Seller is unsure how much she owes?

Question

Hi everyone! I'm new to wholesaling and I'm hoping to get some advice here. I just got a call from a seller who wants to get out of her house, but she has no idea what she owes!

I searched the public records and I came up with some liens, back taxes, and 2 mortgages. However, she says that she bought insurance which was supposed to pay off the mortgages when her husband died, and she has the paperwork for it. It doesn't look like that happened, though.

If she only owes the liens and taxes, then it's a workable deal. The mortgages would mean she doesn't have any equity for me to work with.

Is it something that is worth my time to pursue? Should I get it under contract first and just let the title company sort out the mortgages and liens? Or would my time be better spent elsewhere? Thanks :)

Ibrahim Hughes · Answer

We never say die in wholesaling - lol.

What are the mortgages worth?
Perhaps the junior liens can be discounted for pennies, thus creating equity.

My thinking is that the private investors inherited the rights of the original mortgage co. Thus they should still be able to cash in on the insurance policy.

Again, run this by your title co. They should be able to sort most of this out.

Steph K. · Answer

Thanks for the help! As it turns out, the mortgages are on the property and are much more than what it's worth. The insurance was by the original mortgage company, but the mortgages were bought by private investors and the original mortgage company is nowhere to be found :-/

Ibrahim Hughes · Answer

Steph, this should be signed up and under contract YESTERDAY.

Find out what she is looking to get out of the deal (she may not be looking for much but 'moving money'). You can then draft the contract to read that you agree to buy the property for whatever taxes, mortgages, liens, judgments etc. that are against the property as long as she doesn't owe more than x amount of dollars.

Get it under contract, put the title co. on the job. Title companies here are ran by attorneys so see what their legal opinion of the policy is.

Brandon Gadish · Answer

If you have a relationship with a title company, they will likely run a preliminary title report for you for free.  it wont insure the title, but you will have a real good idea of what is encumbering the title.