Off Market Private Acquisition

6 Replies

Bigger Pockets Community  - need some guidance! 

There is a a vacant property next to the property I am closing on this week.

I had a broker run a title report and it shows the house has a mortgage with Wells Fargo with $105,000 in debt remaining and no liens. 

The property tax records give me the previous owners info. She no longer lives there but I spoke with the neighbors and they claim she is still paying the property taxes on it. I am going to call the township on Monday. 

A broker I know gave me his opinion that the lot itself was worth ~$70,000. The house is a 2 bedroom, 1 bath bunglow at 1000 sf. It is in pretty bad shape. I need to walk through it but would estimate ARV would be $200,000 - $210,000.

My question is how you would move forward? I actually found the previous owner through Facebook. I know its not a business like way to contact but its the only way her name came up and its definitely the same women. 

Because the bank has not legally foreclosed, can I buy the property from the previous owner? If I bought it for $106,000, the previous owner would pay the $106,000 to Wells Fargo and then pocket $1000. 

Could I also work with the seller and Wells Fargo to try to buy the loan at a discount? Could I offer like $65,000 - $70,000 for the remaining debt on the mortgage? Would I then have to foreclose on the property?

Thank you very much for your help. I want to aggressively pursue this opportunity. 

If the bank is owed $105,000, and you say it is worth ARV $210,000 that is a big spread, and I don't think she will just take the payoff be honest and offer the lady $20,000 and that way you will feel good not taking advantage of the little old lady, and you still make a good payday.


Joe Gore

If the house is going through foreclosure, there are most certainly late payments, fees, etc., that have built up on the loan, so the total payoff is very likely a good bit more than $105K.  Just how much can only be determined by the owner, so you'll need to get in touch with him/her to know the minimum payoff.  

As for negotiating a short sale on the property, you'd likely want to get an agent involved who is experienced with short sales -- if WF is the bank, they'll require that the property is publicly listed before they approve a short sale, so you'll need an agent involved.

First things first, you need to talk to the owner.  If Facebook is the only way to do that, go for it.  What's the worst that can happen?

@Joe Gore ARV at $210,000 is after I spend $50,000+...I haven't walked through the inside and its in very beat up shape.

This isn't a situation where I'm going to get the house from the old lady and then immediately sell it for a massive profit. Its on the potential of being a tear down. 

@J Scott thanks for the advice. I totally agree I just need to strategize how to go about the process if the woman responds. 

Am I able to buy the house from her for less than what she owes the bank? 

Im working on getting a contact from Wells Fargo from a broker I am working with. Why would WF have any involvement in if I buy the house from the current owner if they haven't legally foreclosed? 

The reason Wells Fargo is still in the picture they have a lien on the property and no matter what kind of deal you make with the owner Wells Fargo will get paid before you get a clean deed.

Joe Gore

Originally posted by @Francis Longo:
Am I able to buy the house from her for less than what she owes the bank? 

Im working on getting a contact from Wells Fargo from a broker I am working with. Why would WF have any involvement in if I buy the house from the current owner if they haven't legally foreclosed? 

 The way you buy for less than what she owes is called a short sale.  You can only do a short sale if the lender approves.

Imagine I borrowed money from you.  Could I repay you less than what I owe you without your permission?  Of course not.  Same with the mortgage -- you can only pay less than what's owed if the lender approves.  And the lender will only approve under very specific circumstances:

-  Hardship on the part of the borrower

-  House is publicly listed to try to get the best offer

-  House sells for near what an appraiser (or third-party agent) says it's worth

Btw, a contact at WF won't do you any good.  Perhaps 10 years ago...but these days, individuals at the bank have essentially no authority -- the deal would have to go through a specific person (the asset manager), and the likelihood that you could find/talk to that guy is near zero for a big bank.

@J Scott thank you, i am familiar with a short sale but appreciate the thorough explanation. 

So I guess the only way this could work is if I pay the current owner an amount higher than the debt she owes Well Fargo.

When my broker ran a title report, it shows no liens against the property. 

I could pay her $110,000, repay Wells $105,000 (not taking into account any late fees/etc) and then she gets $5000..

However, the house is definitely not worth $110k...It would only make sense financially to acquire at less than ~$95,000....I am saying this without walking though it. 

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