Ok, so i'm looking into pre foreclosure deals
Now, i'm a newbie so I really don't know much about what goes in between what i'm about to lay out
please correct me and give me more details on what i'm trying to do also please add anything that i'm missing.
So I found a house in pre-foreclosure that's worth $368,000
The owner bought it at $359,000 and he owes $139,520
So what I have understood is that I can make an offer to the owner to buy their house at the amount of lets say $239,000 if I were to buy at 65 cents on the dollar of value ($368,000)
So i make this agreement with the home owner and put it under contract? what kind of contract?
After I have put the deal under agreement i look for a buyer that will take care of paying for the $239,000
The previous owner keeps $139,520 to pay off his debt and I keep $99,480?
Does the previous owner keep any profit from the $99,480?
I'm trying to learn as much as i can, I know there are a lot of errors with the way I structured my plan out and please fix anything. Also what contracts would I have to use in this sort of situation?
If you put under contract the amount of $239k. All the money will go to the owner. If you are going to wholesale. You need to make a contract with the owner with the amount that he can agreed and you make the rest of the selling price to another investor.
There's 2 things that you can do when you sell the house to the investor:
1. Assignment of contract (the investor will know how much you are making, but it is cheaper in costs)
2. Double closing (Will cost you more, but no one will know how much you are making. Basically, you will need the purchase money and the closing cost.)
Thanks for the reply (:
So the wholesaling process can still be applied to a pre foreclosure?
If you can done it quick, then yes. You can have a contract option (which says that you have the option to buy the property first with the agreed price within certain period of time, basically you said that no one else can buy the property from him. This will discourage the buyer though) and put $100 as the earnest money or have a real contract and back down if you don't have any investor to buy.