (or at least try), but I bet that they would be out of there a lot quicker if they would just use a Realtor.
Donna, very interesting idea and certainly a ploy to get some attention.
What nobody has mentioned is the Net Present Value of the "full refund" -- even after a few years at a conservative discount rate, the amount of the refund will be much smaller than the amount actually paid today. Just like those lottery tickets that pay off over 20 years. The payment of $399,000 ten years from now is worth a fraction of what it's worth today.
What if the new buyers sell the house in the meantime? Can they get a loan against their future contractual interest in the sellers' deaths? Lots of questions to be answered. I hope the Husicks have a good attorney.
OK.... Hang on... For anybody who is thinking about it, let's make sure you cover your basis.
1. Insist on being legally adopted. Have an irrevocable Will leaving you with the house when they die and Power of Attorney. That way, your basis steps up and you can avoid capital gains when you sell it. Then, incorprate a hedge fund all of you as general partners and them as managers and invest 399K. Have them lease the house to you for a dollar a month, bills paid. If you borrow the money, you can't write it off as mortgage interest, but you can write off the interest against other investment income, which is a dollar for dollar tax credit as opposed to a percentage write off.
2. Have them transfer the house in Scottsdale immediately into the hedge fund and charge the 399K over 50 years as a management fee. That would create an additional write off for them by stretching the money out instead a lump sum dispersement.
3. Transfer ownership of the 2.5 million into a holding company, owned by the Hedge Fund. Invest the money into Berkshire Hathaway, wich has an average 36% per year return. Assuming that continues, pay a 200K dividend to the Hedge Fund, which they draw on as addition managment fees. At the end of 50 years, the value of the BRK would be a tad over 71 Billion after taxes.
As the years pass and they grow old, if they stay sweet, everyone lives in harmony and you all have turkey and dressing with pecan pie at Thanksgiving. If they get cranky and try to welch on the deal, bust out your Power of Attorney and stick 'em in an old folks home (but a nice one...) and call it a day.
OK, time to go back to work now....
DISCLAIMOR>>> I'M NOT A CPA OR AN ATTORNEY, (but it seems like it might work...)
This story is everywhere..... and, yes, they didn't mention some particulars.
Houses aren't "just not selling" unless they are in Chernobyl or something. What they are doing is "not selling for the price they want." They could probably knock a few bucks off and move out to the vacation home.
And who's to say what the estate will be worth when these people die.
This is great!! Hey if the house is good condition it might be worth a shot, I would love to be at that closing table when they draw up this agreement.
Phyllis Pafumi
I read they were in their 50s. Wow, new marketing tactic. I know real estate is local... but it does make everyone think everywhere that things are that bad.
I've not seen it mentioned yet so I have to it.
I'd be concerned that my soon to be heir would try to "speed up" my demise. Espicially if they were taking care of me in my old age.
Offering a $399,000 'rebate' and possibly as much as $2.5 mil if the sellers meet their demise....
I'm not sure I would call this creative marketing. Maybe I've seen too many episodes of "Law & Order", but this seems like a bad idea...
Great story tho.
One of the stipulations is that the owners have to die of natural causes.
Even a car accident calls for further review.
(I heard that info from another agent, can't swear on that one.)
Donna,
This article got to me too. I had a lot to say about it HERE: http://activerain.com/blogsview/255995/Money-Back-Guarantee-On
The seller was on The Morning Show Today. He says that they have found a buyer and it went for Way over Listing. He would not say how much though. He said somebody paid him 5K to be next in line should the current deal not work out, and the offer is quite a bit over listing.
The seller seems happy enough at this point and his plan worked? I never did here though Does anyone know if a Realtor® was involved? Lust wondering.
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