Seller owes too much on her house

7 Replies

So the seller was recently divorced from her husband and their house was left to the wife. She says she doesn’t know what to do with the house and that she owes a significant amount on the house. But she is willing to work with me to see what she can do. How should I go about this or should I even continue to work with this lady?
Originally posted by @Bryant Pryor :
So the seller was recently divorced from her husband and their house was left to the wife. She says she doesn’t know what to do with the house and that she owes a significant amount on the house. But she is willing to work with me to see what she can do. How should I go about this or should I even continue to work with this lady?

 If she owes more than it will sell for, there is nothing to do here, move along.

@Bryant Pryor You can help this seller even if the debt is high. Of course, you need more information to make sure. What's the after repair value, debt, payment, term on loan,if loan is current, market rent, and cost of repairs needed is a good start, on the property. Then you find out what seller can do to help transaction. Can seller cover payments for a while, make repairs, add more real estate, add more cash to buy something bigger, go to bank and borrow on this property or another, seller finance, lease back after close, use their IRA on another deal, provide contractor for repairs, pay off house, are all good questions to get answered. And there are many more. Knowing how to buy over leveraged properties will allow you to buy the property that a less experienced investor can't. From the information gathered, you decide what method to use. Could be seller finances with no payment for a year, or you may be offering to buy the note from bank, and anything in between. The easier to do the deal, the more competition you have. I have bought houses that my competition referred to me, because they only focus on one formula. I try to keep a bunch of tools in my tool bag. Reach in and grab the right tool, the correct strategy, and get to work.

I ran into this one time, lady owed slightly less than what the house was worth, but the house also needed work.  I looked into assuming the loan but their interest rate was just awful, lol.  There just wasn't a good way to make it work.

She will have to submit for a hardship with her mortgage company to see if she  can be approved for a short sale.  Then its a very long process, but the lender will send an appraiser out to the property to appraise it.  Once that happens, you can list at the appraisal costs and hope you can find a buyer that will pay 88 percent of the appraised amount. It will definitely have to be a short sale.  

Originally posted by Account Closed:
Originally posted by @Bryant Pryor:
So the seller was recently divorced from her husband and their house was left to the wife. She says she doesn’t know what to do with the house and that she owes a significant amount on the house. But she is willing to work with me to see what she can do. How should I go about this or should I even continue to work with this lady?

 If she owes more than it will sell for, there is nothing to do here, move along.

Definitely not.  If they owe more than it would sell for then you have a great opportunity to make a lot of money.  You would pursue the short sale process.  You can list and sell the house for 6%, or be the buyer and submit an offer at the lowest end of the neighborhood price range.