Paying Outstanding Balance & Get the Deed?
Hi
I am new to real estate investing. I was recently informed of a method used to acquire property through "QuitClaim Deed". Basically targeting the Pre Foreclosure List speaking with the seller/owner and finding out the actual amount behind in payments as well as the overall amount remaining from the original loan and then QuitClaim the deed to myself and then selling it to a cash buyer. I know that you must be extremely careful with QuitClaim because of title insurance, encumbrances, etc but if the due diligence is done thoroughly you should be able to discover this, correct?
Has anyone ever heard of this or is this just wholesaling?
Ex:
Home being foreclosed January 8, 2018
Reach out to the owner and the amount owed on the mortgage mos payments is $5200
Amount owed on the mortgage loan is $45,000
"I" come in and pay the $5200 if and only if I receive the deed to the property.
Resale the property to a cash investor for $65,000
Pay the $45,000 to the mortgage company and pocket the $20,000
Is it this simple?
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#1 Foreclosures Contributor
- Real Estate Professional
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In theory, yes. In reality, no. The seller is going to want Some if their equity at least.
You may also want to check your state and local regulations regarding targeting people in the foreclosure process. I know some areas consider it predatory and can have consequences.
Your math is off.
You spent $5200 to bring the mtg current.
You haven't included any transaction costs ... for 2 transactions.
You haven't allocated a single dollar to the displaced homeowner.
@Mike Cumbie also raised a big issue ... be sure that getting involved at this point is even legal.
So in this scenario a quitclaim is fine
@Arreanna Cromartie if the cash buyer would buy at $65k, the place must be worth more, at least $90k for the cash buyer to consider it a deal. If the place is worth $90k, why wouldn't the seller just sell and take their equity?